IDEAS home Printed from https://ideas.repec.org/a/taf/ginixx/v41y2015i2p407-425.html
   My bibliography  Save this article

Trade and Democracy: A Factor-Based Approach

Author

Listed:
  • John A. Doces
  • Christopher S. P. Magee

Abstract

We study the relationship between trade openness and democracy using a data set with capital-labor ratios, trade flows, and regime type for 142 countries between 1960 and 2007. We are among the first to test a prediction that emerges from the model of Acemoglu and Robinson (2006): Relative factor endowments determine whether trade promotes democracy or not. The statistical results from two-stage least squares estimation indicate that trade is positively associated with democracy among labor-abundant countries but that trade has a negative effect on democracy in capital-abundant countries. The results are not robust, however, and thus we conclude that the evidence in support of their argument is relatively weak.

Suggested Citation

  • John A. Doces & Christopher S. P. Magee, 2015. "Trade and Democracy: A Factor-Based Approach," International Interactions, Taylor & Francis Journals, vol. 41(2), pages 407-425, March.
    • Handle: RePEc:taf:ginixx:v:41:y:2015:i:2:p:407-425
    DOI: 10.1080/03050629.2015.984065
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/03050629.2015.984065
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/03050629.2015.984065?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Edward D. Mansfield & Helen V. Milner & B. Peter Rosendorff, 2015. "Free to Trade: Democracies, Autocracies, and International Trade," World Scientific Book Chapters, in: Edward D Mansfield (ed.), THE POLITICAL ECONOMY OF INTERNATIONAL TRADE, chapter 7, pages 127-143, World Scientific Publishing Co. Pte. Ltd..
    2. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    3. Freeman, John R. & Quinn, Dennis P., 2012. "The Economic Origins of Democracy Reconsidered," American Political Science Review, Cambridge University Press, vol. 106(1), pages 58-80, February.
    4. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
    5. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422.
    6. O'Rourke, Kevin & Taylor, Alan M., 2006. "Democracy and Protectionism," CEPR Discussion Papers 5698, C.E.P.R. Discussion Papers.
    7. B. Peter Rosendorff, 2001. "Choosing Democracy," Economics and Politics, Wiley Blackwell, vol. 13(1), pages 1-29, March.
    8. Paul Collier & Anke Hoeffler, 2004. "Greed and grievance in civil war," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 563-595, October.
    9. Przeworski,Adam & Alvarez,Michael E. & Cheibub,Jose Antonio & Limongi,Fernando, 2000. "Democracy and Development," Cambridge Books, Cambridge University Press, number 9780521793797.
    10. Przeworski,Adam & Alvarez,Michael E. & Cheibub,Jose Antonio & Limongi,Fernando, 2000. "Democracy and Development," Cambridge Books, Cambridge University Press, number 9780521790321.
    11. David L. Epstein & Robert Bates & Jack Goldstone & Ida Kristensen & Sharyn O'Halloran, 2006. "Democratic Transitions," American Journal of Political Science, John Wiley & Sons, vol. 50(3), pages 551-569, July.
      • David Epstein & Robert H. Bates & Jack Goldstone & Ida Kristensen & Sharyn O'Halloran, 2004. "Democratic Transitions," CID Working Papers 101, Center for International Development at Harvard University.
    12. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-750, July.
    13. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    14. Rogowski, Ronald, 1987. "Trade and the variety of democratic institutions," International Organization, Cambridge University Press, vol. 41(2), pages 203-223, April.
    15. Kono, Daniel Y., 2006. "Optimal Obfuscation: Democracy and Trade Policy Transparency," American Political Science Review, Cambridge University Press, vol. 100(3), pages 369-384, August.
    16. John S. Ahlquist & Erik Wibbels, 2012. "Riding the Wave: World Trade and Factor‐Based Models of Democratization," American Journal of Political Science, John Wiley & Sons, vol. 56(2), pages 447-464, April.
    17. Lipset, Seymour Martin, 1959. "Some Social Requisites of Democracy: Economic Development and Political Legitimacy1," American Political Science Review, Cambridge University Press, vol. 53(1), pages 69-105, March.
    18. Tanja Ellingsen, 2000. "Colorful Community or Ethnic Witches' Brew?," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(2), pages 228-249, April.
    19. Nita Rudra, 2005. "Globalization and the Strengthening of Democracy in the Developing World," American Journal of Political Science, John Wiley & Sons, vol. 49(4), pages 704-730, October.
    20. Yu, Miaojie, 2010. "Trade, democracy, and the gravity equation," Journal of Development Economics, Elsevier, vol. 91(2), pages 289-300, March.
    21. Milner, Helen V. & Kubota, Keiko, 2005. "Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries," International Organization, Cambridge University Press, vol. 59(1), pages 107-143, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sajjad Faraji Dizaji, 2019. "Trade openness, political institutions, and military spending (evidence from lifting Iran’s sanctions)," Empirical Economics, Springer, vol. 57(6), pages 2013-2041, December.
