Political Freedoms and Productive Firms: Exporters and Their Effect on Trade Policy in Democracies and Autocracies

Roosevelt, Megan Elizabeth

Graduate Thesis Or Dissertation

Political Freedoms and Productive Firms: Exporters and Their Effect on Trade Policy in Democracies and Autocracies Public Deposited

Analytics

Citations

Citeable URL: https://scholar.colorado.edu/concern/graduate_thesis_or_dissertations/t722h8931

Abstract

What explains variation in trade policy openness across countries? Past explanations have hinged on individual-level preferences expressed through a voting channel, especially to account for more liberal trade policy in democracies, but recent survey data calls the plausibility of this mechanism into question. In this three-paper dissertation, I focus on firm-level variation in preferences for free trade or protection, rooted in a New New Trade Theory (NNTT) framework. This theoretical response to classic and new trade theories emphasizes the heterogeneity of firms, and particularly the fundamental differences between exporting firms and domestically-oriented or import-competing firms. Before proceeding with a firm-level explanation for trade policy variation, I argue that, while NNTT makes an important contribution to the study of trade outcomes and policies, its support has been demonstrated mostly in single-country case studies which cannot allow for analysis of ways in which domestic variables such as political institutions, economic development, and geography alter the markets in which firms operate. In a pooled sample of firms from approximately 150 countries, representing great geographic coverage and spanning various levels of political freedom and development, I find quantitative empirical support for NNTT’s global applicability but highlight ways in which its primary firm-level expectations are nuanced by domestic factors. I then argue, and demonstrate empirically using cross-national and firm-level data, that the variable proportion of exporting firms exerting special interest pressure on policymakers alters the openness or restrictiveness of national trade policy outcomes. Furthermore, democratic and non-democratic leaders implement systematically different configurations of market entry regulations, which alters the ability of productive firms to participate in export markets. This, in turn, shapes the degree of pro-free-trade pressure faced by policymakers. This dissertation contributes to literatures on trade policy preferences and formation, firm-level heterogeneity, business lobbying, and political regimes.

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