Regionalism and Conflict: Peace Creation and Peace Diversion
- Regionalism and Conflict: Peace Creation and Peace Diversion
- Tabakis, Chrysostomos
- Preferential trade agreements; regionalism; military conflict; war
- Issue Date
- Series/Report no.
- KDI Working Paper Series;WP14-04
- We investigate the implications of preferential trade agreements (PTAs) for interstate
con ict. We set up a two-stage game with three competing importers, where rst, two
of the countries decide on whether to initiate war against each other, and subsequently,
all three countries select their import tari¤s. We show that PTAs produce both a
peace-creation and a peace-diversion e¤ect, whereby they reduce the likelihood of
con ict between member countries (peace creation), but could render the eruption of
war between member and non-member countries more likely (peace diversion). This
paper is the rst to identify and explicitly model the peace-diversion e¤ect of PTAs, and
is also the only one in this literature to endogenize countries terms of trade. We use
data from the Correlates of War project to empirically test these predictions, and after
controlling for endogeneity, we nd robust evidence of both peace creation and peace
diversion in relation to free-trade-area as well as customs-union establishment.
- Files in This Item:
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.