Chronic Murmuring

Trade and Democracy

An interesting abstract over at Brad DeLong's weblog on a new study by J. Ernesto Lopez-Cordova and Christopher Meissner on the relationship between globalization and democracy. A low rumble from the crowd, too, in the comments is also worth checking out. Here's the abstract.

Abstract: We study whether international trade fosters democracy. The likely endogeneity between democracy and trade is addressed via the gravity model of trade, allowing us to obtain a measure of natural openness. This serves as our instrumental variable for actual trade openness a la Frankel and Romer (1989). We use this powerful instrument to obtain consistent estimates of the causal impact of openness on democratization. The positive impact of openness on democracy is apparent from about 1895 onward. Late nineteenth century globalization may have helped to generate the "first wave" of democratization. Between 1920 and 1938 countries more exposed to international trade were less likely to become authoritarian. Finally, our post-World War II results suggest that a one standard deviation increase in trade with other countries could bring countries like Indonesia, Russia, or Venezuela to be as democratic as the U.S., Great Britain, or France. We also see some variation of the impact of openness by region and note that commodity exporters and petroleum producers do not seem to become more democratic by exporting more of such items.