Containing Conflict? The Effect of the Intermodal Transport Revolution

Abstract

How does trade affect the likelihood of conflict? This enduring question unifies the two major subfields of international relations. Yet despite extensive scholarship, there remains a lack of consensus. Inference has been handicapped by the reciprocal nature of trade and conflict. To address this difficulty, this paper studies the trade and conflict nexus in the wake of an important technological change-the introduction of shipping containers. It offers two main contributions. First, it uses the exogenous technological shock of containerization to identify the effect of trade on conflict. Perhaps surprisingly, trade gains induced by containerization substantially increase the incidence of conflict within country pairs. Second, it develops a new theoretical model to explain these novel findings. Bargaining breakdowns are exacerbated when the exact benefits of trade are uncertain and one side suspects the other's gains are large relative to their own. This informational environment closely parallels the context of a technological shock.