US Security Strategy and the Gains from Bilateral Trade

Vincenzo Bove, Leandro Elia and Petros Sekeris

Review of International Economics, 2014, vol. 22, issue 5, 863-885

Abstract: We explore the geo-strategic determinants of bilateral trade flows between the USA and the rest of the world. We develop a three-party model of security and trade patterns and use data on military assistance and troop deployments over the 1950–2009 period to validate its predictions. We find that security assistance has significant, positive impacts on the shares of bilateral trade between the USA and the recipient country, results that are robust to issues of reverse causality and hold across different sectors.

Date: 2014
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Working Paper: U.S. Security Strategy and the Gains from Bilateral Trade (2013)
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