A democratic dividend in trade? Evidence from a flexible empirical implementation

Rodolphe Desbordes, Markus Eberhardt and Mario Larch

No 2025-02, Discussion Papers from University of Nottingham, GEP

Abstract: We study the causal effect of country-specific democratic regime change on bilateral trade flows, extending standard structural gravity empirics to ‘heterogeneous gravity’ estimated at the country-pair level. Our original difference-in-differences implementation accounts for selection into regime change, multilateral resistance, globalisation effects, and spatial dependence. We initially find average effects of 46% higher exports for countries after thirty years in democracy, but demonstrate that these effects are driven by the democratic dividend for income: the causal chain runs from democracy to economic prosperity to trade, and democracy appears to have a limited ‘direct’ effect on trade flows.K

Keywords: trade gravity model; democratic regime change; monadic variables; heterogeneity; panel data; interactive fixed effects (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.nottingham.ac.uk/gep/documents/papers/2025/25-02.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:2025-02

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, GEP School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by Hilary Hughes ().