Offshoring’s Effect On Economic Nationalism

Official URL: https://risc01.sabanciuniv.edu/record=b3200014

This thesis investigates the effect of offshoring (companies moving production to abroad) on the economic nationalism positions of the political parties (total, left, and right parties). It analyzes data on the manifestos of political parties and constructs economic nationalism (opposition to free trade, isolationism, laissez-faire on domestic economic issues, and a strong nationalist stance) score of 42 countries’ left and right parties for 216 elections between 1992 and 2017 by utilizing Comparative Manifesto Project data, and offshoring variable is constructed from industry-level EORA data by focusing on trade in intermediates (foreign part of the production). I expect to find increasing offshoring to increase the economic nationalism position of political parties. Based on these measures, the thesis quantitatively analyzes the relationship and finds that while increasing offshoring increases the economic nationalism position (supportive of economic nationalism) for right parties, it decreases for left parties (opposed to economic nationalism). In the interactive models, I found partial evidence that, with an increasing level of democracy, offshoring contributes to the increase in economic nationalism positions for both left- and right-wing political parties. However, the models demonstrate stronger effects on the economic nationalism positions of left-wing parties, while providing only partial results for right-wing parties. These findings provide empirical evidence that political parties, depending on their ideological position, react differently to increasing offshoring and propose different policies to mitigate the effects of offshoring to capture the votes of (primarily) globalization losers, and level of democracy plays important role.