Does International Trade Reduce Political Disputes?
| Author | Hailay Gebretinsae Beyene |
| DOI | 10.1177/0015732515572058 |
| Published date | 01 May 2015 |
| Date | 01 May 2015 |
| Subject Matter | Articles |
Does International Trade
Reduce Political Disputes?
Hailay Gebretinsae Beyene1
Abstract
The effect of economic integration and other factors on interstate conflict has
been examined with a delimited geographical scope. A logistic regression analysis
is adopted with one-year lagged independent variables regressed on dependent
variable of interstate conflict. It is revealed that the pacification effect of economic
openness and economic dependence on trade of the East African countries—
Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Sudan, Tanzania and Uganda—is
significant. In addition, it is found that an improvement in the democratic situa-
tion of the dyads reduces the likelihood of eruption of interstate conflict in the
region. The article has uncovered that higher national capability asymmetry in
East African region among the specified countries leads to an increase in the
possibility of violence.
JEL: F14, F01, F51, F59, D74
Keywords
Democratic situation, economic openness, interstate conflict, national capability,
trade dependence
Introduction
The article is undertaken to examine the effect of economic openness, trade share,
economic dependence on trade, alliance, political conditions of a country and the
national capability of a country on interstate conflict.
One of the decisive factors that contribute towards growth and development
is peace. In the absence of peace, countries become exposed to multifaceted
problems, whereby the restoration of peace becomes vital issue to be dealt with
Article
Foreign Trade Review
50(2) 99–117
©2015 Indian Institute of
Foreign Trade
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0015732515572058
http://ftr.sagepub.com
Corresponding author:
Hailay Gebretinsae Beyene, Research Fellow, Institute for Dispute Resolution in Africa, University of
South Africa, Pretoria, Sunnyside Campus, Room 2-10, Building 1, PO Box 392, UNISA 0003, South
Africa.
E-mail: hailayggg@gmail.com; beyenhg@unisa.ac.za
1 Institute for Dispute Resolution in Africa, University of South Africa, Pretoria, South Africa.
100 Foreign Trade Review 50(2)
by concerned bodies. To sustain peace, it requires the identification of the factors
that are associated with peace, so that policymakers and decision-making body
become concerned. The causes for the distortion of peace could be attributed to
internal or external factors of a country. If peace is to sustain for long, it should
not be imposed by others (third party). If it is imposed, it would innately be unsta-
ble, as it leaves the basic factors, that make countries differ and trigger them into
conflict, remain unsolved. It is pointed out that sustainable peace can be realized
if approached from the issues that naturally exist between the countries than
through outside intervention.1
This article, consistent with the concerns of Polachek (1980), examined the
factors that determine peace in East Africa. It is done with the assertion that poli-
cymakers should act on peace affairs of East Africa based on inputs gleaned from
empirical/scientific investigations. The article’s findings reflect the realities of the
region as linked to interstate conflict. This article is consistent with assertions of
Polachek (1980) and suggests ways to resolve interstate conflict in East Africa. In
other words, instead of relying on prescriptions or impositions from third parties,
conflict resolution should focus on the prevailing realities of the region.
Basically, this article is an extension of the previous unpublished work on
‘trade, interdependence, and its effect on interstate conflict in East African region’
(Beyene, 2013). First, distinct from the previous article, in this article, more theo-
retically grounded logistic regression method of analysis is employed. Furthermore,
unlike the previous work, the independent variables used for this article lagged by
one year and regressed on the dependent variable interstate conflict. Second, the
solitary effect of the independent variables on interstate conflict had not been
explored in the previous work, which this article has dealt at some length.
Third, the previous article approached the investigation of the effect of both
trade and economic factors along with other contingent factors in a combined
form. However, this article extends the analysis by examining the effect of trade
and economic interdependence on interstate conflict without inclusion of the other
variables, such as polity and national capability of dyads. Fourth, the proxies used
for openness and national capability ratio are the natural logarithm of the corre-
sponding values, whereas the former work was not based on lagged logarithm
values. Fifth, the model specification, as an extension of the previous work, has
included the higher values for openness, trade share, dependence and democracy/
autocracy in addition to the lower values that the former work had used.
Review of Literature
Most of the studies that attempt to examine the interrelationship of trade and con-
flict deal with dyadic approach. The findings of the vast majority of empirical
studies show integration through trade inhibits conflict between countries (see
Goenner, 2004, 2011).
Integration through trade has a pacifying effect on integrating nations. It is
pointed out that trade ties serve as an incentive to settle down disputes before they
grow into conflict or violence (see Russett & Oneal, 2001).
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