2008/07/01 by J. Ernesto López-Córdova, Christopher M. Meissner · 134 citations
Social Sciences · #Corruption and Economic Development #Democracy #Democratization #Development economics #Econometrics #Economics #Endogeneity #Instrumental variable #International Development and Aid #International economics #International trade #Openness to experience #Political Conflict and Governance #Political science #Politics
paper · doi:10.1353/wp.0.0016
published in World Politics 60(4), 539-575 (Cambridge University Press)
openalex publication_date 2008/07/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The likely endogeneity between democracy and trade is addressed with an instrumental variables strategy in this article about whether international trade fosters democracy. The authors use a measure of natural openness to obtain estimates of the causal impact of openness on democratization in three separate samples spanning the last 130 years. A positive impact of openness on democracy is apparent in the data over the long run. The post–World War II results suggest that with a rise in trade with other countries equal to a one standard deviation increase, countries such as Indonesia, Russia, and Venezuela could eventually become as democratic as the U.S., Great Britain, or France. There is some variation in the impact of openness by region that may be because trade seems to have a positive impact only when the capital-to-labor ratio is sufficiently high. This is consistent with the idea that openness promotes democracy when it strengthens the economic fortunes of the middle class.