A new study shows that areas in Europe hit hardest by trade saw a rise in support for nationalist parties
And one such trend folks have fixed on is globalization.
In a new working paper, Italo Colantone and Piero Stanig from Bocconi University looked into the relationship between the impact of globalization and electoral outcomes in fifteen European countries between 1988 and 2007. More specifically, they looked at the relationship between the economic shock due to the surge of imports from China and voter behavior.
They found that a stronger import shock from China at the district level was linked to an increase in support for nationalist parties, a general shift to the right in the electorate, and an increase in support for radical right parties.
To measure the effects of trade, the team built a region-specific indicator based on the idea that different regions' exposure to growth in Chinese exports depends on what industries are concentrated in each region. By looking at those regional industry concentrations and national-level trade data for the products of the various industries, the researchers were able to estimate the overall impact of Chinese trade on different regions.
In the paper, the team found that the shock from an increase of imports from China to Europe "had a heterogeneous impact across European regions, depending on their historical employment composition." Using data from 76 legislative elections across the fifteen countries, they found that areas with a stronger regional exposure to the trade shock saw a larger increase in support for nationalism and the radical right than regions with less trade exposure.
The countries examined by the team include Austria, Belgium, Findland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. All are EU members save Norway and Switzerland.
Europe is not the only part of the world where trade shocks have been correlated with political shifts.
Back in November, economists David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi found that areas in the US hit the hardest by trade shocks were more likely to shift away from centrist politicians. Notably, the move to more extreme political positions wasn't caused so much by incumbent politicians shifting their views away from the center, but rather the electorate voting in new representatives who espoused more left- or right-leaning ideas.
Although the authors of the paper looked at elections between 2002 and 2010, trade was a huge issue in the 2016 US presidential election. We saw a similar pattern with the emergence of nontraditional candidates like Donald Trump and - to a much lesser degree, but still espousing a shift away from the center - Democratic candidate Bernie Sanders. Both pointed a finger at trade with China.
Even Hillary Clinton, more centrist than either Trump or Sanders, eventually abandoned support of the Trans-Pacific Partnership deal - after previously calling it the "gold standard" of trade agreements - ostensibly in an attempt to address voters' concerns.
Ultimately, we should note that a trade shock is, of course, not the sole variable affecting voters' decisions. The relationship of economics, race, social trends, institutions, and politics in both Europe and the United States is far too complex to be limited to two studies - not to mention the fact that sometimes these factors are interconnected. And even within economics, trade is not the whole story. Automation, for example, has also affected American jobs. In short, trade is just one part of a bigger picture.
But these studies do raise questions about not only how politicians will continue to respond during elections to voters' grievances amid a shifting socioeconomic landscape, but more importantly how they will respond when it comes to actually making policy. And regarding that, Colantone and Stanig offered their own analysis.
"The main message of this paper is that globalization might not be sustainable in the long run in the absence of appropriate redistribution policies aimed at compensating the so-called 'losers' of globalization: those segments of society that bear most of the adjustment costs of international trade," the authors wrote in their paper.
They continued (emphasis ours):
"The unequal sharing of the welfare gains brought about by globalization has resulted in widespread concerns and a general opposition to free trade. Such a sentiment is interpreted and promoted especially by nationalist and radical-right parties, whose policy proposals tend to bundle support for domestic free market policies with strong protectionist stances. This policy bundle has started to be referred to as 'economic nationalism' also in public discussion. As parties offering such a policy mix become increasingly successful, we might see the end - and possibly even a reversal - of globalization."
Check out the full paper here.