Department

Economics, Finance and Quantitative Analysis

Document Type

Article

Publication Date

6-2-2014

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.

Journal

American Economic Journal: Macroeconomics

Journal ISSN

1945-7715

Volume

6

Issue

2

First Page

29

Last Page

70

Digital Object Identifier (DOI)

10.1257/mac.6.2.29

Included in

Economics Commons

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