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Wednesday 23 Aug 2017 | 18:31 | SYDNEY
Wednesday 23 Aug 2017 | 18:31 | SYDNEY

Globalisation and war: What's the evidence for Pax Mercatoria? (I)

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This post is part of the Globalisation and war debate thread. To read other posts in this debate, click here.

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8 June 2010 10:21


This post is part of the Globalisation and war debate thread. To read other posts in this debate, click here.

As the Interpreter has been hosting a debate on the relationship between globalisation and conflict, I thought it might be useful to take a look at what some of the empirical literature has to say on the subject. To keep it manageable, I'll focus on the links between trade and war.

To start, let's look at what conflict means for international trade. Here the empirics confirm the intuition; conflict is bad for trade (although there are exceptions). So, for example, this paper by Reuben Glick and Alan Taylor finds a very strong impact of war on trade volumes. 

It estimates that the costs of war in terms of lost trade are large, and comparable in scale to the other costs of war such loss of human life. Glick and Taylor also find that the damage to trade is persistent, so that even after a conflict ends, trade does not resume its pre-war level for many years. And they find that trade destruction also harms neutrals (a negative externality in econo-speak). 

Brock Blomberg and Gregory Hess have looked at the economic cost of violence more broadly, adding terrorism and internal conflict to external wars. They too find that the economic cost of violence for trade is large and comparable to the cost of other trade barriers; indeed, they find that the positive impact of peace on trade is larger than the trade-supporting effects of WTO membership or bilateral trade arrangements. 

Finally, some recent work by Daron Acemoglu and Pierre Yared goes beyond conflict to look at the relationship between militarism and international trade. They find that increased militarism, measured by military spending and size, is negatively associated with trade.

But what happens when we reverse the causality, and ask about the implications of international trade for conflict? That's the subject of my next post.

Photo by Flickr user MorBCN, used under a Creative Commons license.

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