Militarism and trade

Daron Acemoglu and Pierre Yared argue that militaristic states are less likely to engage in trade (NBER Working Paper 15694):

Despite the major advances in information technology that have shaped the recent wave of globalization, openness to trade is still a political choice, and trade policy can change with shifts in domestic political equilibria. This paper suggests that a particular threat and a limiting factor to globalization and its future developments may be militarist sentiments that appear to be on the rise among many nations around the globe today.

The evidence?

We proxy militarism by spending on the military and the size of the military, and document that over the past 20 years, countries experiencing greater increases in militarism according to these measures have had lower growth in trade. Focusing on bilateral trade flows, we also show that controlling flexibly for country trends, a pair of countries jointly experiencing greater increases in militarism has lower growth in bilateral trade.

Comments

[hair loss in women]

interesting, deep, but interesting...

[Roland Holtzen]

In case the readers here are looking for a link to that NBER paper, here it is:

http://www.nber.org/papers/w15694.pdf

Those "political moves" may be a part of the risk management solutions that countries do to prevent damages. While it's true that the room for improvement in the field of trade is getting bigger because of the progression of information technology, the risk management part still has to be done.

[wrapping machine]

it's well known today that most of the wars are made and happening to gain more profits.