Academic journal article Contemporary Economic Policy

Political Affiliation and Perceptions of Trade: Examining Survey Data from the State of Georgia

Academic journal article Contemporary Economic Policy

Political Affiliation and Perceptions of Trade: Examining Survey Data from the State of Georgia

Article excerpt

1. INTRODUCTION

Frequently, the opinions of policymakers and the public do not mirror the views of many economists who believe that free trade is a desirable goal. Noneconomists acknowledge the associated benefits and indicate majority support for trade (Fuller and Geide-Stevenson, 2003), yet policymakers and the public often express hesitancy; for example, recent polls suggest that the public favors trade with stipulations, particularly side-agreements concerning labor and environmental standards (Chicago Council on Foreign Relations, 2005: Warf and Kull, 2001). Trade policy is formulated based on policymakers' views and opinions, which are likely to be influenced by constituent preferences. Alternatively, constituents may align themselves with a political party due to their views on other issues and then take cues from party platforms when formulating opinions concerning trade. In either case, it is expected that party affiliation is correlated with an individual's opinion regarding trade.

Neoclassical theory predicts that while trade liberalization results in detrimental outcomes for some individuals, the removal of trade barriers is, on net, welfare improving. Accordingly, an individual's support for trade is expected to decrease as the perceived probability of experiencing a negative trade-related outcome rises. Furthermore, one might anticipate that support for trade depends on an individual's level of risk aversion and the stake they stand to lose if, in fact, a negative outcome is realized. Thus, for the individual, concerns over community and national welfare may be tertiary, and when formulating opinions on trade, individuals may consider the likelihood that they will suffer a negative outcome and, if so, the potential associated losses.

Several papers examine the determinants of trade policy preferences (Hoffman, 2005; Mayda and Rodrik, 2005; O'Rourke and Sinnott, 2001; Scheve and Slaughter, 2001a 2001b, 2006). Findings generally support the predictions of neoclassical trade theory; however, these studies, with the notable exception of Hoffman (2005), fail to consider the potential influence of party affiliation. Using Program on International Policy Attitudes/Knowledge Networks data, Hoffman finds that party affiliation influences opinions on particular trade-related events. However, this may reveal more about opinions of the particular events and involved parties than it does about general perceptions of trade. For example, Hoffman finds Democrats more likely than Republicans to hold favorable opinions of North American Free Trade Agreement, which was supported by Bill Clinton but negotiated by the George H.W. Bush administration, and Republicans more likely than Democrats to view the 2002 "safeguard" steel tariffs, enacted by George W. Bush, in a positive light. We seek to reduce issue-specific influences by first examining whether responses to seven trade-related questions independently correlate with party affiliation or political conservatism/liberalism. We then consider whether a composite measure of trade preferences (labeled as a trade perceptions index [TPI]), which is constructed using the responses to the seven trade-related questions, correlates with party affiliation or political conservatism/liberalism.

Our findings support and extend the literature. Party affiliation is found to be significantly correlated with trade policy preferences, in general, and for several of the specific trade-related issues. Republicans are more likely to favor trade compared to independents and Democrats. These individuals are more likely to agree that trade creates jobs domestically, improves foreign relations, and strengthens the global economy. They also are more likely to disagree with characterizations of trade leading to worker exploitation in developing nations, environmental degradation, and increased income inequality. Conservatives are also more likely to support trade. …

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