Trade Policy, Economic Interests and Party Politics in a Developing Country: The Political Economy of CAFTA

Citation:

Hicks, R., Milner, H., & Tingley, D. (2014). Trade Policy, Economic Interests and Party Politics in a Developing Country: The Political Economy of CAFTA. International Studies Quarterly , 58, 106-117.
costarica.pdf142 KB

Abstract:

Why have developing countries increasingly opened their economies to trade? Research about trade policy in developed countries has focused on a bottom up process by identifying the economic preferences of domestic groups. We know less about preferences in developing countries. To explore this, we focus on the micro level and explore one country’s decision making in a systematic fashion, rather than using a cross-national analysis. We analyze how economic and political variables influenced Costa Rican voters in a referendum on CAFTA, an international trade agreement. We find surprisingly little support for Stolper-Samuelson models of economic preferences and instead find more support for skill-biased trade theories. Furthermore, we isolate the effects of political parties on the referendum vote; we document how at least one party influenced voters and this made the difference for CAFTA passage. Politics, in the form of parties using their organizational strength to cue and frame messages for voters, influenced an important trade policy decision. Theories about trade policy in developing countries need to take into account the impact of top-down political factors such as parties and message framing.

Last updated on 09/15/2014