The Trilemma of the Protectionist Autocrat: An Assessment of the Political Determinants of Foreign Economic Liberalization

Hausken, Kjell and Plümper, Thomas and Schneider, Gerald (2002): The Trilemma of the Protectionist Autocrat: An Assessment of the Political Determinants of Foreign Economic Liberalization. Published in: https://ecpr.eu/Filestore/PaperProposal/2ca454a7-dba5-4cfa-bcab-df149d5b208b.pdf

Abstract

The rapid increase in the number of open developing countries has recently caused a proliferation of arguments concerning the determinants of foreign economic liberalization. In this emerging debate, explanations stressing the importance of economic crises, interest-group competition, international financial institutions, and the increase in political participation can be distinguished. We add a fifth explanation and suggest a model that links foreign economic liberalization to government fragmentation in autocratic countries. The ‘trilemma of the protectionist autocrat’ describes a situation in which the dominant protectionist fraction in government cannot reach the three goals of high rental income, maintaining a protectionist policy and appeasing the dominated, more liberal faction simultaneously. A two-stage non cooperative game is developed to show that government fractionalization makes foreign economic liberalization more likely. Since an increase in political conflict between the dominant and the dominated faction increases the likelihood of a revolution, the dominant faction might use policy concessions to stabilize the government. We test this claim with a Cox continuous time survival model with time-dependent covariates. The results suggest in line with our model that economic crises and government fractionalization increase the likelihood of foreign economic opening, while lending by international financial institutions and democratization do not exert a systematic influence.

• Item Type: MPRA Paper
• Language: English
• Keywords: Protectionism, Autocracy, Political Determinants, Economic Liberalization, Game, Economic Crises
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory; D - Microeconomics > D6 - Welfare Economics; D - Microeconomics > D7 - Analysis of Collective Decision-Making

References

Acemoglu, Daron/ Robinson, James A. (2000): Democratization or Repression, European Economic Review 44, 683-693.

Acemoglu, Daron/ Robinson, James A. (2001): A Theory of Political Transitions, American Economic Review 91, 938-963.

Akerlof, George (1991): Procrastination and Obedience, American Economic Review 81, 1-19.

Alesina, Alberto/ Drazen, Allen (1991): Why are Stabilizations Delayed? American Economic Review 81, 1170-1188.

Beck, Thorsten/ Clarke, George/ Groff, Alberto/ Keefer, Philip/ Walsh, Patrick (2000): New Tools and New Tests in Comparative Political Economy: The Data- base of Political Institutions, mimeo, World Bank.

Bates, Robert/ Krueger, Anne O. (eds.) (1993): Political and Economic Interactions in Economic Policy Reform. Evidence from Eight Countries, Basil Blackwell, Ox- ford.

Bodenstein, Thilo/ Schneider, Gerald (2001): "A Political Economy Approach to Economic Openness in Transition Countries." Paper presented at the 4th Pan-European International Relations Conference, University of Kent, September 6-10, 2001.

Bresser Pereira, L./ Maravall, J.M./ Pr zeworski, A. (1993): Economic Reforms in New Democracies. A Social Democratic Approach, Cambridge University Press, Cambridge.

Bunce, Valerie (2000): Comparative Democratization. Big and Bounded Generaliza- tions, Comparative Political Studies 33, 703-734.

Cox, D.R. (1972) : Regression Models and Life Tables, Journal of the Royal Statistical Society 34, 187-220.

Cox, D.R. (1975): Partial Likelihood, Biometrika 62, 269-276.

Drazen, Allen (2000): The Political Economy of Macroeconomics, Princeton University Press, Princeton.

Edwards, Sebastian (1997): Trade Liberalization Reforms and the World Bank, American Economic Review 87, 43-48.

Greenaway, David/ Morrissey, Oliver (1996): Multilateral Institutions and Unilateral Trade Liberalization in Developing Countries, in: V.N. Balasubramanyam und Da-vid Greenaway (Hrsg.): Trade and Development, Macmillan, Basikstoke, 135-160.

Grossman, Herschel I. (1991): A General Equilibrium Model of Insurrections, American Economic Review 84, 833-850.