    2. Houda Haffoudhi & Rihab Bellakhal, 2020. "Threshold Effect of Globalization on Democracy: the Role of Demography," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(4), pages 1690-1707, December.
    3. Victoria Pistikou, 2020. "The Impact of CEFTA on Exports, Economic Growth and Development," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 13(3), pages 15-31, December.
    4. Pavel S. Pronin, 2020. "International Trade And Democracy: How Trade Partners Affect Regime Change And Persistence," HSE Working papers WP BRP 75/PS/2020, National Research University Higher School of Economics.
    5. Roberto Ezcurra & Beatriz Manotas, 2017. "Is there a link between globalisation and civil conflict?," The World Economy, Wiley Blackwell, vol. 40(12), pages 2592-2610, December.
    6. Bellakhal, Rihab & Ben Kheder, Sonia & Haffoudhi, Houda, 2019. "Governance and renewable energy investment in MENA countries:How does trade matter?," Energy Economics, Elsevier, vol. 84(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pavel S. Pronin, 2020. "International Trade And Democracy: How Trade Partners Affect Regime Change And Persistence," HSE Working papers WP BRP 75/PS/2020, National Research University Higher School of Economics.
    2. Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, vol. 28(1), pages 132-146.
    3. Christopher J. Boudreaux, 2015. "The Evolutionary Effects of Democracy: In the Long Run, We are All Trading?," The International Trade Journal, Taylor & Francis Journals, vol. 29(5), pages 376-396, December.
    4. Martin Gassebner & Michael J. Lamla & James Raymond Vreeland, 2013. "Extreme Bounds of Democracy," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(2), pages 171-197, April.
    5. Lin, Faqin & Sim, Nicholas C.S., 2014. "Baltic Dry Index and the democratic window of opportunity," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 143-159.
    6. Sunde, Uwe & Fortunato, Piergiuseppe & Cervellati, Matteo, 2011. "Democratization and Civil Liberties: The Role of Violence During the Transition," CEPR Discussion Papers 8315, C.E.P.R. Discussion Papers.
    7. Nedra Baklouti & Younes Boujelbene, 2018. "The Nexus Between Democracy and Economic Growth: Evidence from Dynamic Simultaneous-Equations Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 980-998, September.
    8. Ivar Kolstad & Arne Wiig, 2014. "Diversification and democracy," CMI Working Papers 9, CMI (Chr. Michelsen Institute), Bergen, Norway.
    9. Krenz, Astrid, 2016. "Do political institutions influence international trade? Measurement of institutions and the Long-Run effects," University of Göttingen Working Papers in Economics 276, University of Goettingen, Department of Economics.
    10. Markus Brückner & Antonio Ciccone & Andrea Tesei, 2012. "Oil Price Shocks, Income, and Democracy," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 389-399, May.
    11. Houda Haffoudhi & Rihab Bellakhal, 2020. "Threshold Effect of Globalization on Democracy: the Role of Demography," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(4), pages 1690-1707, December.
    12. repec:gig:joupla:v:2:y:2010:i:3:p:129-142 is not listed on IDEAS
    13. Laura Policardo & Edgar J. Sanchez Carrera, 2020. "Can income inequality promote democratization?," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 510-532, July.
    14. Houle, Christian & Kayser, Mark A. & Xiang, Jun, 2016. "Diffusion or Confusion? Clustered Shocks and the Conditional Diffusion of Democracy," International Organization, Cambridge University Press, vol. 70(4), pages 687-726, October.
    15. Markus Brückner & Antonio Ciccone, 2011. "Rain and the Democratic Window of Opportunity," Econometrica, Econometric Society, vol. 79(3), pages 923-947, May.
    16. Anke Hoeffler & Mr. Robert H. Bates & Ms. Ghada Fayad, 2012. "Income and Democracy: Lipset's Law Revisited," IMF Working Papers 2012/295, International Monetary Fund.
    17. Papaioannou, Elias & Siourounis, Gregorios, 2008. "Economic and social factors driving the third wave of democratization," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 365-387, September.
    18. Dahlum, Sirianne & Knutsen, Carl Henrik, 2017. "Do Democracies Provide Better Education? Revisiting the Democracy–Human Capital Link," World Development, Elsevier, vol. 94(C), pages 186-199.
    19. Barry Eichengreen & David Leblang, 2008. "Democracy And Globalization," Economics and Politics, Wiley Blackwell, vol. 20(3), pages 289-334, November.
    20. Yue, Jiahua & Zhou, Shangsi, 2018. "Democracy’s comparative advantage: Evidence from aggregated trade data, 1962–2010," World Development, Elsevier, vol. 111(C), pages 27-40.
    21. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, vol. 66(C), pages 226-247.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ginixx:v:41:y:2015:i:2:p:407-425. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GINI20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.