Trade and insecure resources

Garfinkel, Michelle R.; Skaperdas, Stergios; Syropoulos, Constantinos

doi:10.1016/j.jinteco.2014.10.001

Cited by 66 publications

(30 citation statements)

References 36 publications

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“…However, while that analysis emphasizes the importance of the disruptive effects of conflict, ours highlights the importance of the endogeneity of arming and its traderegime dependence. Furthermore, our analysis, like Skaperdas and Syropoulos (2001) and Garfinkel et al (2015), suggests that, in this case, trade between friends could make the adversaries worse off. 14 Based on the different implications of trade with the enemy versus trade with friends for arming choices, we also provide some suggestive evidence in support of the theory.…”

Section: Introductionmentioning

confidence: 84%

“…14 It is important to emphasize, though, that the result in this paper is due to the beneficial effect that a country's arming has on its own terms of trade to add to arming incentives, whereas the result in Skaperdas and Syropoulos (2001) and Garfinkel et al (2015) derives from the impact of world prices to increase arming incentives through factor prices. A similar result arises in settings with conflict over some resource between groups within a single (small) country that trades with the rest of the world (e.g., Garfinkel et al, 2008).…”

Section: Introductionmentioning

confidence: 95%

“…Previous theoretical treatments of trade and conflict in the economics literature have identified two distinct channels through which trade between countries could influence their military spending-namely, a factor-price channel and an income channel. For example, based on extensions of Heckscher-Ohlin models that emphasize differences in factor endow-ments, Skaperdas and Syropoulos (2001) and Garfinkel et al (2015) study settings with two small countries that contest a resource and can trade in world markets. A shift from autarky to trade in such settings changes product prices and thus relative factor prices, thereby altering the cost of combining resources in producing military force.…”

Section: Introductionmentioning

confidence: 99%

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Arming in the global economy: The importance of trade with enemies and friends

Garfinkel

Syropoulos

Yotov

2020

Journal of International Economics

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We analyze how trade openness matters for interstate conflict over productive resources. Our analysis features a terms-of-trade channel that makes security policies trade-regime dependent. Specifically, trade between two adversaries reduces each one's incentive to arm given the opponent's arming. If these countries have a sufficiently similar mix of initial resource endowments, greater trade openness brings with it a reduction in resources diverted to conflict and thus wasted, as well as the familiar gains from trade. Although a move to trade can otherwise induce greater arming by one of them and thus need not be welfare improving for both, aggregate arming falls. By contrast, when the two adversaries do not trade with each other but instead trade with a third (friendly) country, a move from autarky to trade intensifies conflict between the two adversaries, inducing greater arming. With data from the years surrounding the end of the Cold War, we exploit the contrasting implications of trade between enemies versus trade between friends to provide some evidence that is consistent with the theory.

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Section: Introductionmentioning

confidence: 84%

Section: Introductionmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

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Arming in the global economy: The importance of trade with enemies and friends

Garfinkel

Syropoulos

Yotov

2020

Journal of International Economics

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“…A recent theoretical model by Garfinkel et al (2015) explores the consequences of interstate disputes over contested resources, such as oil, for defence spending and trade flows. Contestation of natural resources plays a big role in many interstate disputes and shapes the security policies of the countries involved.…”

Section: Introductionmentioning

confidence: 99%

Global Arms Trade and Oil Dependence*

Bove

Deiana

Nisticò

2018

The Journal of Law, Economics, and Organization

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We investigate how oil dependence affects the trade of weapons between countries. We argue that oil-dependent economies have incentives to transfer arms to oil-rich countries to reduce their risk of instability and, as a result, the chances of disruption in the oil industry. We employ gravity models of the arms trade and estimate the effect of both a local as well as a global oil dependence. Two key results emerge. First, the volume of arms transfers to a specific country is affected by the degree of dependence on its supply of oil. Second, global oil dependence motivates arms export to oil-rich countries even in absence of a direct bilateral oil-for-weapons exchange. Our results point consistently towards the conclusion that the arms trade is an effective foreign policy tool to securing and maintaining access to oil.

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“… While Oneal and Russett (1997, 1999), for example, present evidence that economic interdependence between two nations is negatively related to the likelihood of war breaking out between them,Barbieri (1996Barbieri ( , 2002 finds no significant relation between trade and war. See Copeland (2015) for a survey of alternative views and empirical evidence regarding trade and war found in the international relations literature.2 See, for example,Skaperdas and Syropoulos (2001),Garfinkel et al (2015), andGarfinkel and Syropoulos (2017a). Also, seeBonfatti and O'Rourke (2017) who study how increasing trade dependence for two adversarial countries with the rest of the world can influence the likelihood of a preemptive war.3 See, for example,Anbarci et al (2002).…”

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confidence: 99%

Rules for Dividing a Disputed Resource in the Context of the Classical Liberal Argument for Peace

Garfinkel

Syropoulos

2018

Peace Economics, Peace Science and Public Policy

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In this paper, we study alternative forms of conflict resolution, both peaceful and non-peaceful, between two countries that compete for claims to a resource used to produce potentially traded goods. Consistent with the classical liberal argument, peace supports mutually beneficial trade, whereas war preempts it. War always induces countries to allocate resources into non-contractible arming ("guns") for superiority in conflict. Under peaceful settlement, countries might choose to arm as well for gaining leverage in negotiations, but arming is typically less than what it is under war. Building on the observation that arming itself affects the countries' bargaining sets, we compare the efficiency properties of division rules generated by three prominent bargaining solutions-namely, splitting the surplus, equal sacrifice, and Nash bargaining-and show how they depend on the gains from trade.JEL Classification: C72, C78, D30, D74, F51Keywords: Resource disputes, gains from trade, negotiated settlements, variable threats, endogenous bargaining set. † We are indebted to Nejat Anbarci and Stergios Skaperdas, as well as three anonymous referees, for insightful comments and suggestions.

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Trade and insecure resources

Cited by 66 publications

References 36 publications

Arming in the global economy: The importance of trade with enemies and friends

Arming in the global economy: The importance of trade with enemies and friends

Global Arms Trade and Oil Dependence*

Rules for Dividing a Disputed Resource in the Context of the Classical Liberal Argument for Peace

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