IDEAS home Printed from https://ideas.repec.org/a/sae/joupea/v61y2024i6p903-916.html
   My bibliography  Save this article

Butterfly effects in global trade: International borders, disputes, and trade disruption and diversion

Author

Listed:
  • Ryan Brutger

    (Travers Department of Political Science, University of California)

  • Tim Marple

    (Google Trust & Safety)

Abstract

This article theorizes and tests how different types of interstate conflict across borders affect trade between disputing parties and trade diversion with third parties. Building on theories of borders as institutions, we differentiate the effects of two types of international disputes – border disputes and escalated militarized disputes – and draw on 60 years of trade and conflict data to test the effects of these disputes on bilateral and third-party trade flows. We find that border disputes and militarized disputes each depress trade flows between the disputing countries. However, legal border disputes are associated with increased trade diversion with non-disputing countries, which may fully offset the forgone bilateral trade, whereas militarized disputes have the opposite effect. These results show that actors engaged in trade can offset bilateral trade losses from a border dispute by expanding trade with third parties not involved in the dispute, but the same cannot be said of offsetting the losses from militarized disputes. The fact that border disputes and militarized disputes have opposite effects on trade diversion highlights the importance of examining both the type of dispute and the type of trade flows that are affected when studying conflict and trade and evaluating the potentially pacifying incentives of international trade.

