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Political Limits to Globalization

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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.

Suggested Citation

  • Daron Acemoglu & Pierre Yared, 2010. "Political Limits to Globalization," NBER Working Papers 15694, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15694
    Note: IFM ME POL
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    References listed on IDEAS

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    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. 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.
    3. 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.
    4. Solomon William Polachek, 1980. "Conflict and Trade," Journal of Conflict Resolution, Peace Science Society (International), vol. 24(1), pages 55-78, March.
    5. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2008. "Make Trade Not War?," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 865-900.
    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. 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.
    8. K. H. O'Rourke & R. Sinnott, 2001. "The Determinants of Individual Trade Policy Preferences: International Survey Evidence," CEG Working Papers 20016, Trinity College Dublin, Department of Economics.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Les limites politiques de la mondialisation
      by Yannick Bourquin in Que disent les économistes? on 2010-06-23 09:00:00

    Citations

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    Cited by:

    1. Mishra, SK, 2017. "Globalization under Hysteresis: A Study of Eastern Bloc Countries, China and India," MPRA Paper 81962, University Library of Munich, Germany.
    2. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2015. "Trade costs, conflicts, and defense spending," Journal of International Economics, Elsevier, vol. 95(2), pages 305-318.
    3. 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.
    4. Yazdani, Naveed & Mamoon, Dawood, 2012. "The economics and philosophy of globalization," MPRA Paper 36091, University Library of Munich, Germany.
    5. 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.
    6. Kashcheeva, Mila & Tsui, Kevin K., 2015. "Political oil import diversification by financial and commercial traders," Energy Policy, Elsevier, vol. 82(C), pages 289-297.
    7. repec:eee:enepol:v:107:y:2017:i:c:p:210-224 is not listed on IDEAS
    8. 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).
    9. 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.
    10. 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(7-8), pages 837-849, August.
    11. Lan, Xiaohuan & Li, Ben, 2011. "Nationalism and international trade: theory and evidence," MPRA Paper 36412, University Library of Munich, Germany, revised 03 Feb 2012.
    12. 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.
    13. repec:jfr:ijfr11:v:9:y:2018:i:1:p:226-238 is not listed on IDEAS
    14. 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.
    15. Aiginger, Karl, 2017. "Europa zwischen Globalisierung und Renationalisierung," Department of Economics Working Paper Series 5682, WU Vienna University of Economics and Business.
    16. Galiani, Sebastian & Torrens, Gustavo, 2014. "Autocracy, democracy and trade policy," Journal of International Economics, Elsevier, vol. 93(1), pages 173-193.
    17. repec:bla:scotjp:v:64:y:2017:i:3:p:310-326 is not listed on IDEAS

    More about this item

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F10 - International Economics - - Trade - - - General
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism

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