Democracy and Trade Discrimination

Scholars continue to debate the relationship between democracy and free trade. This paper contributes to this debate by showing that the effects of democracy on trade policy vary across trading partners. Because democratization shifts political power from wealthier individuals to poorer. ones, it creates political pressures for trade liberalization with wealthier partners but for increased protection against poorer ones. I test and find support for this hypothesis using dyadic trade flows from 1950 to 2000 and dyadic trade barriers in the 1990s. My results show that democratization leads to trade discrimination against poor countries, primarily via nontariff barriers. This result explains many features of the contemporary global trading system and also highlights the need to combat discrimination in international trade.