Arbeitspapier
Arming in the Global Economy: The Importance of Trade with Enemies and Friends
We analyze how trade openness matters for interstate conflict over productive resources. Our analysis features a terms-of-trade channel that makes security policies trade-regime dependent. Specifically, trade between two adversaries reduces each one’s incentive to arm given the opponent’s arming. If these countries have a sufficiently similar mix of initial resource endowments, greater trade openness brings with it a reduction in resources diverted to conflict and thus wasted, as well as the familiar gains from trade. Although a move to trade can otherwise induce greater arming by one of them and thus need not be welfare improving for both, aggregate arming falls. By contrast, when the two adversaries do not trade with each other but instead trade with a third (friendly) country, a move from autarky to trade intensifies conflict between the two adversaries, inducing greater arming. With data from the years surrounding the end of the Cold War, we exploit the contrasting implications of trade between enemies versus trade between friends to provide some evidence that is consistent with the theory.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 7500
- Klassifikation
-
Wirtschaft
Distribution: General
Conflict; Conflict Resolution; Alliances; Revolutions
Trade: General
International Conflicts; Negotiations; Sanctions
National Security; Economic Nationalism
- Thema
-
resource insecurity
interstate disputes
conflict
arming
trade openness
comparative advantage
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Garfinkel, Michelle R.
Syropoulos, Constantinos
Yotov, Yoto V.
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2019
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Garfinkel, Michelle R.
- Syropoulos, Constantinos
- Yotov, Yoto V.
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2019
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