Building the walls of international trade after war: Can dispute resolution mechanisms (DRMs) help?

Felix Fosu

Economic Inquiry, 2025, vol. 63, issue 4, 1147-1169

Abstract: This paper explores how international trade recovers after war, emphasizing the role of dispute resolution mechanisms (DRMs). Wars typically prolong negative trade impacts due to heightened tensions, but DRMs—such as General Agreement on Tariffs and Trade/World Trade Organization and diplomatic exchanges—can reduce these tensions, lower policy uncertainty, and ease economic frictions, facilitating recovery. Using the gravity model, the study analyzes trade flows between countries with a history of conflict to test if DRM membership brings additional trade benefits. Results indicate that DRM membership is linked to positive trade effects for countries affected by war, likely accelerating recovery from disruptions caused by conflict.

Date: 2025
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