Suggested Citation

  • Ryan Brutger & Tim Marple, 2024. "Butterfly effects in global trade: International borders, disputes, and trade disruption and diversion," Journal of Peace Research, Peace Research Institute Oslo, vol. 61(6), pages 903-916, November.
    • Handle: RePEc:sae:joupea:v:61:y:2024:i:6:p:903-916
    DOI: 10.1177/00223433231180928
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/00223433231180928
    Download Restriction: no
    File URL: https://libkey.io/10.1177/00223433231180928?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Reuven Glick & Alan M. Taylor, 2010. "Collateral Damage: Trade Disruption and the Economic Impact of War," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 102-127, February.
    2. Matthieu Crozet & Julian Hinz, 2020. "Friendly fire: the trade impact of the Russia sanctions and counter-sanctions," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(101), pages 97-146.
    3. Goldstein, Judith L. & Rivers, Douglas & Tomz, Michael, 2007. "Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade," International Organization, Cambridge University Press, vol. 61(1), pages 37-67, January.
    4. Gowa, Joanne & Hicks, Raymond, 2013. "Politics, Institutions, and Trade: Lessons of the Interwar Era," International Organization, Cambridge University Press, vol. 67(3), pages 439-467, July.
    5. Christina L. Davis & Sophie Meunier, 2011. "Business as Usual? Economic Responses to Political Tensions," American Journal of Political Science, John Wiley & Sons, vol. 55(3), pages 628-646, July.
    6. Mansfield, Edward D. & Pevehouse, Jon C., 2000. "Trade Blocs, Trade Flows, and International Conflict," International Organization, Cambridge University Press, vol. 54(4), pages 775-808, October.
    7. John F. Helliwell, 1997. "National Borders, Trade and Migration," NBER Working Papers 6027, National Bureau of Economic Research, Inc.
    8. Gowa, Joanne & Hicks, Raymond, 2017. "Commerce and Conflict: New Data about the Great War," British Journal of Political Science, Cambridge University Press, vol. 47(3), pages 653-674, July.
    9. Paul F Diehl & Gary Goertz & Yahve Gallegos, 2021. "Peace data: Concept, measurement, patterns, and research agenda," Conflict Management and Peace Science, Peace Science Society (International), vol. 38(5), pages 605-624, September.
    10. Carter, David B. & Poast, Paul, 2020. "Barriers to Trade: How Border Walls Affect Trade Relations," International Organization, Cambridge University Press, vol. 74(1), pages 165-185, January.
    11. Huth, Paul K. & Croco, Sarah E. & Appel, Benjamin J., 2011. "Does International Law Promote the Peaceful Settlement of International Disputes? Evidence from the Study of Territorial Conflicts since 1945," American Political Science Review, Cambridge University Press, vol. 105(2), pages 415-436, May.
    12. Roberts, Bryan & Rose, Adam & Heatwole, Nathaniel & Wei, Dan & Avetisyan, Misak & Chan, Oswin & Maya, Isaac, 2014. "The impact on the US economy of changes in wait times at ports of entry," Transport Policy, Elsevier, vol. 35(C), pages 162-175.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lin, Faqin & Hu, Cui & Fuchs, Andreas, 2019. "How do firms respond to political tensions? The heterogeneity of the Dalai Lama Effect on trade," China Economic Review, Elsevier, vol. 54(C), pages 73-93.
    2. Yaying Liu & Jin Chen & Churen Sun, 2022. "Partnership Diplomacy and China’s Exports," Sustainability, MDPI, vol. 14(19), pages 1-22, September.
    3. Hartwell, Christopher A. & Zadorozhna, Olha, 2024. "The connections that bind: Political connectivity in the face of geopolitical disruption," Journal of International Management, Elsevier, vol. 30(3).
    4. Miguel Ángel Almazán‐Gómez & Carlos Llano & Julián Pérez & Daniel Rauhut, 2024. "Socioeconomic impacts of Russian invasion of Ukraine: A multiregional assessment for Europe," Journal of Regional Science, Wiley Blackwell, vol. 64(2), pages 333-354, March.
    5. Anderton Charles H. & Anderton Roxane A., 2021. "The Trade Disruption Hypothesis Fails for State-Sponsored Genocides and Mass Atrocities: Why It Matters," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(2), pages 143-168, May.
    6. Lars Karlsson & Peter Hedberg, 2021. "War and trade in the peaceful century: the impact of interstate wars on bilateral trade flows during the first wave of globalization, 1830–1913," Economic History Review, Economic History Society, vol. 74(3), pages 809-830, August.
    7. Zhou, Bo & Zhang, Ying & Zhou, Peng, 2021. "Multilateral political effects on outbound tourism," Annals of Tourism Research, Elsevier, vol. 88(C).
    8. Yuleng Zeng, 2024. "Microchips and sneakers: Bilateral trade, shifting power, and interstate conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 61(4), pages 659-672, July.
    9. 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.
    10. Vicard, Vincent, 2012. "Trade, conflict, and political integration: Explaining the heterogeneity of regional trade agreements," European Economic Review, Elsevier, vol. 56(1), pages 54-71.
    11. Haoran Li & Xibo Wan & Wendong Zhang, 2024. "Do firms hedge against political tensions? Evidence from Chinese food importers of Norwegian salmon," The World Economy, Wiley Blackwell, vol. 47(8), pages 3618-3647, August.
    12. Emilie M. Hafner-Burton & Jana von Stein & Erik Gartzke, 2008. "International Organizations Count," Journal of Conflict Resolution, Peace Science Society (International), vol. 52(2), pages 175-188, April.
    13. Chunfang Cao & Xiaoyang Li & Guilin Liu, 2023. "Does geopolitical risk matter for corporate investment decisions? Evidence from cross‐border acquisitions," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 665-695, November.
    14. Silva, Thiago Christiano & Wilhelm, Paulo Victor Berri & Tabak, Benjamin Miranda, 2023. "Trade matters except to war neighbors: The international stock market reaction to 2022 Russia’s invasion of Ukraine," Research in International Business and Finance, Elsevier, vol. 65(C).
    15. Brandon J Kinne, 2014. "Does third-party trade reduce conflict? Credible signaling versus opportunity costs," Conflict Management and Peace Science, Peace Science Society (International), vol. 31(1), pages 28-48, February.
    16. Fuchs, Andreas & Klann, Nils-Hendrik, 2013. "Paying a visit: The Dalai Lama effect on international trade," Journal of International Economics, Elsevier, vol. 91(1), pages 164-177.
    17. Aysegul Aydin, 2010. "The deterrent effects of economic integration," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(5), pages 523-533, September.
    18. Li, Haoran & Wan, Xibo & Zhang, Wendong, 2021. "How do Firms Respond to Long-term Political Tensions? Evidence from Chinese Food Importers," ISU General Staff Papers 202106020700001118, Iowa State University, Department of Economics.
    19. Barry Eichengreen & Arnaud Mehl & Livia Chițu, 2021. "Mars or Mercury redux: The geopolitics of bilateral trade agreements," The World Economy, Wiley Blackwell, vol. 44(1), pages 21-44, January.
    20. Daria Suprunenko, 2024. "Ukrainian export and production after the 2014 Russia shock," IEER Working Papers 124, Institute of Empirical Economic Research, Osnabrueck University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:joupea:v:61:y:2024:i:6:p:903-916. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.prio.no/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.