Job Market Paper (PDF)

One of the most notable characteristics of increased global trade integration has been increased subnational variation in the benefits and costs of globalization. While political responses to these uneven distributional outcomes in democracies have drawn increasing attention, we know little about how authoritarian regimes are able to manage the heterogeneous effects of globalization. I argue that economic interdependence presents a double-edged sword for authoritarian regimes. Openness facilitates the economic growth necessary for maintaining popular and elite support. At the same time, uneven subnational integration into global markets can pose both short and long-term risks to authoritarian stability. I theorize that authoritarian regimes maintain stability amidst economic interdependence through a mix of top-down directives and selective policy devolution, and that global crises can provide political opportunities for economic reforms to reduce the exposure to future crises, partially attenuating the risks of continued interdependence. To test this theory, I create a subnationally-disaggregated measure of export dependency for China, based on the location and industrial classification of all Chinese firms, combined with product-level data on changes in US imports following the 2008 financial crisis. Leveraging the crisis as an exogenous shock, I show that, contrary to expectations, the Chinese regime used declining exports as part of a geographical reallocation of government investment, away from regions more negatively impacted by the crisis. I complement this with panel data analysis and case evidence from field interviews. These findings advance understanding of the political effects of uneven subnational globalization, and contribute to our theoretical models of how authoritarian regimes can deepen trade integration while maintaining political stability. They also have practical implications for understanding the drivers of China's trade and industrial policies.