The Geography of Conflicts and Regional Trade Agreements

Thierry Mayer, Mathias Thoenig and Philippe Martin

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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.

Date: 2012-10
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03461131
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Published in American Economic Journal: Macroeconomics, 2012, 4 (4), pp.1 - 35. ⟨10.1257/mac.4.4.1⟩

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Journal Article: The Geography of Conflicts and Regional Trade Agreements (2012)
Working Paper: The Geography of Conflicts and Regional Trade Agreements (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03461131

DOI: 10.1257/mac.4.4.1

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