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The Globalization of Trade and Democracy, 1870-2000

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  • J. Ernesto Lopez-Cordova
  • Christopher M. Meissner

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 à la Frankel and Romer (1999). We use this powerful instrument to obtain estimates of the causal impact of openness on democratization. A positive impact of openness on democracy is apparent from about 1895 onwards. Late nineteenth century trade globalization may have helped 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 US, Great Britain or France. We also see some variation in 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.

Suggested Citation

  • J. Ernesto Lopez-Cordova & Christopher M. Meissner, 2005. "The Globalization of Trade and Democracy, 1870-2000," NBER Working Papers 11117, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11117 Note: DAE ITI POL
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Antonio Spilimbergo, 2009. "Democracy and Foreign Education," American Economic Review, American Economic Association, vol. 99(1), pages 528-543, March.
    2. Aidt, Toke S. & Jensen, Peter S., 2014. "Workers of the world, unite! Franchise extensions and the threat of revolution in Europe, 1820–1938," European Economic Review, Elsevier, vol. 72(C), pages 52-75.
    3. Abeliansky, Ana & Krenz, Astrid, 2015. "Democracy and international trade: Differential effects from a panel quantile regression framework," Center for European, Governance and Economic Development Research Discussion Papers 243, University of Goettingen, Department of Economics.
    4. Toke Aidt & Peter Jensen, 2013. "Democratization and the size of government: evidence from the long 19th century," Public Choice, Springer, vol. 157(3), pages 511-542, December.
    5. de Bromhead, Alan, 2015. "Women voters and trade protectionism in the interwar years," QUCEH Working Paper Series 15-03, Queen's University Belfast, Queen's University Centre for Economic History.
    6. Nobuhiro Mizuno, 2010. "Inequality And Sequence Of Economic Liberalization And Democratization," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 1-13, March.
    7. Aidt, T. & Jensen, P.S., 2007. "The Taxman Tools Up: An Event History Study of the Introduction of the Personal Income Tax in Western Europe, 1815-1941," Cambridge Working Papers in Economics 0766, Faculty of Economics, University of Cambridge.
    8. Dalibor Eterovic & Nicolas Eterovic, 2010. "Political Competition vs. PoliticalParticipation: Effects on Government's Size," Working Papers wp_006, Adolfo Ibáñez University, School of Government.
    9. Simeon Djankov & Jose G. Montalvo & Marta Reynal-Querol, 2006. "Does Foreign Aid Help," Cato Journal, Cato Journal, Cato Institute, vol. 26(1), pages 1-28, Winter.
    10. Nathan Nunn, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 569-600.
    11. Jorge Braga de Macedo & Luis Brites Pereira & Joaquim Oliveira Martins & João Tovar Jalles, 2013. "Globalization, Democracy and Development," NBER Working Papers 19575, National Bureau of Economic Research, Inc.
    12. Kim, Nam-Seok & Heshmati, Almas, 2017. "The Relationship between Economic Growth and Democracy: Alternative Representations of Technological Change," GLO Discussion Paper Series 85, Global Labor Organization (GLO).
    13. James Fenske, 2014. "Ecology, Trade, And States In Pre-Colonial Africa," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 612-640, June.
    14. James Fenske, 2014. "Ecology, Trade, And States In Pre-Colonial Africa," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 612-640, 06.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • N0 - Economic History - - General

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