Globalization & Democracy

Abstracts from last weekend’s IPES conference at Princeton that caught my eye:

Daniel Kono of UC-Davis:

Most research on democracy and trade policy indicates that democracies are more liberal than autocracies. I argue, in contrast, that the effects of democracy on trade policy vary across trading partners. Because the typical median voter has a low capital endowment relative to the national mean, (s)he benefits from trade with relatively capital-abundant countries but is hurt by trade with relatively labor-abundant ones. Democracy, which increases the median voter’s influence, thus leads to trade liberalization with wealthier countries but increased protection against poorer ones. I test and find support for this hypothesis using dyadic trade flows from 1950-2000 and dyadic trade barriers in the 1990s. My results imply that democratization has led and will lead to discrimination in international trade, primarily via nontariff barriers. The spread of democracy thus heightens the need for multilateral trading rules that combat the discriminatory use of such measures.

Nikolaos Zahariadis of Alabama-Birmingham:

Why is there still so much protectionism in light of political rhetoric extolling the virtues of free trade, favorable economic theory and evidence, and legal pressure to dismantle protectionist measures? The answer rests on four factors and their interactions: globalization, asset specificity, political power, and institutional access. I test the argument using data from 14 EU member states during the period 1992-2004. The findings clarify the variable impact of globalization on demands for protection, the impact of institutions on rent-seeking and rent-supplying behavior, and the conditions affecting domestic coalition formation. Politicians face an uncomfortable dilemma. Globalization and democracy appear to be on a collision course: the more globalization undermines democratic politics, the more democratic politics will strive to tame globalization.

[Hat tip: Drezner]