Dani Rodrik – Why Does Globalization Fuel Populism?

Harvard economist Dani Rodrik, a leading researcher in the field of the political economy of globalization, came out with a new working paper this week where he suggests a model to answer some open questions on the link between globalization and populism.

Rodrik tackles five different points:

• What are the mechanisms through which globalization fuels populism?
• How do the different facets of globalization (trade, finance and migration) work their way through the political system?
• Why does globalization appear to have an outsized effect on politics compared to, say, technological change or regular business cycles?
• Why have nativist, ethno-nationalist populists been the ones to take advantage?
• Could it be that populism is rooted not in economics but in a cultural divide?

Rodrik identifies four mechanisms of how globalization shocks affect political outcomes that attempt to provide a synthesized answer to these questions.

1. “A direct effect from economic dislocation to demands for anti-elite, redistributive policies”
2. “An indirect demand-side effect, through the amplification of cultural and identity division”
3. “A supply-side effect through political candidates adopting more populist platforms in response to economic shocks”
4. “Another supply-side effect through political candidates adopting platforms that deliberately inflame cultural and identity tensions in order to shift voters’ attention away from economic issues”

The full paper is to be found on his website – here.