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How Outsourcing Affects Bilateral Political Relations

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  • Polachek, Solomon

    (Binghamton University, New York)

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.

Suggested Citation

  • Polachek, Solomon, 2004. "How Outsourcing Affects Bilateral Political Relations," IZA Discussion Papers 1334, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1334
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    References listed on IDEAS

    as
    1. Edward E. Azar, 1980. "The Conflict and Peace Data Bank (COPDAB) Project," Journal of Conflict Resolution, Peace Science Society (International), vol. 24(1), pages 143-152, March.
    2. Polachek, Solomon W, 1997. "Why Democracies Cooperate More and Fight Less: The Relationship between International Trade and Cooperation," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 295-309, August.
    3. Solomon William Polachek, 1980. "Conflict and Trade," Journal of Conflict Resolution, Peace Science Society (International), vol. 24(1), pages 55-78, March.
    4. Polachek Solomon W., 1999. "Conflict and Trade: An Economics Approach to Political International Interactions," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 5(2), pages 1-32, April.
    5. Solomon W. Polachek & John Robst & Yuan-Ching Chang, 1999. "Liberalism and Interdependence: Extending the Trade-Conflict Model," Journal of Peace Research, Peace Research Institute Oslo, vol. 36(4), pages 405-422, July.
    6. Mark Gasiorowski & Solomon W. Polachek, 1982. "Conflict and Interdependence," Journal of Conflict Resolution, Peace Science Society (International), vol. 26(4), pages 709-729, December.
    7. Solomon W. Polachek, 2002. "Trade-Based Interactions: an Interdisciplinary Perspective," Conflict Management and Peace Science, Peace Science Society (International), vol. 19(2), pages 1-21, September.
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    Cited by:

    1. Knill, April & Lee, Bong-Soo & Mauck, Nathan, 2012. "Bilateral political relations and sovereign wealth fund investment," Journal of Corporate Finance, Elsevier, vol. 18(1), pages 108-123.

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    More about this item

    Keywords

    cooperation; outsourcing; conflict; international trade; peace;
    All these keywords.

    JEL classification:

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

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