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Compensation or Constraint? How Different Dimensions of Economic Globalization Affect Government Spending and Electoral Turnout

Abstract

This article extends theoretical arguments regarding the impact of economic globalization on policy making to electoral turnout and considers how distinct dimensions of globalization may produce different effects. It theorizes that constraints on government policy that reduce incentives to vote are more likely to be induced by foreign ownership of capital, while compensation through increased government spending is more likely (if at all) to be the product of structural shifts in production associated with international trade. Using data from twenty-three OECD countries from 1970–2007, the study finds strong support for the ownership-constraint hypothesis in which foreign ownership reduces turnout, both directly and – in strict opposition to the compensation hypothesis – indirectly by reducing government spending (and thus the importance of politics). The results suggest that increased foreign ownership, especially the most mobile capital flows, can explain up to two-thirds of the large declines in turnout over recent decades.

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Marshall, Department of Government, Harvard University (email: jlmarsh@fas.harvard.edu – corresponding author); Fisher, Department of Sociology, University of Oxford (email: stephen.fisher@sociology.ox.ac.uk). We are grateful to Mark Franklin for a copy of the aggregate data used in his book; to Nicholas Fawcett and especially Mark Pickup for advice on statistical modelling; and to Yves Dejaeghere, Nilesh Fernando, Mark Franklin, Torben Iversen, Philipp Rehm, Nils Steiner, Jack Vowles, Hugh Ward, three anonymous referees, and participants and presentations at Harvard University and the University of Oxford and the Elections, Public Opinion and Parties 2008 and American Political Science Association 2010 conferences for comments on earlier versions of the article. Data replication sets and online appendices are available at http://dx.doi.org/doi:10.1017/S0007123413000422

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