Publications
Publications
- 2024
- HBS Working Paper Series
Economic Integration and the Transmission of Democracy
By: Marco Tabellini and Giacomo Magistretti
Abstract
In this paper, we study the effects of economic integration with democratic partners
on democracy. We assemble a large country-level panel dataset from 1960 to 2015, and
exploit improvements in air, relative to sea, transportation to derive a time-varying
instrument for economic integration. We find that economic integration with democracies increases countries’ democracy scores, whereas the impact of economic integration
with non-democracies is muted. Results are stronger when democratic partners have
a longer history of democracy, grow faster, spend more on public goods, are culturally
closer, and export higher quality goods. The effects we document are driven by imports,
rather than exports, and by integration with democratic partners that account for a
larger share of a country’s trade in institutionally intensive, cultural, and consumer
goods, as well as in goods that involve more face-to-face interactions and entail higher
levels of bilateral trust. These patterns are consistent with economic integration favoring the transmission of democracy by signaling the (actual or perceived) desirability of
democratic institutions. Alternative mechanisms—including human capital accumulation and economic growth—cannot, alone, explain our findings.
Keywords
Democratization; Institutional Development; Economic Integration; International Trade; Democracy; Political Preferences; Institutions; Trade; Global Range; Economics; Government and Politics
Citation
Tabellini, Marco, and Giacomo Magistretti. "Economic Integration and the Transmission of Democracy." Harvard Business School Working Paper, No. 19-003, July 2018. (Revised March 2024. Available also from VOX, VOXEU, Atlantico, The Economist, Domani, and Ideas for India. Longer NBER working paper version available here. Conditionally accepted at the Review of Economic Studies.)