Peace matters for bilateral trade: An empirical evaluation using a gravity model for Pakistan
DOI:
https://doi.org/10.15355/epsj.20.2.26Keywords:
peace, gravity model, tradeAbstract
While studies of trade do consider conflict as a factor in gravity models, they do not consider the converse impact of peace. Using the Global Peace Index this article considers the case of trade between Pakistan and its neighbours which, despite considerable potential, remains very low. It considers whether introducing a measure of peace into a gravity model better explains the patterns of trade. The empirical analysis suggests that it does, and while Pakistan’s bilateral trade flows are mainly affected by the economic size of trading countries and a common border, distance had a significant role only in the presence of peace between trading partners.
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