Economic and Ethnic Determinants of Trade Preferences: Evidence from India
Nikhar Gaikwad and Pavithra Suryanarayan
Thursday 04/02 at 4pm.
Join URL: https://nyu.zoom.us/j/424601862
In ethnically ranked societies, the gains from trade hold redistributive implications not only for individuals across economic classes but also for members of different ethnic groups. In this paper, we argue that trade provides new avenues of economic advancement for individuals belonging to ethnic groups that have historically been excluded from domestic labor markets and compartmentalized into lower-skilled occupations. In developing countries that hold a comparative advantage in producing lower-skilled labor-intensive goods, members of discriminated ethnic groups therefore stand to gain relatively more from an open economy. We present evidence from three large, post-election surveys of Indian voters from the period 1999 to 2009 to show that individuals belonging to disadvantaged caste and religious communities are significantly more likely to support trade liberalization. We then probe the mechanisms underlying this finding by using an original survey experiment on a nationally representative sample of Indian voters. We find that members of dominant ethnic groups focus exclusively on economic considerations while developing trade policy preferences. For members of discriminated groups, by contrast, ethnicity considerations are paramount and reinforce the effects of material self-interest. Our findings point to ethnicity as a key determinant of economic policy preferences regarding globalization for disempowered communities in ethnically segmented societies.