Political Limits to Globalization

17 Pages Posted: 26 Jan 2010

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Pierre Yared

Columbia University - Columbia Business School, Finance

Multiple version iconThere are 3 versions of this paper

Date Written: January 15, 2010

Abstract

Despite the major advances in information technology that have shaped the recent wave of globalization, openness to trade is still a political choice, and trade policy can change with shifts in domestic political equilibria. This paper suggests that a particular threat and a limiting factor to globalization and its future developments may be militarist sentiments that appear to be on the rise among many nations around the globe today. We proxy militarism by spending on the military and the size of the military, and document that over the past 20 years, countries experiencing greater increases in militarism according to these measures have had lower growth in trade. Focusing on bilateral trade flows, we also show that controlling flexibly for country trends, a pair of countries jointly experiencing greater increases in militarism has lower growth in bilateral trade.

Keywords: globalization, trade, military spending, militarism, nationalism

JEL Classification: F01, F10, F52

Suggested Citation

Acemoglu, Daron and Yared, Pierre, Political Limits to Globalization (January 15, 2010). MIT Department of Economics Working Paper No. 10-01, Available at SSRN: https://ssrn.com/abstract=1540243 or http://dx.doi.org/10.2139/ssrn.1540243

Daron Acemoglu (Contact Author)

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Pierre Yared

Columbia University - Columbia Business School, Finance ( email )

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