The Political and Economic Factors Affecting the U.S. Sugar Subsidy Program

This paper explores the U.S. sugar subsidy programs; specifically why an increasing amount of sugar subsidy is being allocated to a decreasing number of domestic sugar growers. Traditional neoclassical economic theory fails to capture the autonomous nature of political institutions in affecting the policy making decision regarding the sugar program. Douglass North offers an analytic framework for explaining the ways in which institutions and institutional change affect the performance of economies. Two empirical models test the impact economic and political variables have on the level of sugar loans allocated to sugar growers. The House and Senate Agriculture Committees, and the number of democrats in the chambers of Congress contribute to explaining the variance of sugar subsidy loans. The Senate committee in particular emerges as statistically significant