Can International Trade Change Minds?

Most economists believe that international trade provides economic benefits to both the exporting and importing countries. A large literature characterizes and estimates the welfare gains from trade, and identifies the mechanisms through which trade affects workers, firms and the aggregate economy. Some policymakers believe that international trade has effects beyond changing economic outcomes such as prices, expenditures, wages, employment and productivity. Trade may change individuals’ views and attitudes towards other countries and cultures. For example, individuals who have directly benefited from international trade by selling their production abroad may hold more cosmopolitan views and be more favorable towards the values of their buyers.

Of course, participation in international trade and an individual’s views and attitudes may simply be correlated. It is hard to estimate the causal impact of trade on views and attitudes because of the difficulty of finding a convincing counterfactual since substantial evidence suggests that exporters differ from non-exporters. It is also difficult to estimate this relationship because one needs to complement trade data with surveys on individual attitudes.

We hope to make progress on these issues and provide the first rigorous evidence on how exposure to trade with Western Democracies affects participants’ views and attitudes. We do this by utilizing the randomized allocation of export orders to rug-making firms in Fowa, Egypt, as described in Atkin, Khandelwal and Osman (forthcoming). More than five years after the initial randomization, and three years after our last follow up survey, we re-surveyed producers to collect information on their attitudes and world views. We developed a survey that focused on issues of economic equality, gender equality, information sources and international trade. Most importantly, given the geographic and historical context of our sample, we also asked questions about Western bias and attitudes towards terrorism. Our main hypothesis is that trade with Western democracies decreases anti-Western bias and support for terrorism.