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Does Peace Promote Bilateral Trade Flows? An Economic Analysis of Panel Data in Asian Perspective

Author

Listed:
  • Ghulam Shabbir

    (Forman Christian College University Lahore)

  • Amjad Naveed

    (Aarhus University)

  • Muhammad Ali Khan

    (Forman Christian College University Lahore)

  • Shabib Haider Syed

    (Minhaj University Lahore)

Abstract

This study investigates the effect of peace on the bilateral trade flows of Pakistan under the framework of the gravity model. Specifically, we tested the impact of peace (using the Global Peace Index) in Pakistan relative to its 26 trading partners on trade flows from 2007 to 2018. Using system GMM estimation procedure that takes care of endogeneity issues, this study shows that the standard gravity model does not hold in the case of Pakistan. Therefore, it is important to investigate whether the peace in Pakistan and its trading partner promotes trade in the regions. Furthermore, the results indicate that a rise in the prevalence of peace in Pakistan relative to its trading nation has significantly and positively contributed to its trade flows. Besides, development of infrastructure improves trade flow due to low transportation cost. From a policy perspective, reducing conflict and promoting peace will further encourage neighboring countries to enhance trade relations, which will be beneficial for the whole region.

Suggested Citation

  • Ghulam Shabbir & Amjad Naveed & Muhammad Ali Khan & Shabib Haider Syed, 2022. "Does Peace Promote Bilateral Trade Flows? An Economic Analysis of Panel Data in Asian Perspective," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(1), pages 143-158, March.
    • Handle: RePEc:pal:compes:v:64:y:2022:i:1:d:10.1057_s41294-021-00155-2
    DOI: 10.1057/s41294-021-00155-2
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    Cited by:

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    More about this item

    Keywords

    Trade flows; Peace; Infrastructure; Gravity model; System GMM;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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