How Outsourcing Affects Bilateral Political Relations

Solomon Polachek

No 1334, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: One issue the literature neglects is how outsourcing stimulates trade (imports, exports and foreign direct investment), thereby affecting political relations. However, at least as far back as 1750, economic philosophers such as Baron de Montesquieu in his L’Esprit des Lois, argued, “peace is the natural effect of trade.” This paper first reviews this literature and then presents econometric evidence. The evidence integrates political international relations events data with economics data on bilateral trade. The resulting econometric models show that trade between nations fosters more peaceful dyadic relations.

Keywords: cooperation; outsourcing; conflict; international trade; peace (search for similar items in EconPapers)
JEL-codes: F1 F2 J61 M55 O24 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2004-10
New Economics Papers: this item is included in nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Indian Journal of Economics and Business, 2004, 3 (special issue), 29-42.

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