Trade, peace and war

Question 1

What are the theoretical arguments on the correlation between trade/economic integration and the likelihood of war?

Answer 1

Liberal/idealistic view: Trade –> dependency on each other –> higher costs of war –> less risk of war

Realist tradition: The relation between trade and war is not so simple. There are still areas, where trade can lead to higher risk of war

1. Multilateral trade can increase the risk of bilateral war
2. Trade and interdependency can create new conflicts
   - Financial interdependency can be weaponized –> like the situation with Russian gas today.
3. Globalization trickers economic dynamics that shakes the world order
   - Latecomer syndrome (China)
   - Incentives to challenge rivals while strong

Question 2

What is the imperial evidence on the correlation between trade and war?

Answer 2

Empirical observation: The risk of war has not fallen at the same pace as the increase in trade since the 1970s.

Bilateral trade decreases the risk of war between those two countries.

However: multilateral trade can increase the risk of bilateral wars, since you can trade with multiple partners instead of just the one (it decreases bilateral dependence).

Question 3

How costly is wars in terms of trade between the countries at war?

Answer 3

War creates a 80% reduction in trade between countries

The trade is back to a normal level after 10 years.

Question 4

How costly are wars in terms of physical destruction?

Answer 4

Bombings: Large small run destruction of e.g. bombings → but studies show us that this has very little long run effects on GDP
Rebuilding of countries often happens relatively smooth

Unexploded ammunition: Bigger problem than bombings
If a country is not “cleaned up” after a war, then nobody wants to invest in new buildings etc, because there is still the risk of destroyment → blocks the rebuilding process.

Question 5

How costly are wars in terms of social capital?

Answer 5

Wars have different negative effects on social capital
- Less trust in society
- War sparks attitudes that can hinder economic development
- The above things are big hindrances to rebuilding a society after war

Question 6

How does war affect migration patterns?

Answer 6

War leads to a lot of forced migration → e.g. the millions of Ukrainians right now

Studies show that forced migration is damaging for the sending countries (the countries people migrate from): loss of social and human capital.

Many refugees at once in a country halters integration → refugees should be moved to regions with promising labor market outcomes.

Question 7

How does war affect gender-ratios?

Answer 7

Wars create sex-ratio imbalances → more women than men (male scarcity)

Creates a shift in labour-market participation → more men leave (to join war), more women enter

Effects of male scarcity:
More women on the marriage market → men marry “upwards”, more children born outside of marriage,