Working Paper: NBER ID: w12450
Authors: Barry Eichengreen; David Leblang
Abstract: The connections between globalization and democracy are a classic question in international political economy and a topic much debated in foreign policy circles. While the analytical literature is extensive, few previous studies have acknowledged the possibility of bidirectional causality or developed an instrumental variables strategy suitable for addressing it. We do so in this paper and apply our approach to an extensive historical data set. The results suggest the existence of positive relationships running both ways between globalization and democracy, though exceptions obtain at particular times (during the Bretton Woods era) and places (in labor scarce economies).
Keywords: No keywords provided
JEL Codes: F0; F00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Democracy (D72) | Trade Openness (F43) |
| Trade Openness (F43) | Democracy (D72) |
| Financial Openness (F30) | Democracy (D72) |
| Democracy (D72) | Removal of Capital Controls (F38) |
| Democracy interacts with Resource Endowments (D72) | Protectionist Policies (F13) |