Butterfly effects in global trade: International borders, disputes, and trade disruption and diversion
| Published date | 01 November 2024 |
| DOI | http://doi.org/10.1177/00223433231180928 |
| Author | Ryan Brutger,Tim Marple |
| Date | 01 November 2024 |
| Subject Matter | Regular Articles |
https://doi.org/10.1177/00223433231180928
Journal of Peace Research
2024, Vol. 61(6) 903 –916
© The Author(s) 2023
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DOI: 10.1177/00223433231180928
journals.sagepub.com/home/jpr
1225162JPR0010.1177/00223433231180928Journal of Peace ResearchBrutger & Marple
research-article2023
Regular Article
Butterfly effects in global trade:
International borders, disputes,
and trade disruption and diversion
Ryan Brutger
Travers Department of Political Science, University of California
Tim Marple
Google Trust & Safety
Abstract
This article theorizes and tests how different types of interstate conflict across borders affect trade between disputing
parties and trade diversion with third parties. Building on theories of borders as institutions, we differentiate the
effects of two types of international disputes – border disputes and escalated militarized disputes – and draw on 60
years of trade and conflict data to test the effects of these disputes on bilateral and third-party trade flows. We find
that border disputes and militarized disputes each depress trade flows between the disputing countries. However,
legal border disputes are associated with increased trade diversion with non-disputing countries, which may fully
offset the forgone bilateral trade, whereas militarized disputes have the opposite effect. These results show that actors
engaged in trade can offset bilateral trade losses from a border dispute by expanding trade with third parties not
involved in the dispute, but the same cannot be said of offsetting the losses from militarized disputes. The fact that
border disputes and militarized disputes have opposite effects on trade diversion highlights the importance of
examining both the type of dispute and the type of trade flows that are affected when studying conflict and trade
and evaluating the potentially pacifying incentives of international trade.
Keywords
borders, conflict, disputes, trade, trade diversion
Introduction
How do political conflicts affect international economic
relations and what role do economic relations have in
shaping the trajectory of conflicts? These questions have
garnered significant attention from scholars examining
how international economic relations affect the likeli-
hood of war (Gilpin, 1987; Mansfield & Pevehouse,
2000; Kinne, 2012), and those interested in how polit-
ical and military tensions affect trade relations (Pollins,
1989; Barbieri & Levy, 1999; Anderton & Carter, 2001;
Kastner, 2007; Davis & Meunier, 2011). While scholar-
ship on these issues has contributed a great deal to our
understanding of trade and conflict, there is also a
growing literature addressing political conflict, trade
diversion, and international borders. Scholars have
suggested that mutually recognized borders can provide
joint-gains that incentivize the resolution of border dis-
putes (Simmons, 1999; Schultz, 2015) and that borders
help coordinate economic activities (Carter & Goemans,
2018). With Russia’s invasion of Ukraine in 2014, and
the continuing conflict, the importance of understand-
ing the costs of territoria l conflict have risen. Imp or-
tantly, the costs are not just borne by the disputing
parties but can also spread to third parties. For example,
Crozet & Hinz (2020) find that Western countries saw a
significant decline in trade following Russia’s annexation
of Crimea, partially attributed to the costs of
Corresponding author:
brutger@berkeley.edu
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