Make Trade Not War? - Archive ouverte HAL Access content directly
Journal Articles Review of Economic Studies Year : 2008

Make Trade Not War?

(1, 2) , (3, 1, 4) , (5, 4)
1
2
3
4
5

Abstract

This paper analyses theoretically and empirically the relationship between military conflicts and trade. We show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial, military conflicts reduce trade, and leaders are rational. When war can occur because of the presence of asymmetric information, the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains. However, countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict. We test our predictions on a large data set of military conflicts on the 1950–2000 period. Using different strategies to solve the endogeneity issues, including instrumental variables, we find robust evidence for the contrasting effects of bilateral and multilateral trade openness. For proximate countries, we find that trade has had a surprisingly large effect on their probability of military conflict.

Keywords

Fichier principal
Vignette du fichier
2008_Make Trade not War .pdf (402.11 Ko) Télécharger le fichier
Origin : Explicit agreement for this submission

Dates and versions

hal-03415798 , version 1 (04-10-2022)

Licence

Attribution - NoDerivatives - CC BY 4.0

Identifiers

Cite

Philippe Martin, Thierry Mayer, Mathias Thoenig. Make Trade Not War?. Review of Economic Studies, 2008, 75 (3), pp.865 - 900. ⟨10.1111/j.1467-937X.2008.00492.x⟩. ⟨hal-03415798⟩
574 View
7 Download

Altmetric

Share

Gmail Facebook Twitter LinkedIn More