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The Geography of Conflicts and Regional Trade Agreements

Author

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  • Philippe Martin
  • Thierry Mayer
  • Mathias Thoenig

Abstract

In addition to standard trade gains, regional trade agreements (RTAs) can promote peaceful relations by increasing the opportunity cost of conflicts. Country pairs with large trade gains from RTAs and a high probability of conflict should be more likely to sign an RTA. Using data from 1950 to 2000, we show that this complementarity between economic and politics determines the geography of RTAs. We disentangle trade gains from political factors by a theory-driven empirical estimation and find that country pairs with higher frequency of past wars are more likely to sign RTAs, the more so the larger the trade gains. (JEL D72, D74, F15, N70)

Suggested Citation

  • Philippe Martin & Thierry Mayer & Mathias Thoenig, 2012. "The Geography of Conflicts and Regional Trade Agreements," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 1-35, October.
  • Handle: RePEc:aea:aejmac:v:4:y:2012:i:4:p:1-35
    Note: DOI: 10.1257/mac.4.4.1
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    Cited by:

    1. Kangni Kpodar & Patrick Imam, 2016. "Does a Regional Trade Agreement Lessen or Worsen Growth Volatility? An Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 949-979, November.
    2. Jaime de Melo & Mariana Vijil, 2014. "Barriers to Trade in Environmental Goods and Environmental Services: How Important Are They? How Much Progress at Reducing Them?," Working Papers 2014.36, Fondazione Eni Enrico Mattei.
    3. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2015. "Trade costs, conflicts, and defense spending," Journal of International Economics, Elsevier, vol. 95(2), pages 305-318.
    4. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, Elsevier.
    5. Vincenzo Bove & Leandro Elia & Petros G. Sekeris, 2014. "US Security Strategy and the Gains from Bilateral Trade," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 863-885, November.
    6. Fenske, James & Kala, Namrata, 2017. "1807: Economic shocks, conflict and the slave trade," Journal of Development Economics, Elsevier, vol. 126(C), pages 66-76.
    7. Juan Duque & Michael Jetter & Santiago Sosa, 2015. "UN interventions: The role of geography," The Review of International Organizations, Springer, vol. 10(1), pages 67-95, March.
    8. Marco Fugazza & Frédéric Robert-Nicoud, 2012. "The ‘Emulator Effect’ Of The Uruguay Round On United States Regionalism," UNCTAD Blue Series Papers 51, United Nations Conference on Trade and Development.
    9. Crozet, Matthieu & Hinz, Julian, 2016. "Friendly fire - the trade impact of the Russia sanctions and counter-sanctions," Kiel Working Papers 2059, Kiel Institute for the World Economy (IfW).
    10. Jaime de Melo & Mariem Nouar & Jean-Marc Solleder, 2017. "Integration along the Abuja road map: A progress report," WIDER Working Paper Series 103, World Institute for Development Economic Research (UNU-WIDER).
    11. Matthieu Crozet & Julian Hinz, 2016. "Collateral Damage: The impact of the Russia sanctions on sanctioning countries’ exports," Working Papers 2016-16, CEPII research center.
    12. Hadjiyiannis, Costas & Heracleous, Maria S. & Tabakis, Chrysostomos, 2016. "Regionalism and conflict: Peace creation and peace diversion," Journal of International Economics, Elsevier, vol. 102(C), pages 141-159.
    13. Rotunno, Lorenzo, 2016. "Political stability and trade agreements: Evidence for ‘endgame FTAs’," European Journal of Political Economy, Elsevier, vol. 45(C), pages 133-148.
    14. Jaime DE MELO & Yvonne TSIKATA, 2014. "Regional integration in Africa: Challenges and prospects," Working Papers P93, FERDI.
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    16. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.
    17. Hinz, Julian, 2017. "The ties that bind: Geopolitical motivations for economic integration," Kiel Working Papers 2085, Kiel Institute for the World Economy (IfW).
    18. repec:bla:reviec:v:25:y:2017:i:1:p:195-232 is not listed on IDEAS
    19. Juan C. Duque & Michael Jetter & Santiago Sosa, 2013. "The Determinants of UN Interventions. Are There Regional Preferences?," DOCUMENTOS DE TRABAJO CIEF 010731, UNIVERSIDAD EAFIT.
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    21. Rahel Aichele & Gabriel Felbermayr & Inga Heiland, 2014. "Going Deep: The Trade and Welfare Effects of TTIP," CESifo Working Paper Series 5150, CESifo Group Munich.
    22. Florian Mölders, 2016. "On the Path to Trade Liberalisation: Political Regimes in Trade Negotiations," The World Economy, Wiley Blackwell, vol. 39(7), pages 890-924, July.
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F15 - International Economics - - Trade - - - Economic Integration
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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