Free trade agreements and the consolidation of democracy

Arbeitspapier

We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by destroying protectionist rents, thus making democracies last longer. This gives governments in unstable democracies an extra motive to form FTAs. Hence, greater democratic instability induces governments to boost their FTA commitments. In a dataset with 116 countries over 1960-2007, we find robust support for these predictions. They help to rationalize the rapid simultaneous growth of regionalism and of worldwide democratization since the late 1980s.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4103

Classification and Topics

• Classification: Wirtschaft ; Trade Policy; International Trade Organizations ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; International Agreements and Observance; International Organizations ; Economic Integration
• Subject: regionalism ; rent destruction ; political regimes ; trade liberalization ; Freihandelszone ; Handelsregionalismus ; Außenhandelsliberalisierung ; Demokratisierung ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Liu, Xuepeng ; Ornelas, Emanuel
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/69572
• Last update: 10.03.2025, 11:41 AM CET