Baccini, Leonardo and Urpelainen, Johannes
Democratization, New Leaders, and the Need for Economic Reform:
Can Preferential Trading Agreements Help?
Can international institutions help leaders commit economic reform? In this article, we examine
how leaders use preferential trading agreements with major powers (European Union and
the United States) to promote liberal economic policies. We argue that under democratization,
new leaders benefit the most from credible commitment. Using original data on treaty negotiations,
our empirical analysis shows that under democratization, leader change greatly increases
the probability that the government of a developing country begins treaty negotiations. We
also demonstrate that preferential trading agreements are accompanied by liberalization in different
sectors of the economy, and this effect is most pronounced if it follows a leader change.
These findings support the notion that international institutions enable credible commitment to
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