Democratization and Economic Globalization

We address two questions that are central to the literature on the emergence of democracy and economic globalization. First, does democratization foster higher levels of trade and capital account openness? Second, do trade and capital account openness increase the likelihood of democratization? We review the literature in international political economy and comparative politics that has theoretically and empirically addressed these questions. We then conduct some empirical tests in a sample of developing countries to briefly evaluate the empirical relationship between democracy and economic globalization. Our analysis reveals that evidence for the claim that democracy fosters trade and capital account liberalization is robust but that empirical support for the predicted positive effect of economic openness on democracy among developing countries is weak. More theoretical work is needed to clarify the link between democracy and economic liberalization, and to this end we provide possible topics for future research.