DP6659 Civil Wars and International Trade

Author(s): Philippe Martin, Thierry Mayer, Mathias Thoenig
Publication Date: January 2008
Keyword(s): civil war, globalization, trade
JEL(s): F10, F51, F52, F59
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6659

This paper analyzes empirically the relationship between civil wars and international trade. We first show that trade destruction due to civil wars is very large and persistent and increases with the severity of the conflict. We then test the presence of two effects that trade can have on the risk of civil conflicts: it may act as a deterrent if trade gains are put at risk during civil wars but it may also act as an insurance if international trade provides a substitute to internal trade during civil wars. We find support for the presence of these two mechanisms and conclude that trade openness may deter the most severe civil wars (those that destroy the largest amount of trade) but may increase the risk of lower scale conflicts.