Preferences for trade diversification

Existing IPE work analyzes why do individuals prefer more or less openness, this is, the intensive margin of trade. While different trade models (i.e., factors, sectors, or heterogeneous firms) help to derive predictions for openness vs. autarky, they are also uninformative about demands for different forms of integration to the trade network. Here, I argue that preferences for trade policy depend on different combinations of trade exposure and diversification in both exports and imports that affect perceptions of future risk and income volatility.