Trade liberalization, democratization, and technology adoption

A general equilibrium theory with heterogeneous skills predicts a complementarity between trade and democracy in creating demand for superior technologies. Trade liberalization or democratization alone may lead to vested interests that limit technology adoption. We use panel data on technology adopt...

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Bibliographic Details
Published in:Journal of economic growth (Boston, Mass.) Mass.), 2018-06, Vol.23 (2), p.145-173
Main Authors: Cervellati, Matteo, Naghavi, Alireza, Toubal, Farid
Format: Article
Language:English
Subjects:
Complementarity
Democracy
Democratization
Economic Growth
Economic models
Economics
Economics and Finance
International Economics
Longitudinal studies
Macroeconomics/Monetary Economics//Financial Economics
Openness
Panel data
Technology
Technology adoption
Trade liberalization
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Summary:A general equilibrium theory with heterogeneous skills predicts a complementarity between trade and democracy in creating demand for superior technologies. Trade liberalization or democratization alone may lead to vested interests that limit technology adoption. We use panel data on technology adoption, at a disaggregated level, for the period 1980–2000. Exploiting within-country variation over time and the heterogeneous timing of trade liberalization and democratization, we document a significant and sizable positive interaction between trade openness and democratization for technology adoption. The result that transitions to open democracies are beneficial for technological dynamics is robust to a large set of checks.
ISSN:1381-4338
1573-7020
DOI:10.1007/s10887-018-9155-5