Details
| Original language | English |
|---|---|
| Article number | 103376 |
| Journal | Journal of development economics |
| Volume | 172 |
| Early online date | 26 Sept 2024 |
| Publication status | Published - Jan 2025 |
Abstract
This paper examines the lasting impact of civil conflicts on bilateral trade flows and the subsequent implications for economic recovery. Utilizing a novel estimation approach based on the structural gravity model of international trade, we demonstrate that importers shift their trade preferences away from exporters involved in civil conflicts. This effect persists even after the conflict has been resolved, as countries solidify their relocation decisions by reducing bilateral trade costs with alternative trading partners through Preferential Trade Agreements. Notably, the persistent trade relocation is more pronounced in the manufacturing sector, while it does not occur in the fuels sector. Our findings underscore the significance of supportive trade policies as effective tools for assisting nations in recovering from episodes of political violence. Furthermore, our estimation approach can be adapted to investigate the impacts of other unilateral shocks, such as natural disasters, or to analyze various bilateral dependent variables, including migration.
Keywords
- Conflict and trade, Economic development, Gravity estimation, Trade relocation
ASJC Scopus subject areas
- Social Sciences(all)
- Development
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
Sustainable Development Goals
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In: Journal of development economics, Vol. 172, 103376, 01.2025.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - The persistence of trade relocation from civil conflict
AU - Korn, Tobias
AU - Stemmler, Henry
N1 - Publisher Copyright: © 2024 The Authors
PY - 2025/1
Y1 - 2025/1
N2 - This paper examines the lasting impact of civil conflicts on bilateral trade flows and the subsequent implications for economic recovery. Utilizing a novel estimation approach based on the structural gravity model of international trade, we demonstrate that importers shift their trade preferences away from exporters involved in civil conflicts. This effect persists even after the conflict has been resolved, as countries solidify their relocation decisions by reducing bilateral trade costs with alternative trading partners through Preferential Trade Agreements. Notably, the persistent trade relocation is more pronounced in the manufacturing sector, while it does not occur in the fuels sector. Our findings underscore the significance of supportive trade policies as effective tools for assisting nations in recovering from episodes of political violence. Furthermore, our estimation approach can be adapted to investigate the impacts of other unilateral shocks, such as natural disasters, or to analyze various bilateral dependent variables, including migration.
AB - This paper examines the lasting impact of civil conflicts on bilateral trade flows and the subsequent implications for economic recovery. Utilizing a novel estimation approach based on the structural gravity model of international trade, we demonstrate that importers shift their trade preferences away from exporters involved in civil conflicts. This effect persists even after the conflict has been resolved, as countries solidify their relocation decisions by reducing bilateral trade costs with alternative trading partners through Preferential Trade Agreements. Notably, the persistent trade relocation is more pronounced in the manufacturing sector, while it does not occur in the fuels sector. Our findings underscore the significance of supportive trade policies as effective tools for assisting nations in recovering from episodes of political violence. Furthermore, our estimation approach can be adapted to investigate the impacts of other unilateral shocks, such as natural disasters, or to analyze various bilateral dependent variables, including migration.
KW - Conflict and trade
KW - Economic development
KW - Gravity estimation
KW - Trade relocation
UR - http://www.scopus.com/inward/record.url?scp=85206688991&partnerID=8YFLogxK
U2 - 10.1016/j.jdeveco.2024.103376
DO - 10.1016/j.jdeveco.2024.103376
M3 - Article
AN - SCOPUS:85206688991
VL - 172
JO - Journal of development economics
JF - Journal of development economics
SN - 0304-3878
M1 - 103376
ER -