Global Economic Integration and Politics in Emerging Economies

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Helms, Benjamin, Foreign Affairs - Graduate School of Arts and Sciences, University of Virginia
Leblang, David, AS-Dept of Politics, University of Virginia

This dissertation consists of three distinct papers that explore the intersection of global economic integration and domestic politics in emerging economies. In the first chapter, I investigate the causes of globally ascendant nativist political movements. In advanced democracies, rising anti-immigrant politics is in part a backlash against economic globalization. In emerging economies, where nativists primarily target internal migrants, there is little investigation of whether trade liberalization fuels anti-migrant sentiment, perhaps because trade benefits workers in these contexts. In my first chapter, I argue that global economic integration causes nativist backlash in emerging economies even though it does not dislocate workers. I highlight an alternative mechanism: geographic labor mobility. Workers strategically migrate to access geographically uneven global economic opportunity. This liberalization-induced mobility interacts with native-migrant cleavages to generate nativist backlash. I explore these dynamics in the Indian textile sector, which experienced a positive shock following global trade liberalization in 2005. Using a difference-in-differences analysis, I find that exposed localities experienced increased internal migration and nativism, manifesting in anti-migrant rioting and nativist party support. This chapter demonstrates that liberalization can fuel nativism even when its economic impacts are positive. It also extends the literature on the backlash to globalization, which has grown rapidly in recent years, to the developing world.

In the second chapter, which is co-authored with Sonal Pandya and Sheetal Sekhri, I explore how global economic integration shapes governance in developing countries. This question is central to globalization's welfare implications, but existing work generates contradictory findings. In this second chapter, we analyze how liberalization of FDI shapes a critical input to governance: the allocation of bureaucratic talent. We present two competing hypotheses: politicians assign career-concerned bureaucrats to FDI-facing roles to maximize economic growth, or they prioritize career-constrained bureaucrats to facilitate rent-seeking. We leverage India's large and sudden 2005 FDI liberalization to identify FDI's causal effect on turnover of bureaucrats in the Indian Administrative Service (IAS). Our findings are consistent with increased politician rent-seeking. Bureaucratic turnover increases in FDI-exposed districts, driven by the movement of career-constrained bureaucrats. This pattern is pronounced in more corrupt states, in the presence of FDI from more corrupt countries, and FDI to produce for the local market. State legislators representing FDI-exposed constituencies see substantial growth in their personal assets, but only when their party controls the state government and when they are in districts with higher proportions of career-constrained bureaucrats. Finally, survey respondents in exposed areas report less confidence in politicians. This chapter's findings findings highlight a novel way that global economic integration strengthens politicians' motives to engage in rent-seeking. It also suggests a new explanation for why politicians in developing countries work hard to attract FDI despite weak economic voting: MNCs can be an appealing source of rents to fund clientelism.

In the third and final chapter, I focus on how domestic politics shape a crucial cross-border economic flow: international migration. In particular, I focus on the relationship between corruption and global flows of human capital. Existing research suggests that people concerned about corruption use elections to punish corrupt incumbents. I argue that when people grow concerned with corruption, they may turn to exit rather than voice, using emigration to escape corruption. Highly educated citizens in particular, who are most informed about corruption and hold valuable human capital, likely see exit as attractive in the face of persistent corruption. Using a wealth of micro-level data on potential emigration, I show that when people perceive widespread corruption, they are more likely to have taken concrete steps to emigrate. Advanced degree holders are much more likely to have prepared to emigrate in response to corruption. I also show that corruption-concerned potential emigrants choose less corrupt destination countries and are less likely to have faith, and participate, in electoral institutions. My argument and findings hold implications for the corruption literature and generate new questions about the relationship between emigration and accountability. They also show how domestic political conditions can shape globalization by generating human mobility.

PHD (Doctor of Philosophy)
globalization, domestic politics, international political economy, migration, foreign direct investment
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