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Political Limits to Globalization

Author

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  • Daron Acemoglu
  • Pierre Yared

Abstract

Despite the major advances in information technology that have shaped the recent wave of globalization, openness to trade is still a political choice, and trade policy can change with shifts in domestic political equilibria. This paper suggests that a particular threat and a limiting factor to globalization and its future developments may be militarist sentiments that appear to be on the rise among many nations around the globe today. We proxy militarism by spending on the military and the size of the military, and document that over the past 20 years, countries experiencing greater increases in militarism according to these measures have had lower growth in trade. Focusing on bilateral trade flows, we also show that controlling flexibly for country trends, a pair of countries jointly experiencing greater increases in militarism has lower growth in bilateral trade.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Daron Acemoglu & Pierre Yared, 2010. "Political Limits to Globalization," American Economic Review, American Economic Association, vol. 100(2), pages 83-88, May.
  • Handle: RePEc:aea:aecrev:v:100:y:2010:i:2:p:83-88
    Note: DOI: 10.1257/aer.100.2.83
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    References listed on IDEAS

    as
    1. Eichengreen, Barry & Irwin, Douglas A., 2010. "The Slide to Protectionism in the Great Depression: Who Succumbed and Why?," The Journal of Economic History, Cambridge University Press, vol. 70(04), pages 871-897, December.
    2. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2008. "Make Trade Not War?," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 865-900.
    3. Solomon William Polachek, 1980. "Conflict and Trade," Journal of Conflict Resolution, Peace Science Society (International), vol. 24(1), pages 55-78, March.
    4. Ronald Findlay & Kevin H. O'Rourke, 2007. "Power and Plenty: Trade, War and the World Economy in the Second Millennium (Preface)," Trinity Economics Papers tep0107, Trinity College Dublin, Department of Economics.
    5. Mayda, Anna Maria & Rodrik, Dani, 2005. "Why are some people (and countries) more protectionist than others?," European Economic Review, Elsevier, vol. 49(6), pages 1393-1430, August.
    6. John R. Oneal & Bruce Russett, 1999. "Assessing the Liberal Peace with Alternative Specifications: Trade Still Reduces Conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 36(4), pages 423-442, July.
    7. K. H. O'Rourke & R. Sinnott, 2001. "The Determinants of Individual Trade Policy Preferences: International Survey Evidence," Trinity Economics Papers 200110, Trinity College Dublin, Department of Economics.
    8. Kristian S. Gleditsch & Michael D. Ward, 2001. "Measuring Space: A Minimum-Distance Database and Applications to International Studies," Journal of Peace Research, Peace Research Institute Oslo, vol. 38(6), pages 739-758, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2015. "Trade costs, conflicts, and defense spending," Journal of International Economics, Elsevier, vol. 95(2), pages 305-318.
    2. Imai, Masami & Shelton, Cameron A., 2011. "Elections and political risk: New evidence from the 2008 Taiwanese Presidential Election," Journal of Public Economics, Elsevier, vol. 95(7), pages 837-849.
    3. Sudhanshu K. MISHRA, 2018. "Globalization under hysteresis: A study of Eastern Bloc Countries, China and India," Journal of Social and Administrative Sciences, KSP Journals, vol. 5(1), pages 46-59, March.
    4. repec:bla:scotjp:v:64:y:2017:i:3:p:310-326 is not listed on IDEAS
    5. Rajag M. Nag & Johannes F. Linn & Harinder S. Kohli (ed.), 2016. "Central Asia 2050: Unleashing the Region's Potential," Books, Emerging Markets Forum, edition 1, number centasia2050, August.
    6. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "InternationalPolitics and Import Diversification in the Second Wave of Globalization," Discussion Papers Series, Department of Economics, Tufts University 0770, Department of Economics, Tufts University.
    7. Fuchs, Andreas & Klann, Nils-Hendrik, 2013. "Paying a visit: The Dalai Lama effect on international trade," Journal of International Economics, Elsevier, vol. 91(1), pages 164-177.
    8. Galiani, Sebastian & Torrens, Gustavo, 2014. "Autocracy, democracy and trade policy," Journal of International Economics, Elsevier, vol. 93(1), pages 173-193.
    9. Aiginger, Karl, 2017. "Europa zwischen Globalisierung und Renationalisierung," Department of Economics Working Paper Series 5682, WU Vienna University of Economics and Business.
    10. Yazdani, Naveed & Mamoon, Dawood, 2012. "The economics and philosophy of globalization," MPRA Paper 36091, University Library of Munich, Germany.
    11. Wu, Yan & Heerink, Nico, 2016. "Foreign direct investment, fiscal decentralization and land conflicts in China," China Economic Review, Elsevier, vol. 38(C), pages 92-107.
    12. repec:spr:qualqt:v:52:y:2018:i:3:d:10.1007_s11135-017-0525-4 is not listed on IDEAS
    13. Kashcheeva, Mila & Tsui, Kevin K., 2015. "Political oil import diversification by financial and commercial traders," Energy Policy, Elsevier, vol. 82(C), pages 289-297.
    14. repec:eee:enepol:v:107:y:2017:i:c:p:210-224 is not listed on IDEAS
    15. repec:jfr:ijfr11:v:9:y:2018:i:1:p:226-238 is not listed on IDEAS
    16. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2011. "Geopolitics, Global Patterns of Oil Trade, and China¡¦s Oil Security Quest," Working Papers 322011, Hong Kong Institute for Monetary Research.
    17. Kashcheeva, Mila & Tsui, Kevin K., 2015. "Political influence in commercial and financial oil trading : the evidence from US firms," IDE Discussion Papers 491, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    18. Lan, Xiaohuan & Li, Ben, 2011. "Nationalism and international trade: theory and evidence," MPRA Paper 36412, University Library of Munich, Germany, revised 03 Feb 2012.

    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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