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Is There a Democratic Dividend of World Market Integration?

Thilo Bodenstein
Central European University
Thilo Bodenstein
Central European University
Open Panel

Abstract

Since the end of the Second World War, especially during the past three decades, a majority of countries has integrated into the global market, making the world a more open, interconnected and prosperous place. But has world market integration also made the world a more democratic place? Extant research has come up with contradicting answers. There is some empirical evidence that countries opening their economies are also more likely to democratize, but the causal mechanisms leading from trade openness to democratization are still debated. Testing the factor endowment model proposed by Acemoglu and Robinson (2005) and using panel data for 1960-2008, the paper presents evidence that factor endowment has some effect on a country’s likelihood to democratize after opening its economy to the world market: world market integration seem to reinforce autocratic structures in countries that are abundantly endowed with land, leading to a higher likelihood to remain autocratic.