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How Outsourcing Affects Bilateral Political Relations

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  • Polachek, Solomon

    ()
    (Binghamton University, New York)

Abstract

One issue the literature neglects is how outsourcing stimulates trade (imports, exports and foreign direct investment), thereby affecting political relations. However, at least as far back as 1750, economic philosophers such as Baron de Montesquieu in his L’Esprit des Lois, argued, “peace is the natural effect of trade.” This paper first reviews this literature and then presents econometric evidence. The evidence integrates political international relations events data with economics data on bilateral trade. The resulting econometric models show that trade between nations fosters more peaceful dyadic relations.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1334.

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Length: 19 pages
Date of creation: Oct 2004
Date of revision:
Publication status: published in: Indian Journal of Economics and Business, 2004, 3 (special issue), 29-42.
Handle: RePEc:iza:izadps:dp1334

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Related research

Keywords: cooperation; outsourcing; conflict; international trade; peace;

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References

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  1. Polachek, Solomon W, 1997. "Why Democracies Cooperate More and Fight Less: The Relationship between International Trade and Cooperation," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 295-309, August.
  2. Polachek Solomon W., 1999. "Conflict and Trade: An Economics Approach to Political International Interactions," Peace Economics, Peace Science, and Public Policy, De Gruyter, De Gruyter, vol. 5(2), pages 1-32, April.
  3. Solomon W. Polachek, 2002. "Trade-Based Interactions: an Interdisciplinary Perspective," Conflict Management and Peace Science, Peace Science Society (International), Peace Science Society (International), vol. 19(2), pages 1-21, September.
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Cited by:
  1. Knill, April & Lee, Bong-Soo & Mauck, Nathan, 2012. "Bilateral political relations and sovereign wealth fund investment," Journal of Corporate Finance, Elsevier, Elsevier, vol. 18(1), pages 108-123.

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