Do Democracies Trade More Freely?
39 Pages Posted: 15 Aug 2007
Date Written: September 2005
Abstract
What are the characteristics of the democratic polity that are relevant to trade policy? This chapter surveys the empirical evidence to address the first question, and presents a simple model of trade and politics to address the second. Democracies are, in general, characterized by divided polities. Two specific forms of this divided polity - separation of powers across decision makers and electoral accountability of leaders - are key to the trade-liberalizing tendencies of these regimes. The presence of a divided polity alters the reversion points - which in turn shifts the agendas for trade liberalization. The e¤ect is to make democracies both more willing to cooperate in Preferential Trading Agreement (PTA) formation, to unilaterally liberalize, as well as better able to extract concessions fromnon-democracies. Divided polities e¤ect both unilateral and bilateral strategies and outcomes in the trade liberalizing arena.
Keywords: Democracy, Trade Policy, Divided Government, Separation of Powers
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