Democracy and globalisation

Barry Eichengreen and David Leblang

No 219, BIS Working Papers from Bank for International Settlements

Abstract: The relationship between democracy and globalisation has been the focus of substantial policy and academic debate. Some argue that democracy and globalisation go hand in hand suggesting that unrestricted international transactions leads to increased political accountability and transparency. And, politically free societies are likely to have minimal restrictions on the mobility of goods and services across national borders. Others argue that the causal relationship should be reversed: democracies are more likely to have closed markets and vice versa. We examine these relationships between political democracy and trade and financial globalisation over the period 1870-2000 and treat both democracy and globalisation as both cause and effect. Our empirical strategy uses instrumental variables and estimates relationships using the Generalised Method of Moments framework. Our general findings support the hypothesis of a positive two-way relationship between democracy and globalisation.

Keywords: Democracy; globalisation (search for similar items in EconPapers)
JEL-codes: D72 F02 F41 N10 P51 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2006-12
New Economics Papers: this item is included in nep-cdm, nep-dev, nep-hpe and nep-pol
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: DEMOCRACY AND GLOBALIZATION (2008)
Working Paper: Democracy and Globalization (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:219

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