Do Democracies Trade More Freely?

hours of conversation on this (and many other) topic(s). I also thank the participants at and organizers of the Mitsui Conference on Economic Freedom held in Tokyo in 1999, where an early draft of this paper was presented. Lastly, thanks to the editor, Bob Pahre for his suggestions and repeated careful readings. Do democracies trade more freely? If so, what are the characteristics of the demo-cratic polity that are relevant to trade policy? This chapter surveys the empirical evidence to address the \u85rst question, and presents a simple model of trade and politics to address the second. Democracies are, in general, characterized by divided polities. Two speci\u85c forms of this divided polity- separation of powers across decision makers and electoral accountability of leaders- are key to the trade-liberalizing tendencies of these regimes. The presence of a divided polity alters the reversion points- which in turn shifts the agendas for trade liberalization. The e¤ect is to make democracies both more willing to cooperate in Preferential Trading Agreement (PTA) formation, to unilaterally liberalize, as well as better able to extract concessions from non-democracies. Divide