Trading Tyranny for Freedom:

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Trading Tyranny for Freedom

• How Open Markets
• Till the Soil for Democracy
• Presentation by Daniel T. Griswold
• Cato Institute
• January 9, 2004

2
Introduction

• Bipartisan support for trade as a foreign-policy
  tool during much of Cold War.
  
• Theme reemerged after September 11.
• President Bush Societies that are open to
  commerce across their borders are more open to
  democracy within their borders.

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Theory Direct Effects of Trade

• Promotes exchange of ideas, foreign travel,
  face-to-face meetings.
  
• New communication technologies faxes, cell
  phones, satellite dishes, the Internet.
  
• Counterweight to concentrated authority creates
  space for civil society.

4
Theory Indirect Effects of Trade

• Trade promotes growth.
• Growth creates a growing, independent,
  politically aware middle classthe foundation of
  democracy.
  
• Exception of state-controlled wealth.

5
Evidence Broad Trends

• Twin trends of past three decades globalization
  and democratization.
  
• Since 1972, share of worlds population living in
  Free countries up from 35 to 44 share living
  in Not Free countries down from 47 to 35.
  

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Evidence Broad Trends

• Since 1987, share of countries classified as
  democracies up from 40 to 63.

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Evidence Comparing Countries

• Two data bases Fraser Institutes Economic
  Freedom of the World Freedom Houses Freedom
  in the World.
  
• 123 nations, 90 percent of worlds population.

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Evidence Comparing Countries

• Among most open quintile of countries, 21 are
  Free, 3 Partly Free, 1 Not Free.
  
• Among least open quintile, only 7 are Free, 9
  Partly Free, 9 Not Free.
  
• Open countries 3 times more likely to be Free,
  closed countries 9 times more likely to be Not
  Free.

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Evidence Comparing Countries

• Significant, positive statistical correlation
  between economic openness and political and civil
  freedom.
  
• Countries that rate five points higher on index
  of economic openness will on average rate 3
  points higher on index of political and civil
  freedom, even controlling for incomes.

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Evidence Within countries over time

• Significant, positive correlation between a
  countrys advance in economic openness and
  advance in political and civil freedoms.
  
• Most aggressive reformers in both Chile, Ghana,
  Hungary, Mexico, Nicaragua, Paraguay, Portugal,
  Tanzania. Also Taiwan and South Korea.

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Application

• Middle East.
• Central America.
• Cuba.
• China.
• WTO.

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Conclusion

• By opening our markets at home and encouraging
  freer trade abroad, the United States not only
  promotes economic growth but also a more humane
  and democratic world.

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Conclusion

• Members of Congress who consistently vote
  against more open markets at home and
  market-opening trade agreements with other
  nations are in effect voting to keep millions of
  people locked within the walls of tyranny.