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Votes and Vetoes: The Political Determinants of Commercial Openness

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  • Witold J. Henisz

    ()

  • Edward D. Mansfield

    ()

Abstract

Societal theories of trade policy stress the importance of domestic interest groups, whereas statist theories focus on the effects of domestic institutions. Debates over the relative merits of these approaches have been fierce, but little systematic empirical research has been brought to bear on the relative merits of these theories. In this paper, we argue that, while societal and statist factors are generally regarded as having independent and competing effects, it is more fruitful to view the influence of each type of factor as conditional on the other. As societal explanations contend, deteriorating macroeconomic conditions are a potent source of protectionist pressures. The extent to which such conditions reduce commercial openness, however, depends centrally on the domestic institutions through which societal pressures must filter to influence policy. Two institutional features stand out. First, in states marked by greater fragmentation and more ???veto points,??? it is harder to change existing policies because any number of actors can block such change. Consequently, we expect the effects of macroeconomic conditions on trade policy to be weaker in fragmented states than in those characterized by a highly centralized national government. Second, we expect both fragmentation and the societal pressures stemming from the economy to have a more potent impact on trade policy in democracies than in other regimes, since the electoral constraints facing democratic leaders force them to respond to demands made by key segments of society. The results of our statistical tests covering more than one hundred countries during the period from 1980 to 2000 strongly support these arguments.

Suggested Citation

  • Witold J. Henisz & Edward D. Mansfield, 2004. "Votes and Vetoes: The Political Determinants of Commercial Openness," William Davidson Institute Working Papers Series 2004-712, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2004-712
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    References listed on IDEAS

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    Cited by:

    1. Aghassi Mkrtchyan, 2004. "Impact Of Regulated Price Adjustments On Price Variability In A Very Low Inflation Transition Economy: Case Of Armenia," William Davidson Institute Working Papers Series wp731, William Davidson Institute at the University of Michigan.
    2. Konstantin Sonin & Scott Gehlbach, 2004. "Businessman Candidates," Econometric Society 2004 North American Summer Meetings 178, Econometric Society.
    3. Vatcharin Sirimaneetham, 2006. "What drives liberal policies in developing countries?," Bristol Economics Discussion Papers 06/587, Department of Economics, University of Bristol, UK.
    4. Li, Jiatao & Yao, Fiona Kun, 2010. "The role of reference groups in international investment decisions by firms from emerging economies," Journal of International Management, Elsevier, vol. 16(2), pages 143-153, June.
    5. Libman, Alexander, 2008. "Democracy and growth: is the effect non-linear?," MPRA Paper 17795, University Library of Munich, Germany.

    More about this item

    Keywords

    Protectionism; openness; veto players; veto points; positive political theory; unemployment; trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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