Conflict and Trade

Author:

Polachek Solomon William1

Affiliation:

1. Economics Department, University of North Carolina at Chapel Hill and Hoover Institution, Stanford University

Abstract

This article applies microeconomic theory to illustrate the plausibility of a relationship between international trade and conflict. It is argued that the mutual dependence established between two trading partners (dyads) is sufficient to raise the costs of conflict, there-by diminishing levels of dyadic dispute. This hypothesis of a negative relationship between conflict and trade is tested using a ten-year thirty-country cross section merged from four separate data sources. It is found that ceteris paribus countries with the greatest levels of economic trade engage in the least amounts of hostility. In fact, a doubling of trade on average leads to a 20% diminution of belligerence. This relationship appears robust, holding even more strongly when statistical adjustments are made for causality.

Publisher

SAGE Publications

Subject

Political Science and International Relations,Sociology and Political Science,General Business, Management and Accounting

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