How Outsourcing Affects Bilateral Political Relations

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How Outsourcing Affects Bilateral Political Relations

Author Info

Polachek, Solomon W. () (State University of New York at Binghamton and IZA Bonn)

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Solomon William Polachek

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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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:
Handle: RePEc:iza:izadps:dp1334

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Find related papers by JEL classification:
F1 - International Economics - - Trade
F2 - International Economics - - International Factor Movements and International Business
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
M55 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Contracting Devices
O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-10-21 (All new papers)
NEP-POL-2004-10-21 (Positive Political Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Solomon W. Polachek, 1999. "Conflict and Trade: An Economics Approach to Political International Interactions," Peace Economics, Peace Science and Public Policy, Berkeley Electronic Press, vol. 5(2). [Downloadable!]
Polachek, Solomon W, 1997. "Why Democracies Cooperate More and Fight Less: The Relationship between International Trade and Cooperation," Review of International Economics, Blackwell Publishing, vol. 5(3), pages 295-309, August.

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