The geography of conflicts and free trade agreements - Archive ouverte HAL Access content directly
Preprints, Working Papers, ... Year :

The geography of conflicts and free trade agreements

(1) , (1) , (2)
1
2

Abstract

We analyze the interaction of economic and political determinants of free trade agreements (FTA). In addition to standard trade gains, FTAs can promote peaceful relations by offering a political forum and by increasing the opportunity cost of conflicts that disrupt trade. If policy makers believe in such pacifying effects of FTAs, country-pairs with large trade gains from FTAs and high probability of conflict are more likely to sign a FTA. Using data on the 1950-2000 period, we show that this complementarity between economic and political gains is at work in the geography of FTAs. Country pairs characterized by a high frequency of old wars - which we use as a proxy of the probability of conflict - are shown to be more likely to sign FTAs, the more so the higher the trade gains from a FTA. These trade gains are estimated by a theory-driven empirical strategy to disentangle them from the political factors. We also show that, contrary to old wars, recent wars make it more difficult to negotiate a FTA. This suggests the existence of windows of opportunity to lock-in FTAs and peace. Finally multilateral trade openness, because it reduces the opportunity cost of a bilateral conflict, increases the political incentive to sign FTAs.
Fichier principal
Vignette du fichier
cepr-dp7740.pdf (1.43 Mo) Télécharger le fichier
Origin : Files produced by the author(s)
Loading...

Dates and versions

hal-00973014 , version 1 (03-04-2014)

Identifiers

Cite

Philippe Martin, Thierry Mayer, Mathias Thoenig. The geography of conflicts and free trade agreements. 2010. ⟨hal-00973014⟩
1063 View
1333 Download

Share

Gmail Facebook Twitter LinkedIn More