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Democracy and Trade—Evidence along the Distribution of Trading Activity

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  • Astrid Krenz
  • Ana Abeliansky

Abstract

This paper analyzes the impact of democracy on trade along the distribution of countries' trading activity. We find a stronger relationship between democracy and trade at the lower quantiles of the trading activity, especially for the importing activity. Our results imply that the impact of democratization on trade is more important at a lower level of trading activity. Democratization's marginal benefit decreases over the distribution of the trading activity. We specially focus on a widely neglected issue in the literature: economies with higher trading activity are not necessarily the most democratic countries in the world. We find particular differences in the case of China, Malaysia, Mexico and Russia. Quantile regressions offer a powerful tool to detect these interdependencies. Using a conditional mean estimation methodology only leads to the wrong conclusion that the relationship between democracy and trade remains the same across the distribution of the trading activity and across different countries. See above See above

Suggested Citation

  • Astrid Krenz & Ana Abeliansky, 2015. "Democracy and Trade—Evidence along the Distribution of Trading Activity," EcoMod2015 8750, EcoMod.
    • Handle: RePEc:ekd:008007:8750
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    References listed on IDEAS

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    NA; Trade and regional integration; Trade and regional integration;
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