Trade and democracy in sub-Saharan African countries: a sector-based analysis

The trade literature mostly considers that openness drives democracy through exogenous economic forces that exacerbate divisions between elites. However, international trade also affects the interactions between elites and citizens, which influence democracy. The Heckscher-Ohlin-Samuelson theorem predicts that countries that export labour-intensive goods may see a rise in labour’s reward and a reduction of the gap between the incomes of labour and capital, fostering democracy as citizens gain economic power and become a counterweight to the elites. Despite being labour abundant, Sub-Saharan African (SSA) countries are still lagging in moving towards democracy. We analyse the effect of agricultural, manufacturing and mining goods exports on democracy in SSA countries, considering elite–citizen dynamic. We rely on two-stage least squares regressions on cross-sectional data, pooled two-stage least squares and system generalized method of moments estimation techniques on dynamic panel data with three different measures of democracy for robustness checks. We find no consistent significant effects of agricultural and mining exports on democracy. On the contrary, democratic institutions evolve alongside exports of manufactured goods. Trade composition, shaped by historical patterns of colonization in developing countries, offers insights into institutions. SSA countries should develop their manufacturing sector to pave the way for solid democratic institutions.