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Trade and Democracy: A Factor-Based Approach

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  • John A. Doces
  • Christopher S. P. Magee

Abstract

We study the relationship between trade openness and democracy using a data set with capital-labor ratios, trade flows, and regime type for 142 countries between 1960 and 2007. We are among the first to test a prediction that emerges from the model of Acemoglu and Robinson (2006): Relative factor endowments determine whether trade promotes democracy or not. The statistical results from two-stage least squares estimation indicate that trade is positively associated with democracy among labor-abundant countries but that trade has a negative effect on democracy in capital-abundant countries. The results are not robust, however, and thus we conclude that the evidence in support of their argument is relatively weak.

Suggested Citation

  • John A. Doces & Christopher S. P. Magee, 2015. "Trade and Democracy: A Factor-Based Approach," International Interactions, Taylor & Francis Journals, vol. 41(2), pages 407-425, March.
    • Handle: RePEc:taf:ginixx:v:41:y:2015:i:2:p:407-425
    DOI: 10.1080/03050629.2015.984065
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    7. Hofer, Katrin & Wicki, Michael & Kaufmann, David, 2024. "Public support for participation in local development," World Development, Elsevier, vol. 178(C).

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