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  3. American Economic Journal: Macroeconomics
  4. April 2014
  5. Free Trade Agreements and the Consolidation of Democracy

Free Trade Agreements and the Consolidation of Democracy

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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.

Citation

Liu, Xuepeng, and Emanuel Ornelas. 2014. "Free Trade Agreements and the Consolidation of Democracy." American Economic Journal: Macroeconomics, 6 (2): 29-70. DOI: 10.1257/mac.6.2.29

Additional Materials

JEL Classification

  • D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • F13 Trade Policy; International Trade Organizations
  • F15 Economic Integration
  • O19 International Linkages to Development; Role of International Organizations
  • O24 Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
  • Posted by NAMSUK CHOI
  • Posted on 6/2/2014 2:53:30 AM
I have tried to open your Data.dta file using STATA 12. However, your Data.data file cannot be opened. For your information, the following message is reported by STATA.
"file D:\Data\FTA-Democracy\AEJMacro-2012-0273_data\Data.dta not Stata format
r(610);
"
  • Posted by EMANUEL ORNELAS
  • Posted on 9/9/2014 2:53:28 PM
The original dataset was in Stata 13 format. This is why it couldn't be opened using Stata 12. As indicated earlier in a private e-mail, the dataset is in Stata 12 format now and can be opened with Stata 12 and newer versions.
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