The Rise of Populism in Germany
The past decade has seen a steady rise of mainstream populism across the political landscape in many western societies. One common theme among these movements seems to be a rejection of, or at least a significant skepticism of, economic globalization and a propensity for protectionist thinking. The election of the AfD as the third strongest party to the German parliament during the 2017 federal elections shows that this trend is as real for one of the most globally interconnected economies, as it is in the United Kingdom or the United States.
There are, of course, good reasons for engaging in international trade like avoiding local scarcities, as well as, product specialization. The resulting optimized allocation of scarce production factors benefits all the economies involved.
However, while the overall positive effects of trade empirically hold true on a macro level, that doesn’t mean that there aren’t segments of the population losing out on trade.
With China, and other countries like it, now specializing in producing labor-intensive goods, and developed countries like Germany focusing on producing and exporting more capital-intensive goods, the labor requirement shift has decreased wages and overall employment in Germany and many other developed countries.
Measuring the Effects of Trade on Voting
Analyzing the regression of trade exposure* on the voter share for the AfD in the 2013 and 2017 elections, we saw that:
- Higher trade exposure through import penetration did indeed lead to a statistically significant increase in voter share for the AfD party during the last two German elections.
Regressions like this were run for all other major German parties, as well.
- Most notably affected was the German labor party SPD, which consistently lost significant vote shares in districts facing higher levels of import penetration.
- At the same time, a significant effect of trade exposure on the vote shares of traditional German right-wing parties like the NPD, as previously found by academic literature studying German data prior to the formation of the AfD, could not be found anymore.
This suggests that the AfD successfully managed to establish itself as the predominant German anti-globalization party, catching shares of voters whose economic globalization frustration had previously led them to fringe parties like the NPD.
The Road to Working Policy Solutions
It is important to remember that our paper only examines the negative side of trade exposureby looking specifically at the impact of low-wage import penetration in Germany. Germany does, after all, boost a significant trade surplus and so it does stand to reason that more electoral districts in Germany profit from the positive and job-creating effects of export exposure, than suffer from the negative impact of import penetration.
Still, an argument could be made, that people’s behavior is influenced more by negative impacts, while they take positive effects for granted, leading to the electoral success of an anti-globalization party in Germany despite the comparatively very high level of welfare.
In accepting the truth that trade and globalization do not only produce winners on all sides and in understanding the mechanisms of how trade can influence people’s voting decisions and drive them to more populist, right-wing parties, we gain the power to ultimately devise answers and hopefully provide working policy solutions to these trends in the future.
*To gauge the exact impact trade exposure had on a party’s vote share, the author of our paper created a new data set for the 2013 and 2017 German federal elections. The basis for this data set is a total of 586 German electoral districts (Wahlkreise), observed throughout both elections. For each of these districts we created a measure of trade exposure based on Chinese import penetration, as well as, observed that district’s party share voting behavior. Together with control variables such as a district’s demographics and socio-economic factors, we ran a sequence of mathematical linear regression models to examine the true statistical relationship between the individual data points.