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Title:Does trade integration contribute to peace? PDF Logo
Authors:Pyun, Ju Hyun
Lee, Jong-Wha
Issue Date:2011
Series/Report no.:Working Papers, University of California, Department of Economics 11,7
Abstract:We investigate the effect of trade integration on interstate military conflict. Our empirical analysis, based on a large panel data set of 243,225 country-pair observations from 1950 to 2000, confirms that an increase in bilateral trade interdependence significantly promotes peace. It also suggests that the peace-promotion effect of bilateral trade integration is significantly higher for contiguous countries that are likely to experience more conflict. More importantly, we find that not only bilateral trade but global trade openness also significantly promotes peace. It shows, however, that an increase in global trade openness reduces the probability of interstate conflict more for countries far apart from each other than it does for countries sharing borders. The results also show that military conflict between countries significantly reduces not only bilateral trade interdependence but also global trade integration. The main finding of the peace-promotion effect of bilateral and global trade integration holds robust when controlling for the natural and geopolitical characteristics of dyads of states that may influence the probability of military conflict and for the simultaneous determination of trade and peace.
Subjects:Trade
Globalization
Military conflict
Peace
War
JEL:D74
F15
F51
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, UC Davis

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