Mass support for free trade agreements and factor endowment
| Author | Kim-Lee Tuxhorn |
| Published date | 01 December 2019 |
| Date | 01 December 2019 |
| DOI | http://doi.org/10.1177/0020702019897271 |
| Subject Matter | Scholarly Essay |
Scholarly Essay
International Journal
2019, Vol. 74(4) 537–558
Mass support for free
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trade agreements and
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DOI: 10.1177/0020702019897271
factor endowment
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Kim-Lee Tuxhorn
Department of Political Science, University of Calgary, Calgary,
Alberta, Canada
Abstract
Does the factor endowment (FE) of trade partners influence mass support for free
trade agreements (FTAs), and if so, how? Preference models based on factor endow-
ment expect that individual attitudes toward trade partners should systematically vary
by factors of endowment and respondents’ skill level. This paper provides the first
systematic examination of the effect of trade partner’s FE on mass support for FTAs.
Using a conjoint analysis design on a sample of respondents from developed and
developing economies (the US and India), the findings show that respondents consist-
ently favour trade partners with a highly educated workforce and a higher level of gross
domestic product per capita. Moreover, preferences for these country attributes hold
regardless of respondents’ skill level or their country’s FE. Data from a nationally rep-
resentative survey on Canadian trade preferences offer additional corroborating evi-
dence. Together, the findings offer limited support for economic preferences derived
from factor endowment trade models, indicating that individuals, within and across
countries, may share a common bias against trade with lesser-developed states.
Keywords
Trade preferences, free trade agreements, international political economy, Canada,
India, United States, public opinion, factor endowment, trade partners
Introduction
Voters support trade deals with some countries while opposing deals with others.
Anecdotal evidence appears to suggest that the mass public, at least in developed
states, disfavours having less-developed states as trade partners. In 2010, the major-
ity of Americans supported increased trade with developed nations such as Canada
Corresponding author:
Kim-Lee Tuxhorn, Department of Political Science, University of Calgary, 2500 University Drive N.W.,
Calgary, Alberta, T2N 1N4, Canada.
Email: kimlee.tuxhorn@ucalgary.ca
538
International Journal 74(4)
(76 percent support, 14 percent against), Japan (60 percent support, 30 percent
against), and European Union countries (58 percent support, 28 percent against),
while being less supportive of developing states such as China (45 percent support,
46 percent against).1
Similarly, most Americans (51 percent) opposed the Central American Free
Trade Agreement, a trade deal comprising developing states, while only 32 percent
supported it.2 Nearly identical trends are observed in countries where free trade
is celebrated. For example, in a 2016 survey, German respondents were asked
whether increased trade with various countries would be positive or negative for
Germany. German respondents viewed trade with developed states such as Japan
and France positively (67 percent positive for Japan, 77 percent positive for
France), and were less enthusiastic about trade with developing states such as
China (53 percent positive for China, 55 percent positive for India).3
Does the factor endowment (FE) of trade partners influence mass support for
free trade agreements (FTAs), and if so, how? Since David Ricardo developed his
theory of comparative advantage in 1817, scholars have predicted that individuals
and countries would prefer trade with countries that have economic bases different
than their own. The findings in the existing literature have been mixed, with some
citing evidence consistent with factor-endowment-based preference models. In this
paper, I draw on two survey experiments and a nationally representative survey
from three countries, and find that this is not the case.
This paper provides the first systematic examination of how the factor endow-
ment of trade partners influences mass support for FTAs. I test whether FE influ-
ences individual attitudes toward free trade partners in hypothesized directions that
are consistent with the Heckscher–Ohlin (HO) model and intra-industry trade
model, two standard preference models based on factor endowment. Using a con-
joint analysis (CA) experiment on a sample of respondents from developed and
developing economies (the US and India), the findings show that individual pref-
erences cannot be fully explained by either the factor model or the intra-industry
model. Regardless of respondents’ factor endowment of their home country or
whether they are skilled or unskilled, respondents consistently favour partners
that exhibit characteristics of advanced economies: well-educated workforce; and
high-level of gross domestic product (GDP) per capita. Additional analysis of
survey data from a nationally representative sample of Canadian attitudes
toward 14 countries offers corroborating evidence that is consistent with the experi-
mental results.
