Exports vs. Investment: How Political Discourse Shapes Popular Support for External Imbalances

Forthcoming in the Socio-Economic Review.

44 Pages Posted: 27 Dec 2018 Last revised: 27 Feb 2021

See all articles by Federico Maria Ferrara

Federico Maria Ferrara

London School of Economics and Political Science

Jörg Haas

Hertie School of Governance

Andrew Peterson

University of Geneva

Thomas Sattler

University of Geneva - Department of Political Science and International Relations

Date Written: January 22, 2021

Abstract

The economic imbalances that characterize the world economy have unequally distributed costs and benefits. That raises the question how countries could run long-term external surpluses and deficits without significant opposition against the policies that generate them. We show that political discourse helps to secure public support for these policies and the resulting economic outcomes. First, a content analysis of 32,000 newspaper articles finds that the dominant interpretations of current account balances in Australia and Germany concur with very distinct perspectives: external surpluses are seen as evidence of competitiveness in Germany, while external deficits are interpreted as evidence of attractiveness for investments in Australia. Second, survey experiments in both countries suggest that exposure to these diverging interpretations has a causal effect on citizens’ support for their country’s economic strategy. Political discourse, thus, is crucial to provide the societal foundation of national growth strategies.

Keywords: current account; growth; competitiveness; financial flows; voter attitudes

Suggested Citation

Ferrara, Federico Maria and Haas, Jörg and Peterson, Andrew and Sattler, Thomas, Exports vs. Investment: How Political Discourse Shapes Popular Support for External Imbalances (January 22, 2021). Forthcoming in the Socio-Economic Review. , Available at SSRN: https://ssrn.com/abstract=3298742 or http://dx.doi.org/10.2139/ssrn.3298742

Federico Maria Ferrara

London School of Economics and Political Science ( email )

Houghton St
Holborn
London, WC2A 2AE
United Kingdom

Jörg Haas

Hertie School of Governance ( email )

Friedrichstraße 180
Berlin, 10117
Germany

Andrew Peterson

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

Thomas Sattler (Contact Author)

University of Geneva - Department of Political Science and International Relations ( email )

40 boulevard du Pont d'Arve
Genève 4, Geneve CH-1211
Switzerland

HOME PAGE: http://www.thomassattler.org

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
56
Abstract Views
512
rank
445,717
PlumX Metrics