Trade Blocs, Trade Flows, and International Conflict | Summary (2016)

Note: This is quite an old summary. I wrote this when I was a freshman (2016), so it doesn’t read as smoothly as my current writing.

Also, one of the constraints was for the summary to be written in a single page. Hence, the horrible formatting.

Mansfield  and  Pevehouse’s (2000) primary research  question  asks,  “How  do  preferential  trading arrangements (PTAs) influence the likelihood of military disputes between two states?” Many empirical  studies  were  carried  out  in  attempt  to  resolve  the  debate  on  the  relationship between international trade and political conflict by analyzing the effects of trade flows on conflict. However, these studies have largely ignored the institutional context in which trade is conducted.

Mansfield  and  Pevehouse  argue  that  preferential  trading  arrangements  (PTAs)  dampen military disputes by generating the expectation of future economic gains by members. Since the outbreak of hostilities threatens to scuttle these gains, participants in the same PTA have reason to avoid involvement in military conflicts. Additionally, many PTAs create a forum for bargaining  and  negotiation  that  reduces  the  tensions  among  participants,  helps  resolve conflicts  that  do  occur,  and  promotes  the  establishment  of  focal  points  that  shape  states’ expectations and facilitate the identification of deviations from accepted norms. Consequently, Mansfield and Pevehouse propose 3 hypotheses; firstly, that military disputes are less likely to occur between PTA members than between other states. Secondly, parties to the same PTA are less prone to conflict as the flow of trade expands between them. Third, heightened commerce is more likely to dampen hostilities between parties to the same PTA than between other states.

Since  the  observed  value  of  MIDij   is  dichotomous,  the  model  is  estimated  using  logistic regression. They also estimate their model with a technique developed by King and Zeng to correct for any rare-events bias. Like Oneal and Russett, Mansfield and Pevehouse use the dyad-year as their unit of  analysis, to facilitate comparisons of their results to prior work. Additionally, their temporal range is also the same as Oneal and Russett’s, that is, during the period from 1950 to 1985. Not surprisingly, their spatial domain also covers all pairs of states in the international system.

Mansfield and Pevehouse use a redefined version of MIDij as their dependent variable; MIDij is redefined as a nominal trichotomous variable, equaling 2 if a violent military dispute breaks out between i and j in year t, 1 if a nonviolent dispute begins between i and j in year t, and zero otherwise. To test their first hypothesis, the main independent variable is preferential trading arrangement membership, PTAij. Moreover, data on the dependent and independent variable are obtained from  Oneal and Russett’s (1997) dataset. PTAij equals 1 if  i and are parties to the same preferential trading arrangement in year t – 1, and zero otherwise. To test their second hypothesis, they include TRADEij X PTAij, as well as both GDPL X PTAij  and GDPH  X PTAij. To test their third hypothesis, they include bilateral trade flows, TRADEij. To ensure the robustness of their results, Mansfield and Pevehouse control for the regime types of i and j (DEML and DEMH), economic growth (GROWTHL), alliances (ALLIESij), geographical contiguity (CONTIGij), differences in capabilities (CAPRATIOij), national income of each state in the pair (GDPL, GDPH), and the relative strength of each state (HEGEMONY).

Their results show that hypothesis 1 finds support; military disputes are less likely to occur between  PTA  members than  between  other  states.  Additionally,  the  findings  indicate  that PTAs  have  conditioned  the  effects  of  trade  flows  on  military  disputes;  the  tendency  for heightened trade to dampen conflict is much larger and stronger between PTA members that between  other  states,  and  preferential  arrangements  are  increasingly   likely  to  inhibit hostilities as the flow of commerce rises. This is in line with both hypothesis 2 and 3. Overall, their results show that the institutional setting in which commerce promotes peace cannot be ignored.

Mansfield, E., & Pevehouse, J. (2000). Trade Blocs, Trade Flows, and International Conflict. International Organization, 54(4), 775-808. doi:10.1162/002081800551361

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