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Free Trade Agreements and the Consolidation of Democracy

Xuepeng Liu () and Emanuel Ornelas

No 4103, CESifo Working Paper Series from CESifo Group Munich

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.

Keywords: regionalism; rent destruction; political regimes; trade liberalization (search for similar items in EconPapers)
JEL-codes: F13 D72 F53 F15 (search for similar items in EconPapers)
Date: 2013
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Related works:
Journal Article: Free Trade Agreements and the Consolidation of Democracy (2014) Downloads
Working Paper: Free Trade Aggreements and the Consolidation of Democracy (2013) Downloads
Working Paper: Free Trade Agreements and the Consolidation of Democracy (2013) Downloads
Working Paper: Free trade agreements and the consolidation of democracy (2013) Downloads
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