Many low- and middle-income countries pursue trade liberalisation to enhance structural transformation and growth. However, globalisation policies are often met with debate and backlash, particularly concerning their social and political repercussions. This research aims to fill a gap in the current literature by exploring the relationship between trade exposure and dimensions of social cohesion such as trust, identity, and participation. This project explores this relationship using microdata in Uganda with the goal of answering questions surrounding the positive and negative impacts of globalisation policies in a low-income country.
To answer these questions, the project constructs measures of firm, worker, and household trade exposure. A rich set of microdata covering the universe of formal workers and firms is combined with detailed household surveys and data on public attitudes to obtain a measure of trade exposure. Changes in exchange rates then provide plausibly exogenous variation to social cohesion (and labour market) outcomes. Analysis done at multiple levels allows the project to assess heterogeneous effects of trade liberalisation policies and to consider the mechanisms behind trade exposure and social cohesion.
Gaining insight on globalisation and the channels through which it impacts social cohesion will help policymakers to better understand individual preferences. Furthermore, policy debates surrounding globalisation are common, and information on the responses to trade liberalisation in a low-income country will equip policymakers with information about how to create and amend policies in order to limit the negative impacts of trade liberalisation while still fostering economic growth. This project also considers the impacts of trade shocks and will inform policymakers of how various shocks and policies impact public attitude as a whole and how they impact parts of the public heterogeneously. Insight on unequal trade exposure and its outcomes could help policymakers address ongoing issues of inequality within their countries.