Ideology and Voter Preferences as Determinants of Financial Globalization

We propose that the global spread of ideas affects international economic openness policies, and that to omit ideology as an explanatory variable for economic globalization is to risk omitted variable bias. Using voting data, we create measures of global ideology regarding economic openness and prop...

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Bibliographic Details
Published inAmerican journal of political science Vol. 51; no. 2; pp. 344 - 363
Main Authors Quinn, Dennis P., Toyoda, A. Maria
Format Journal Article
LanguageEnglish
Published Malden, USA Blackwell Publishing Inc 01.04.2007
Blackwell Publishing
Blackwell Publishing Ltd
Subjects
Capital account
Countries
Economic growth models
Economic models
Economic Policy
Free Trade
Globalization
Government policy
Ideology
International economic policy
International economics
International finance
International financial institutions
Liberalization
Longitudinal studies
Political Ideologies
Political science
Preferences
Statistical significance
Voter behavior
Voters
Voting
Voting Behavior
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Summary:We propose that the global spread of ideas affects international economic openness policies, and that to omit ideology as an explanatory variable for economic globalization is to risk omitted variable bias. Using voting data, we create measures of global ideology regarding economic openness and propose that changes in both global and domestic ideology influence how open or closed to international finance an economy is. We also test other influences on liberalization, including proposed state-centered diffusion mechanisms. Using PCSTS and system-GMM models, we estimate the determinants of change in international capital account regulation for 82 countries, 1955 to 1999. We thereby examine diffusion of both liberalizations (1950s and 1990s) and closures (1960s and 1970s). Changes in both global and domestic ideology robustly influence liberalization and closure. The capital account policies of neighboring countries (positively) and of the leading economies (negatively) also influenced a country's capital account liberalization.
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ArticleID:AJPS255
We are grateful for financial assistance provided by the National Science Foundation (SBR‐9729766 and SBR‐9810410), the McDonough School of Business, and the Graduate School of Arts and Sciences, Georgetown University. This project has evolved from several other projects, done in collaboration with Carla Inclán and John Woolley. We would especially like to thank the participants at the May 2002 conference on diffusion held at Yale University, organized by Geoff Garrett and Beth Simmons, participants at a panel at the 2002 annual meeting of the American Political Science Association in Boston, as well as the 2003 UCLA and Harvard conferences (organized by Garrett, Simmons, and Frank Dobbin). We also thank Philip Lane and seminar participants at Trinity College, Dublin. Beth Simmons, Geoff Garrett, and Frank Dobbin provided very detailed and helpful suggestions. Keith Ord deserves special thanks for assisting us with methods. We also thank Rob Franzese, John Freeman, Stef Haggard, Jude Hays, Lars Jonung, Jeff Macher, Peter Mair, John Mayo, Pietra Rivoli, Andy Sobel, Duane Swank, Tom Willett, and Bennet Zelner for their comments. Alberto Ciganda and Sarah Zhu provided able assistance with the dataset. The authors are responsible for all errors.
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ISSN:0092-5853
1540-5907
DOI:10.1111/j.1540-5907.2007.00255.x