Trade and civil conflict: Revisiting the cross‐country evidence

Abstract

AbstractWe revisit and expand the evidence on the impact of trade shocks on intra‐state conflict by using a large sample of developing countries in the 1960–2010 period. The results suggest that increases in the price of a country's exported commodities raise the country's risk of civil conflict and its duration. The effect on conflict risk is mainly driven by the price of point‐source commodities, in line with the rapacity effect theory of conflict. Intense trading with contiguous countries is associated with lower duration of conflict, consistent with the idea that such trade reduces the incentive of these countries to fuel conflict in their neighbor. Trading with neighbors is also associated with a lower risk of conflict when such trade occurs under trade agreements. On the other hand, we find no support for the opportunity cost theory via exported and imported commodities, nor via the economic cycle in export markets. We also identify a number of conditions under which the changes in the value of exported commodities cease to matter for conflict probability.