The Effect of Internal and External Conflicts on the Country Trade and Economic Growth: Case from Emerging and Developed Countries

The current study investigates the impact of internal conflicts and external conflicts on the overall trade of a country, imports and exports in both developed and emerging markets. The study has used 128 countries for the estimation with data collected from the world bank for the period of 1996 and 2016 using the Hausman test. The results of the random effect showed that internal conflicts and external conflicts have negative impact on the imports and exports of countries in both developing and developed economies. The findings of the current study have several implications for both academicians and practitioners. The study has provided a deep insight in to the role of internal and external conflicts (a commonly emergent issue) for international trade and economic growth in both developing and developed countries. The current study has broadened the scope of literature on international finance and trade by providing a unique empirical examination on the role of conflicts in international trade and economic growth which is rarely been examined in the literature. Moreover, the study has some practical implications for the policymakers and government to make their international relations as such that to avoid internal and external conflicts if they want to increase international trade and economic growth. More specifically in developing countries there is more prevalence of internal and external conflicts which is the route cause of the lower level of international trade and is one of the important cause of lower level of economic growth.