The Impact of Conflict Types and Location on Trade

Abstract

This article investigates the impact of interstate and intrastate conflict on trade. Analyses rely on a pooled time-series cross-sectional dataset with observations for 134 countries from 1979 to 2000. Results show that intrastate conflict has a larger negative impact on trade than interstate conflict; conflict in the exporting country has a more negative impact on trade than conflict in the importing country; and, finally, conflict's destructive effects go beyond the borders of the countries that directly experience it, as trade flows are also negatively influenced by conflict in neighboring countries.

Keywords:

• trade
• conflict
• war
• interstate conflict
• civil wars

Notes

¹ Barbieri and Levy (1999, p. 469) present an interesting discussion on these matters.

²It is possible to rank order coefficient magnitudes in this model because each of the independent variables is constructed on the same scale (MEPV). To account for their differing ranges, the independent variables were standardized for the regression analyses.

³For an in-depth discussion of the interpretation of coefficients in models with log transformed dependent variables, see Mukherjee, White, & Wuyts (1998) and Kennedy (2003).