Multilateral Trade Liberalization and Democracy: Does Export Product Diversification Matter?

Abstract

This paper explores the effect of multilateral trade liberalization (MTP) on democracy, using a set of 148 countries over the period 1996–2016. In particular, it investigates whether this effect depends on countries’ level of export product concentration. The analysis shows that MTP promotes democracy only when it reaches a certain threshold. Furthermore, MTP promotes democracy in countries that enjoy a high degree of export product diversification, including away from primary products, or in those with low dependence on natural resource rents. These findings have important policy implications.