Does economic openness affect liberal and electoral democracy in a different way? Empirical evidence from developing countries
| Date | 01 July 2019 |
| Published date | 01 July 2019 |
| Author | Baris Kablamaci |
| DOI | http://doi.org/10.1111/sjpe.12193 |
DOES ECONOMIC OPENNESS AFFECT
LIBERAL AND ELECTORAL
DEMOCRACY IN A DIFFERENT WAY?
EMPIRICAL EVIDENCE FROM
DEVELOPING COUNTRIES
Baris Kablamaci*
ABSTRACT
The focus of this paper was to empirically analyze the impacts of economic lib-
eralization on the liberal and electoral democracy in a sample of 106 less devel-
oped and developing countries over the period 1970–2016. The economic
relationship between these countries and the global trade and the financial sys-
tem generates a crucial question of to what extent political conditions are
affected by this changing relation. To test these relationships, this paper uses V-
Dem’s liberal democracy and electoral democracy indices and nine economic lib-
eralization variables. Utilizing two-step system dynamic panel GMM estimation
indicates that trade openness and economic globalization, de facto strongly
affects electoral democracy.
II
NTRODUCTION
As recently as 2016 Indonesia, Montenegro, Uganda, and Angola had experi-
enced vulnerable economic and political environments because of social con-
flicts that ended with coups d’
etats. These developing countries among which
international trade had profoundly affected on that attempted to integrate
their economies into the international economic system by changing their eco-
nomic structures associated with political changes. After the independence
period of the 1960s, many developing countries had dramatic experiences such
as autocratic presidential governance, which indicates the centralization of
and the inability of peaceful and democratic change of political power and
coups d’
etat during this political and economic transition era.
According to UNDP (2006), although most of developing countries became
multi-party democracies and have electoral systems, the separation and inde-
pendence of legislative, judicial and executive branches of government are
insufficient, where the latter branch is more powerful than the others leading
to limit the transparency and accountability, and the rule of law.
*Istanbul Universitesi
Scottish Journal of Political Economy, DOI: 10.1111/sjpe.12193, Vol. 66, No. 3, July 2019
©2018 Scottish Economic Society.
404
Since the type of the political regime is an influential factor in the trade
policy, trade liberalization also profoundly affects the distribution of the polit-
ical power that determines the level of democracy of a country through
increasing trade flows and reducing poverty. Although this relationship
became a considerable issue and attracted attention in academic circles of
both political science and economics, the findings are mixed and lack of evi-
dence, particularly in the developing countries (e.g., Bussmann, 2002; Li and
Reuveny, 2003; Rudra, 2005; Eichengreen and Leblang, 2008; Milner and
Mukherjee, 2009; Yu, 2010). The main intent of this study was to empirically
analyze the effects of economic openness on both liberal and electoral democ-
racy in developing countries. Indeed, to move from the general to the particu-
lar, the main question remains unsolved in the literature, as to whether
economic openness automatically leads to both liberal and electoral democ-
racy, or just one of them, particularly, in developing economies.
According to Milner and Keohane (1996), globalization brings significant
effects on domestic politics through new policy preferences according to the
relative price changes of the economy, has a power to diminish the govern-
ments’ autonomy on the macroeconomic policy. Since increasing in either
trade or financial integration to world markets, the economy gets vulnerable
structure, due to the balance of payments or exchange rate crises could easily
lead to dramatic political changes. They also argue that, while there is a con-
tinuous relationship between the pressure of global markets and the opposi-
tion against by the domestic institutions, this global market pressure generates
financially disciplined and competitive new political and economic institutions
for the credibility of the domestic economy.
Based on establishing political conditions that strengthen the citizens and
independent organizations generates political order and security, which
empower civil liberties and the rule of law leads to predictable and stable liv-
ing conditions in developing and less developed countries. Therefore, the
necessity to focus on the two distinct dimensions of democracy (liberal and
electoral) emerges from the absence of the influence of domestic factors and
their pragmatic relationships through pressure politics in the society in the lit-
erature. A country that confronts the foreign competition in the world trade
market inevitably will face a political competition between the free trade sup-
porters and protectionists.
While economic policies are the main results of the elections, the majority
of diversified voters, whose preferences of the median directly affect trade pol-
icy through policy makers, do not aware of their politicians’ positions on
trade due to either uninformed or uninterested (Guisinger, 2009). Because
public policy depends on the electoral system, which gives the authority of
official statements to the policymakers, voters are the essential authority in a
democratic country. Thus, the voter behavior becomes the critique and miss-
ing part of the relation between political structure and the economy. There-
fore, manipulation of the economy could bring the people far from their
interests. These conditions bring the importance of the electoral democracy,
relied on electoral competition which consists of free elections and free media
ECONOMIC OPENNESS AND DEMOCRACY 405
Scottish Journal of Political Economy
©2018 Scottish Economic Society
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