Helge Zille – University of Copenhagen

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Helge Zille

"How does violent conflict affect trade with third-party countries? Evidence from a big data analysis in a triadic country setting"

Abstract:

While previous literature on interstate conflict and trade is exclusively limited to a dyadic analytical framework, this paper introduces a data demanding triadic approach, which enables analyses of the effect of interstate conflicts on trade with third-party countries. Using global conflict and trade data on a triadic level over a period of 96 years enables to generate a unique data set with more than 767 million triad-year combinations and to run regression models with more than 100 million observations. The paper finds that violent interstate conflicts do have an effect on trade with third-party countries, and that the relationship constellation between countries matters for this effect. More specifically, conflict will course a shift in trade towards neighboring countries, but also to countries who have a conflict with the same country. Two countries that have a violent conflict with the same other country increase their trade by between 12 and 25 percent. Moreover, states use reductions in trade as a measure to support their formal allies and countries on which they are dependent. I find that countries decrease trade with the enemies of their formal allies by between 18 and 23 percent. This paper contributes to the literature on conflict and trade in three ways: First, by measuring the effect of interstate conflicts on trade with third-party countries for the first time. Second, by introducing big data analysis to trade and conflict literature. And third, by introducing a spatially dynamic perspective on interstate conflicts and trade.


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