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U.S. Security Strategy and the Gains from Bilateral Trade

Author

Listed:
  • Vincenzo Bove

    () (Department of Government, University of Essex)

  • Leandro Elia

    () (Institute for the Protection and Security of the Citizen, European Commission-Joint Research Centre)

  • Petros G. Sekeris

    () (University of Namur)

Abstract

The relationship between trade and foreign-policy goals has led to growing debates in the field of international economics and international relations. Most studies are cross-national and use interstate disputes to proxy the national security interests. We focus on the U.S., the world’s largest trading nation and a global power. While the U.S. has deployed more forces abroad and in more countries than any other nation in the world history, it is also the largest contributor of military aid to foreign countries. Troops and weapons are expensive tools of foreign policy and can serve to explore the geo-strategic determinants of bilateral trade flows between the U.S. and the rest of the World, in times of peace and armed conflict. We develop a three-party model of security and trade patterns and validate its predictions through an augmented log gravity model and newly constructed data on U.S. troop deployments and bilateral foreign military financing (FMF) on the 1950-2010 period. We find that both tools have significant, positive impacts on the shares of bilateral trade between the U.S and the recipient country, results that are robust to other known causes of trade and endogeneity issues. Moreover, our corrected model specification leads to a stronger relationship between trade and foreign policy goals than in the traditional models.

Suggested Citation

  • Vincenzo Bove & Leandro Elia & Petros G. Sekeris, 2013. "U.S. Security Strategy and the Gains from Bilateral Trade," Working Papers 1302, University of Namur, Department of Economics.
  • Handle: RePEc:nam:wpaper:1302
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    1. repec:agr:journl:v:1(614):y:2018:i:1(614):p:73-94 is not listed on IDEAS
    2. Bove Vincenzo & Elia Leandro & Pelliccia Marco, 2016. "Centrality in Trade Networks and Investment in Security," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(1), pages 27-39, January.
    3. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2013. "International Politics and Import Diversification," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 1091-1121.
    4. repec:bla:glopol:v:7:y:2016:i:4:p:510-520 is not listed on IDEAS

    More about this item

    Keywords

    Trade and war; military aid;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism

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