Gurr, Ted Robert (1990): Polity II: Political Structures and Regime Change, 1880- 1986, Ann Arbor, Inter-University Consortium for Political and Social Research, University of Michigan.

Hallerberg, Mark/ Basinger, Scott 1998, ‘Internationalization and Changes in Policy in OECD Countries. The Importance of Domestic Veto Players, Comparative Political Studies 31, 321-352.

Harberger, Arnold C. (1993): Secrets of Success, American Economic Review Papers and Proceedings 83, 343-350.

Harrigan, Jane (1996): The Bretton Woods Institutions in Developing Countries. Be- tes Noires or Toothless Tigers? World Economy 19, 765-779.

Harsanyi, J. (1967/68), Games with Incomplete Information Played by ‘Bayesian Players’, I-III, Management Science 14, 159-183, 320-334, 486-501.

Hausken, Kjell/ Plümper, Thomas (2002): Containing Contagious Financial Crises: The Political Economy of Joint Intervention into the Asian Crisis, Public Choice, forthcoming.

Jaggers, Keith/ Gurr, Ted R. (1995): Tracking Democracy's Third Wave with the Polity III Data, Journal of Peace Research 32, 469-482.

Kaminsky, G., Lizondo, S. and Reinhart, C.M. (1998). Leading Indicators of Currency Crises, IMF Staff Papers 45 (1): 1-48.

Kubota , Keiko/ Milner, Helen (2000): Why the Rush to Free Trade? Democracy and Trade Liberalization in the LDCs, mimeo, Columbia University.

Laban, Raul / Sturzenegger, Frederico (1994): Distributional Conflict, Financial Adaptation and Delayed Stabilization, Economics and Politics 6, 257-276.

Mansfield, Edward/ Milner, Helen/ Rosendorff, Peter (2002): Why Democracies Cooperate More. Electoral Control and International Trade Agreements, International Organization, forthcoming.

Mattli, Walter/ Plümper, Thomas (2002): Competitive Veto-Players and the Politics of Market Reforms in Central and Eastern European Countries, American Political Science Association annual conference, Boston.

Mayer, Wolfgang (1984): Endogenous Tariff Formation. America Economic Review 74: 970-85

Nelson, J. (1994): A Precarious Balance. Democracy and Economic Reform in Latin America, ICS Press, San Francisco.

O ́Donnell, G./ Schmitter, Philip (1986): Transitions from Authoritarian Rule: Tenta- tive Conclusions About Uncertain Democracies. Johns Hopkins University Press, Baltimore.

Olson, Mancur (1982): The Rise and Decline of Nations, Yale University Press, New Haven.

Przeworski, Adam (1991): Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America, Cambridge University Press, Cambridge.

Rodrik, Dani, 1994, ‘The Rush to Free Trade: Why so late, why now?’ in: Stephen Haggard/ Steven B. Webb (eds.), ‘Voting for Reform. Democracy, Political Liberalization, and Economic Adjustment, Oxford University Press, Oxford, 61-88.

Rodrik, Dani (1996): Understanding Economic Policy Reform, Journal of Economic Literature 34, 9-41.

Sachs, Jeffrey/ Warner, Andrew (1995). Economic Integration and the Process of Global Integration, in Brookings Papers on Economic Activity 1, 1-118.

Simon, Herbert A. (1955), A Behavioral Model of Rational Choice, Quarterly Journal of Economics 69: 99-118.

Taylor, Lance (1997): The Revival of the Liberal Creed. The IMF and the World Bank in a Globalized Economy, World Development 25, 145-152.

Tsebelis, George (1995): Decision-Making in Political Systems. Veto Players in Presidentialism, Parliamentarism, Multicameralism and Multypartyism, British Journal of Political Science 25, 289-325.

Tomassi, Mariano/ Velasco, Andres (1996): Where are we in the Political Economy of Reform? Journal of Policy Reform 1, 178-238.

Varian, Hal R. (1999): Intermediate Microeconomics: A Modern Approach, fifth ed., W.W.Norton & Company.

Yamaguchi, Kazuo (1991): Event History Analysis, Sage, Newbury Park.

Zielinski, Jakub (1999): Transitions from Authoritarian Rule and the Problem of Violence, Journal of Conflict Resolution 43, 213-228.