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American Economic Journal: Macroeconomics: Vol. 4 No. 4 (October 2012)

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The Geography of Conflicts and Regional Trade Agreements

Article Citation

Martin, Philippe, Thierry Mayer, and Mathias Thoenig. 2012. "The Geography of Conflicts and Regional Trade Agreements." American Economic Journal: Macroeconomics, 4(4): 1-35.

DOI: 10.1257/mac.4.4.1

Abstract

In addition to standard trade gains, regional trade agreements (RTAs) can promote peaceful relations by increasing the opportunity cost of conflicts. Country pairs with large trade gains from RTAs and a high probability of conflict should be more likely to sign an RTA. Using data from 1950 to 2000, we show that this complementarity between economic and politics determines the geography of RTAs. We disentangle trade gains from political factors by a theory-driven empirical estimation and find that country pairs with higher frequency of past wars are more likely to sign RTAs, the more so the larger the trade gains. (JEL D72, D74, F15, N70)

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Authors

Martin, Philippe (Sciences Po, Paris)
Mayer, Thierry (Sciences Po, Paris)
Thoenig, Mathias (U Lausanne)

JEL Classifications

D72: Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
D74: Conflict; Conflict Resolution; Alliances
F15: Economic Integration
N70: Economic History: Transport, International and Domestic Trade, Energy, Technology, and Other Services: General, International, or Comparative

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