Power Politics and International Trade

Abstract

R recent literature attributes the relative scarcity of open international markets to the prisoner's dilemma structure of state preferences with respect to trade. We argue that the prisoner's dilemma representation does not reflect the most critical aspect of free trade agreements in an anarchic international system, namely, their security externalities. We consider these external effects explicitly. Doing so leads us to two conclusions: (1) free trade is more likely within, rather than across, political-military alliances; and (2) alliances are more likely to evolve into free-trade coalitions if they are embedded in bipolar systems than in multipolar systems. Using data drawn from an 80-year period beginning in 1905, we test these hypotheses. The results of the analysis make it clear that alliances do have a direct, statistically significant, and large impact on bilateral trade flows and that this relationship is stronger in bipolar, rather than in multipolar, systems.

Exports, jobs, growth! Congressional hearings on US trade agreements

“…Some of the topics are politically meaningful but not about the substantive features of the agreement, for example, comments on the timetable for completion of the agreement (“Timetable”) or about the procedures for gathering stakeholder feedback (“Process”). The remaining topics are all about the substantive content of the agreement or likely effects of the agreement, and are categorized into five broad sets: ordinary export opportunities and import competition; foreign sourcing and international investment; expanded trade agenda items like SPS measures, TBTs, rules of origin, and labor standards; effects of the agreement on jobs, growth, and consumers, whether at home or abroad; and broader strategic issues like the partner countries being US allies or the impacts of the agreement on development or democratization (Gowa & Mansfield, ; Mansfield & Bronson, ; Mansfield, Milner, & Rosendorff, ).…”

China’s economic diplomacy and the politics-trade nexus

“…Exploiting bilateral event data on conflict and cooperation for the 1955-1978 period, his empirical results support the hypothesis that greater amity between trading parties increases trade, while greater hostility has a tradedampening effect. Similarly, Gowa and Mansfield (1993) argue that gains from trade are a source of security externalities as trade-induced efficiency frees resources for military use in the economy of the trading partner. Consequently, it is in a country's strategic interest to concede such gains to befriended countries and deny them to enemies.…”

The empire strikes back: French‐African trade after independence

“…On the other hand, the political and economic manifestations of French post‐colonial influence could have favored French‐African trade. Gowa and Mansfield () show, using data from 1905 to 1985, that political and military alliances have a direct and substantial impact on bilateral trade flows and that this relationship is stronger in bipolar, rather than in multipolar, systems. Dixon and Moon () find that political proximity in the international arena shapes international trade patterns.…”