The Trilemma of the Protectionist Autocrat: An Assessment of the Political Determinants of Foreign Economic Liberalization

The rapid increase in the number of open developing countries has recently caused a proliferation of arguments concerning the determinants of foreign economic liberalization. In this emerging debate, explanations stressing the importance of economic crises, interest-group competition, international financial institutions, and the increase in political participation can be distinguished. We add a fifth explanation and suggest a model that links foreign economic liberalization to government fragmentation in autocratic countries. The ‘trilemma of the protectionist autocrat’ describes a situation in which the dominant protectionist fraction in government cannot reach the three goals of high rental income, maintaining a protectionist policy and appeasing the dominated, more liberal faction simultaneously. A two-stage non cooperative game is developed to show that government fractionalization makes foreign economic liberalization more likely. Since an increase in political conflict between the dominant and the dominated faction increases the likelihood of a revolution, the dominant faction might use policy concessions to stabilize the government. We test this claim with a Cox continuous time survival model with time-dependent covariates. The results suggest in line with our model that economic crises and government fractionalization increase the likelihood of foreign economic opening, while lending by international financial institutions and democratization do not exert a systematic influence.