Globalization and trade does help promote democracy: historic evidence

Does globalization and international trade helps promote democracy? On the one hand, Dovish school of foreign policy believes that trade can engage countries behind iron curtains and get them exposed to new ideas and new thoughts. Also, authoritarian regimes are likely to hold out when the economy open up and private sector develops. On the other hand, the hawkish believe are very pessimistic on this, pointing to China as an counterexample, claiming that it is wish-thinking to bet on trade to change a political regime.

Historic evidence however indeed suggests that international trade helps promote democracy. Christopher M. Meissner (Cambridge) and José Ernesto López-Córdova (IADB) study history from 1870 to now, and find that late nineteenth century trade globalization may have helped generate the "first wave" of democratization.

They show that: “Between 1920 and 1938 countries more exposed to international trade were less likely to become authoritarian.”; and “post-World War II results suggest that a one standard deviation increase in trade with other countries could bring countries like Indonesia, Russia or Venezuela to be as democratic as the US, Great Britain or France.”

A caveat does exist. They also notice that “commodity exporters and petroleum producers do not seem to become more democratic by exporting more of such items”. Venezuela, Russia, Nigeria, Saudi Arab..... you can say good bye to democracy.

The Globalization of Trade and Democracy, 1870-2000  (PDF file)
Abstract:  We study whether international trade fosters democracy. The likely endogeneity between democracy and trade is addressed via the gravity model of trade, allowing us to obtain a measure of natural openness. This serves as our instrumental variable for actual trade openness a la Frankel and Romer (1999). We use this powerful instrument to obtain estimates of the causal impact of openness on democratization. A positive impact of openness on democracy is apparent from about 1895 onwards. Late nineteenth century trade globalization may have helped generate the "first wave" of democratization. Between 1920 and 1938 countries more exposed to international trade were less likely to become authoritarian. Finally, our post-World War II results suggest that a one standard deviation increase in trade with other countries could bring countries like Indonesia, Russia or Venezuela to be as democratic as the US, Great Britain or France. We also see some variation in the impact of openness by region and note that commodity exporters and petroleum producers do not seem to become more democratic by exporting more of such items.