1.
Pew Research Center, ‘‘Americans are of two minds on trade,’’ 9 November 2010, https://
www.pewresearch.org/2010/11/09/americans-are-of-two-minds-on-trade/ (accessed 15 November
2018).
2.
Alexandra Guisinger, ‘‘Determining trade policy: Do voters hold politicians accountable?’’
International Organization 63, no. 3 (2009): 533–557.
3.
Christian Bluth, ‘‘Attitudes to global trade and TTIP in Germany and the United States,’’ Global
Economic Dynamics (GED Project), Bertelsmann Foundation, 2016, 1–32, https://www.bertels-
mann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/NW_Attitudes_global_
trade_and_TTIP.pdf (accessed 15 November 2018).
Tuxhorn
539
This paper makes four contributions to our understanding of trade preferences.
First, and most importantly, it presents the first evidence showing that individuals
within and across different country contexts strongly favour trade partners that
have a well-educated workforce and a high-level of GDP/capita. This systematic
favouritism is a new gap in the trade literature for future research to explore and
problematize. Second, I develop a research design specifically intended to estimate
the causal effect of a trade partner’s FE on support for FTAs. Prior research has
used actual country names to measure the effect of factor endowment, potentially
ushering in confounding factors, and making causal inference difficult. This paper
uses CA to redress design issues. Third, this paper presents original survey data
from a sample of Indian respondents. The Indian economy plays an important role
in the international trading system, but little is known about its citizens’ attitudes
toward trade. To my knowledge, this is the first study comparing Indian trade
attitudes to other countries. Fourth, the results from both of my samples including
respondents living in a developed economy (United States) closely match the
findings reported by Gabriele Spilker, Thomas Bernauer, and Victor Uman˜a,
who study trade partner preferences in only developing states.4 In both studies,
respondents prefer democratic trade partners, large economies, military allies,
and states that are geographically close in proximity. Together, the results indicate
that individuals in developing and developed states share similar preferences
for trade partners.
In terms of policy, the proliferation of FTAs provides the opportunity for
countries to liberalize trade on a bilateral and plurilateral basis, but selecting
trading partners for FTAs remains a difficult task for policymakers. The evidence
presented in this paper informs this selection process by bringing attention to the
public’s strong preference for advanced economies. An important policy implica-
tion is that holding other country attributes constant, establishing FTAs with
less-developed states may likely require greater political capital from relevant
stakeholders to obtain a similar level of public support for FTAs with more-
developed states.
This paper proceeds as follows. First, I discuss the growing importance of
understanding FTA partner preferences in the context of the saturation effect in
trade integration. I then provide a brief background explaining the importance of
FE, and highlight gaps in the literature. In the third section, I discuss the experi-
mental research design I used to obtain individual preferences toward trade part-
ners with varying FE. In the concluding section, I discuss three potential
explanations for why individuals, within and across countries, may actually
share a common bias favouring trade with more developed states (and disfavouring
it with lesser-developed ones), and outline policy implications.
4.
Gabriele Spilker, Thomas Bernauer, and Vı´ctor Uman˜a, ‘‘Selecting partner countries for preferen-
tial trade agreements: Experimental evidence from Costa Rica, Nicaragua, and Vietnam,’’
International Studies Quarterly 60, no. 4 (2016): 706–718.
540
International Journal 74(4)
Mass support for FTAs
The period from 1990 to 2009 could be considered ‘‘the golden era’’ of establishing
FTAs, with 26.8 new trade agreements signed on average each year.5 Of the
signed agreements during this period, less than one-third (29 percent) were between
countries on different continents, while the vast majority were between regional
partners. As economic integration among neighbouring states expanded, the public
opinion research on FTAs at the time concentrated on explaining mass support for
specific agreements rather than comparing support for different FTAs. For exam-
ple, scholars...
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