Unsettled Borders in a Market Context

• In Event: Conflict and Trade

Abstract

Border disputes between states can be very costly and disruptive, including major disruptions in trade. From an aggregate perspective, scholars traditionally expect these costs and disruptions to place pressure on states to avoid or resolve these disputes quickly. This view, however, risks oversimplification of the quality of trade and the economic actors driving that trade. We investigate the consequences of complex trade relations on border disputes. Variation in the composition of trade, whether characterized by comparative advantage trade, inter-industry trade, or intra-industry trade, generates variation in the presence and intensity of domestic pressure to avoid or resolve border disputes. We examine the effects of this variation on dispute behavior using an original dataset that combines product-level trade data (spanning from 1962-2001) with ICOW territorial claims data. The use of product-level trade data allows for the analysis of substitutability options which may reduce exit costs and make it easier to escalate border disputes. This analysis helps us better understand the choice to forego trade due to border disputes, and furthers our understanding of the economic impact of unsettled borders.

Authors

• Rob Williams, Washington University in St. Louis

• Bailee Donahue, University of Pennsylvania

• Mark J.C. Crescenzi, University of North Carolina, Chapel Hill