Global Commercial Integration and Autocratic Entrenchment

• In Event: Is Global Capitalism Good for Democracy?

Abstract

Why has the expansion of global capitalism failed to bring democratization to autocracies? While it has long been acknowledged that the prospect of greater global market integration can incentivize countries to adopt market-supporting institutions such as democracy and the rule of law, we have witnessed a wave of autocratic consolidation in recent decades. We argue that global market integration can instead empower autocratic leaders. Specifically, a well-developed, fragmented production network generates positive spillovers to the economy and makes expropriation difficult, which leaves domestic market-supporting institutions redundant. Empirically, we examine how autocrats cultivate this self-enforcing production ecosystem through special economic zones (SEZs)—restricted commercial enclaves where autocrats provide policy concessions such as tax breaks, lower tariffs, and looser regulations. Merging our original global dataset on the establishment, location, and design of SEZs with geo-coded survey responses from the Afrobarometer and LAPOP surveys, we find that autocrats can use SEZs as an institutional shortcut to jump-start the cultivation of relationship-specific global trade and investment, which lengthens autocratic leader tenure and improves regime legitimacy.

Authors

• Michael O. Allen, Harvard University

• Zoe Ge, IE University