Jeffry A. Frieden and Ronald Rogowski. 1996. The Impact of the International Economy on National Policies: An Analytical Overview,

Jeffry A. Frieden and Ronald Rogowski, “The Impact of the International Economy on National Policies: An Analytical Overview,” in Robert O. Keohane and Helen V. Milner, eds., Internationalization and Domestic Politics (New York: Cambridge University Press, 1996), pp. 25-47.

The independent variables in the analysis are the exogenous changes in costs or regards of international economic exchange. The dependent variables are:

1. the policy preferences of relevant socioeconomic and political agents within countries toward national policies and national policy-making institutions.

2. given these preferences, the adoption or revolution of national policies and of national policy institutions

3. given preferences, policies, and institutions, the relationship between a given set of institutions and a given set of policies.

The conjecture is that an exogenous easing of international trade will, ceteris paribus:

1. increase pressure within each country to liberalize international trade and payments, including dismantling structural impediments to trade

2. create such broad political pressure as an increasing function of the degree to which the national economy was previously closed

3. generate such aggregate pressure for change as an increasing function of the degree to which the economy has readily exploitable gains from trade available (such as high levels of total factor productivity).

On average, democratic regimes should liberalize more readily.

Among equally democratic regimes, and among different elective bodies within the same country, the tendency to liberalize should increase as the number of distinct constituencies decreases.

Ceteris paribus, the likelihood of liberalization should decline with increasing partisan fragmentation.

Extended summary by Mike

“The Impact of the International Economy on National Policies: An Analytical Overview” by Jeffry Frieden and Ronald Rogowski

Puzzle: How does economic integration affect domestic politics, policies, and institutions? The question applies to economic integration in general but Frieden and Rogowski mainly discuss trade and apply trade models to discuss the effects of economic liberalization on domestic politics.

Variables:

Independent variable: Exogenous easing, meaning any policies, reductions in transport costs, or enhanced technologies that lead to an overall decrease in the cost of liberalized trade, capital, etc. or an increase in its implicit rewards.

Dependent variable:  The policy preferences of relevant socioeconomic and political agents within countries towards national policies and policymaking institutions. Given these preferences, the authors then consider the adoption or evolution of national policies and of national policy institutions. Given all of these factors, the authors discuss the relationship between a given set of institutions and a given set of policies.

Main arguments:  An exogenous easing of exchange increases the proportion of tradable goods in a national economy, magnifying pressure for converge of domestic to global prices and augmenting domestic susceptibility to international price shocks.

Within societies, freer trade will produce a generally higher level of social pressures for the reduction of barriers to cross-border economic activities. Societies will be divided between those likely to benefit from new relative price schemes (those who benefit from the exploitation of a country’s comparative advantage, frequently consumers of imports and exporters, particularly when there are economies of scale comprises of large firms with a history of internationalism) and those most likely to lose out (particularly import-competing industries, smaller and domestically-oriented firms, or, in the Heckscher-Ohlin case, owners of scarce factors).

Governments are most likely to respond to such pressures to the extent that they more accurately represent broad, aggregate social interests, can make credible commitments and cement public support, and have relatively long time-horizons (and are thus willing to put up with short-term frictions from free trade and any fallout it engenders in order to secure long term gains).

Secondary arguments:

-Easier trade raises the costs of isolation from world markets can create social pressures in favor of liberalization.

-Even where barriers are left in place, domestic actors are still more vulnerable to international fluctuations.