Essays on Conflict, Corruption, and International Trade Politics

Abstract

This dissertation is a collection of three essays which examine issues at the intersection of international economics, political economy, and macroeconomics. A common theme which emerges in the subsequent chapters is a reliance on intuitive models of economies populated by rational agents engaging in both political and economic decisionmaking. Each chapter also presents empirical evidence using aggregate data to highlight new angles on issues related to macroeconomic development policy. Concurrent cross-country political change, such as the recent ``Arab spring" revolutions in the Middle East, the experience of South American military dictatorships in the 1970s and 1980s, and political transition in former Soviet-bloc countries at the end of the Cold War, suggests that global forces impacting multiple countries can serve as a trigger for intrastate conflict. A common conjecture is that economic forces have been a primary impetus for such episodes. In the first chapter, I analyze the effects of worldwide commodity price fluctuations in generating political conflict in developing countries. I develop a simple model to show that shocks to both the level and uncertainty of commodity export prices can elicit conflict events in developing countries. Econometric evidence from a dataset combining major intrastate political resistance campaigns and global food commodity price data lends support to this hypothesis. In the second chapter, I examine whether corruption within one country affected by corruption within another. Understanding the interactions between political-economic culture across countries can allow us to better grasp the implications of greater global and regional integration in recent history. Until now, few studies have examined this question in detail due to the difficulty of measuring corruption and paucity of consistent data over an adequate time span. I use a panel dataset of countries in Asia, Latin America, and the Middle East over a span of fifteen years to examine how domestic corruption reacts to the culture of corruption in the region in which the country is located. Contrary to the results of past literature, I find evidence that a reduction in regional corruption can actually lead to a worsening of corruption within a country, and vice versa. If in an open economy, regional graft lowers the level of income that a rent-seeking government can tax, a reduction in regional corruption can increase the marginal benefit of imposing a more extractive domestic policy by increasing the pool of exploitable funds. My results offer an economic reason for why corruption will be an enduring institution in a more interconnected world. Finally, are less democratic governments more apt to intervene in the prices of imported goods than exported goods? In the third chapter of this dissertation I offer an explanation for why this might be the case, focusing on a government's choice between two alternative interventionist trade policies: import tariffs and export subsidies. If governments have incentives to exploit their political power to extract rents from citizens, they can achieve this by taxing imports rather than subsidizing exports. However, if citizens are able to discipline their governments through elections, the extent of this rent-seeking behavior can be constrained. I present a model that captures this behavior, distinguishing between the level of electoral accountability of a government and the level of bargaining power that citizens have in negotiations. Preliminary empirical evidence is presented which suggests that more authoritarian countries spend greater amounts on import tariffs than on export subsidies. These findings give insight into some of the challenges in establishing free trade amongst countries with different attitudes toward democratic institutions, both on a bilateral basis and within multilateral organizations.