Economic Integration and the Transmission of Democracy

Abstract

In this paper, we study if exposure to the institutions of trade partners changes individuals' attitudes towards democracy and favors the process of democratization. We combine survey data with country-level measures of democracy from 1960 to 2015, and exploit the improvement in air, relative to sea, transportation to derive a time-varying instrument for trade. Relying on within-country variation across cohorts, we find that individuals who grew up when their country was more integrated with democracies are, at the time of the survey, more supportive of democracy. Reflecting the change in citizens' preferences, economic integration with democratic partners has a large, positive effect on a country's democracy score. Instead, economic integration with non-democratic partners has no impact either on individuals' attitudes or on countries' institutions. We provide evidence consistent with the transmission of democratic capital from more to less democratic countries.

Keywords: Democracy, political preferences, institutions, economic integration

JEL Classification: F14, F15, P16.