Globalization and Domestic Politics: Party Politics and Preferences for CAFTA in Costa Rica Raymond Hicks Helen V. Milner Dustin Tingley Princeton University

Background Many developing countries have chosen to liberalize their trade regimes. If citizens in a developing country could vote on trade liberalization, what would influence their vote? Costa Rican referendum on CAFTA in 2007 gives us an opportunity to ask this question. We focus on the role of ‘bottom-up’ economic preferences and ‘top-down’ preferences generated by organized political parties.

Party Politics and Costa Rica PLN and PAC both left parties, but are contrasts PLN established party, PAC very new –PLN more organized than PAC, larger geographic reach PLN pro-CAFTA, PAC wanted renegotiation of treaty, and advocated for voting No in referendum

Economic Effects of CAFTA-DR Negative for low-skilled –Low-skilled industries see larger tariff cuts –Greater competition from US agriculture –Increased telecommunications costs in rural areas Positive for high-skilled –Little tariff changes in high-skilled industries –Increased foreign direct investment in high- skilled industries –Decreased cost of telecommunications in urban areas

Individual preferences over CAFTA Bottom-up individuals form preferences based on perceived economic consequences Top-down Parties can provide cues on complicated policy areas and frame referendum proposals as being in the interests of particular groups Parties with greater organizational capacity should be better able to influence voters through cueing and framing, and influence local political actors (mayors) to lobby polities, provide transportation to polls

Hypotheses Cantons with more voters employed in low skill occupations should be most likely to oppose CAFTA. Controlling for economic factors that affect preferences: differences in individual support across members of pro- and anti-CAFTA parties. PLN will have a larger influence on individual voter preferences than the PAC. cantons where the PLN was especially successful at winning votes and organizing prior to 2007 are the ones most likely to support CAFTA.

Analysis Road Map Collected range of qualitative evidence on party involvement in CAFTA: the PLN cued, framed, and used its organizational muscle (see paper for details) Collected public opinion data Collected canton level referendum data

Public opinion data Universidad de Costa Rica survey, July and August DV: Preferences for CAFTA, IV’s: political (vote in ’06 Prez election), economic demographics (income/education), gender. Party variables highly significant, large effect, and in predicted direction Positive effect of income but relatively small influence

Referendum Analysis Collected canton level (81) referendum results, electoral return data from 2002 (earliest available) and 2006 legislative elections, and most recent census data. Constructed variables measuring canton level skill level using detailed (4 digit) industry level employment codes. Also collected educational levels (highly correlated with skill level measure) and unemployment.

Results 1 Lower skill=less support for CAFTA PLN vote share in 2006 positive and highly significant, PAC negative but generally not significant PLN vote share in 2002 insignificant Straight difference between 2002 and 2006 PLN vote shares, and % (’02) difference significant and +. Still hard to say this identifies the influence of the PLN

Results 2 Dichotomize party change variables at median (high change=treated, low change=control) Nearest neighbor matching on skill level Post matching, we interpret treatment as indicative of high effort by party Difference in means between matched pairs using only common support Average difference in vote between cantons with high/low PLN change: 6% Also conducted formal sensitivity analysis

Conclusions First paper to investigate sources of citizen preferences on a particular trade agreement in the developing world Studied top down and bottom up sources of preferences Opposite finding from SS predictions- details of trade treaty matter Political parties can play an important role- but levels of organization appear to matter Hard to establish causal influence of parties with our data

Future Research Collect additional data on party activities in CR during the referendum campaign and afterwards (where did they focus resources, more information on how they tailored frames to particular populations, etc.). Interview party leaders, local party operatives on role in referendum GIVEN CAFTA, will PLN engage in compensation programs to smooth effects of liberalization?

SUPPLEMENTARY SLIDES

PLN and PUSC Changes The decline of the PUSC (right party) between 1998 and 2006 may have led those with pro-CAFTA-DR preferences to simply migrate to the PLN. More PUSC supporters switched to the PAC than switched to the PLN. In January, prior to the election, three former PUSC party leaders defected to the PAC, whose leaders hoped the move would help garner the leftist party votes from the PUSC (Murillo, 2006a). PUSC encouraged voters to vote for the PAC candidate in the Presidential election and the PUSC candidates in the legislative elections (Wilson, 2007). No significant correlations between our changes in PUSC vote share (discussed below) and changes in PLN vote share.