Can exposure to import competition explain the growing share of votes for the Sweden Democrats?

Sammanfattning: Around the world the rise of populist and anti-globalization forces can be seen. In Sweden this movement is prevalent as well, as the populist party the Sweden Democrats is experiencing a substantial increase in support. The reason for this is a widely debated subject amongst scholars. One potential explanation for the rise of populism could be the increased imports from China in recent years. Previous studies show evidence that the Chinese import penetration has had an impact on the rise of populism in United States, yet no research on this topic exist for Sweden so far. Thus, this paper examines whether increased Chinese imports to the Swedish market has impacted the rise of the Sweden Democrats. This is accomplished by using the prominent framework developed by Autor et al. (2013) to calculate the so called “China Shock” and then regressing the Chinese import shock on change in the election results of the Sweden Democrats over the time period 1998-2018. The study takes into account both the short- term and long-term effects of the rise of the Sweden Democrats since it looks at time periods close to China’s entry to the WTO and time periods that are further away from their entry. Our results indicate that there is some significant effect from the import shock on the votes for the Sweden Democrats both in the short-run and in the long-run. Moreover, we find that the long-term effects seem to have had a larger impact than the short-term effect. Although our data is too limited to assert anything, a cautionary estimate of the import shock indicates an impact of two percentage points between high-shock county and low-shock county 2010 to 2014.