Democracy and Trade: An Empirical Study
AbstractThe theoretical discussion on globalization has suggested that there are linkages between democracy and trade, although the direction of influence is less certain. Formal empirical studies remain scarce, and have often focused on the question of whether democratic regimes influence trade policy, as opposed to the actual relationship between democracy and trade. This paper seeks to answer the question, ``Do democracies trade more?'' by applying the gravity equation to a large dataset of bilateral trade data for the period 1948-1999, while taking into account the role of democracy. It finds that democracy has a positive effect on trade flows, but only after controlling for trade pair heterogeneity. In addition, it makes the case for studies of this nature to draw a distinction between trade flows in the pre- and post-1990s period of rapid democratization as well as between developed and developing countries.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6077.
Date of creation: Oct 2007
Date of revision:
Democracy; trade; gravity model;
Other versions of this item:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-08 (All new papers)
- NEP-INT-2007-12-08 (International Trade)
- NEP-POL-2007-12-08 (Positive Political Economics)
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