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Free trade agreements and the consolidation of democracy

Liu, Xuepeng and Ornelas, Emanuel (2013) Free trade agreements and the consolidation of democracy. CEP Discussion Papers, CEPDP1184. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP1184

Abstract

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.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2013 The Authors
Subjects: H Social Sciences > HF Commerce
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
F - International Economics > F1 - Trade > F13 - Commercial Policy; Protection; Promotion; Trade Negotiations; International Trade Organizations
F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F5 - International Relations and International Political Economy > F53 - International Agreements and Observance; International Organizations
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > Managerial Economics and Strategy Group
Series: Working Papers > CEP Discussion Papers
Date Deposited: 01 Mar 2013 13:42
Last Modified: 01 Mar 2013 13:42
URI: http://eprints.lse.ac.uk/id/eprint/48927

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