Conflict and trade

Abstract

This paper extends the conflict-trade model to incorporate geographic distance. It expands prior research on contiguity in two ways. First, unlike other studies, it examines how geographic distance between countries affects cooperation as well as conflict. Second, it incorporates distance's indirect effect on bilateral trade, which in turn affects conflict. The results show that distance reduces both cooperation and conflict between countries. However, cooperation is decreased more than conflict so that net conflict (conflict minus cooperation) rises as geographic distance between two countries increases. But in addition, distance simultaneously increases transportation and other trading costs, thereby leading to increased conflict and decreased cooperation working through diminished trade. As such, contiguity enhances conflict when contiguous states exhibit little trade. Distance's direct impact on net conflict is miniscule compared to its impact through trade. © 2004 Elsevier Inc. All rights reserved.