Do Autocratic States Trade Less?
Cambridge Economics Working Paper No. 0742
KOF Working Paper No. 175
31 Pages Posted: 17 Sep 2007
Date Written: August 2007
The paper analyzes whether the political regime of a country influences its involvement in international trade. Firstly, we develop a theoretical model that predicts that autocracies trade less than democracies. Secondly, we test the predictions of the model empirically using a panel of more than 130 countries for the years 1962 to 2000. In contrast to the existing literature, we use data on individual importing and exporting countries, rather than a dyadic set-up. In line with the model, we find that autocracies import substantially less than democracies, even after controlling for official trade policies. This finding is very stable and does not depend on a particular set-up or estimation technique.
Keywords: international trade, democracy, autocracy, gravity model
JEL Classification: F13, F14, O24, P45, P51
Suggested Citation: Suggested Citation