How to increase support for international trade liberalization?

The embedded liberalism hypothesis suggests that governments can increase public support for economic globalization by providing stronger social safety nets. Studies so far have focused on the role of government-sponsored social safety nets (i.e. the welfare state). However, non-governmental social safety nets in the form of social capital could also positively affect individual preferences vis-à-vis economic openness.

Relying on existing survey data we test the argument that individuals benefiting from more social capital are more supportive of economic globalization. As in the literature on social capital, we divide social capital into components such as trust in other people and associational membership. We thereby argue that trust is a proxy for those people who in general are less risk averse than people with lower levels of trust. More trustful people therefore tend to be less scared of the future and would not perceive threats from globalization as intensely as people with lower levels of trust. In contrast, ‘membership in associations’ should measure the ability of a person to deal with negative situations, i.e. the loss of one’s job due to globalization. Thus trust should make people think of globalization as something that is not risky, whereas ‘membership in associations’ should make people believe that they can handle the risks if they occur.

Testing these explanations is important to understanding whether there are other forms of compensation other than government sponsored social safety-nets that can change people's negative attitudes towards international trade liberalization.