How Can We Explain Regime Type Differences If Citizens Don't Vote Based on Foreign Economic Policy?

Abstract

Abstract Political economy research shows that more democratic governments generally have more open trade policies with more flexible exchange rate regimes, yet political behavior theory argues that citizens do not think of foreign economic policy as salient and do not cast their votes considering such issues. This note investigates the puzzle about how democracies could have different foreign economic policies than autocracies if citizens do not vote based on these international issues. Using a political model with two possible ways for societal actors to influence state policy (electoral and/or special interest pressure), it first considers how voting based on salient domestic outcomes like inflation and unemployment may lead democratic governments towards more open trade and flexible exchange rates. Second, if more societal groups are able to lobby as special interests in more democratic regimes, then governments may also be pushed toward these same foreign economic policies. Thus, there is no fundamental contradiction between the political economy empirical results and the political behavior theory, although scholars need to adjust their theories to explain foreign economic policy differences across political regime type.