The Social Construction of Policy Reform: Economists and Trade Liberalization Around the World

We argue that the global spread of ideas contributes to trade liberalization. Building on insights from a rich case-based literature, we suggest an explicit mechanism of trade policy diffusion: US-trained Ph.D. economists, who share a common belief in the benefits of free trade, and who operate with varying degrees of political influence around the world. We offer the first cross-national test of the impact of economists on trade liberalization using a unique dataset recording the country of residence of all 6,493 foreign-based, US-trained American Economic Association (AEA) members over the period 1981–1997. Specifically, we measure the influence of economists on the timing and extent of trade liberalization. First, we endogenize the date of trade liberalization using hazard and probit models. Controlling for alternative diffusion mechanisms and other confounding variables, our results suggest that economists significantly speed up the reform process. Second, we find that countries with greater numbers of economists are more open to trade at the end of the period. All of our results are robust to an instrumental variables strategy that employs the number of Fulbright grants allocated by the United States as an instrument for the number of US-trained economists.