International Trade

International Trade

International trade is understood as the ability to import and export “an item (good, service, asset…)” between different countries (Deardorff, 2000). The discussion about the importance of international trade has existed since at least antiquity, where various positions have formed arguing for and against trade, such as the debate between the benefits trade offers a state compared to the disadvantages it will cause within parts of the domestic economy (Irwin, 2001), namely the scarce domestic factors (that will be jeopardized from imports of the same “abundant” factor from outside states). In terms of international politics, it is important to view trade in relation to the national interest of the state. The debate about how to conceptualize international trade stems from theoretical differences about not only the role of the state, but also about the best way to guarantee a state’s national interest. One of the first theoretical arguments in the literature is the liberal perspective of what trade can do for the national interest. In summarizing the differences between liberal theory of trade, Barbieri (2002) explains that the liberal position is that the state’s interest is “driven by a desire to maximize social welfare” of its people (19). According to liberal theory, trade is used “as a vehicle to achieving this goal” (19). Furthermore, if one believes the state exists for this purpose of upholding the “national welfare” of the population, then trade can be used to ensure peace for all states (Barbieri, 2002). Copeland (1996) explains that one of the earliest arguments for trade set forth by Cobden revolved around the idea that trade can benefit the national interest of a state and its citizens. Specifically, the liberal theory rested on the idea that states needed to rid of the idea of “power politics” and instead improve their national interest by trading (8).

Realism and International Trade

The realist theoretical perspective of international trade differs from the liberal position in terms of not only the uses of trade, but more importantly as to the exact type of national interest of the state. This theory has its foundations from a mercantilist system that emphasized trade not for “national welfare” but in order to purse power and state security (Barbieri, 2002). Mercantilism believed that in order to secure their national interests, states needed to obtain a “favorable trade of balance” where exports were outweighing imports. This would give the government additional metals such as gold that would be directly relate to the overall power of the state by having wealth or “by enriching the country which would thus place the country in a better position to contribute to the power of the state by taxes and services” (Hirschman, 1969: 4). Mercantilist trade policy also favored increasing the amount of raw materials, since it believed raw materials would better serve the state by increasing “industry” and also building the “national defense” of the state (Irwin, 2001). Early proponents of this theory also saw the importance of trade and national security in terms of power relative to other states where “[a]n increase of wealth through foreign trade leads to an increase of power relative to that of other countries” (5), (a position differing from free trade proponents such as Adam Smith) (Hirschman, 1969: 5). Thus, the realist’s main objective for trade is the national security for the state. Realists worry that by trading with other states, the state is “vulnerable” (Barbieri, 2002: 8) since trade can be used as a political weapon during conflict by another state, thus endangering the survival of the state (Barbieri, 2002; Waltz, 1979, in Copeland, 1996). Since realist theory suggests that since the goal of the state is to maintain its security, they argue that trade rules can be ignored at the expense of a state’s “national interest” (Barbieri, 2002: 19). Related arguments suggest that a state should establish other trading ties in case one link is severed during conflict so as to not be reliant on one country’s goods (Hirschman, 1967).

Measuring International Trade

From this discussion, how we conceptualize and operationalize trade is thus strongly related to our theories about international trade. Barbieri (2002) explains that the reason why we have so many different measurements of trade is because of the difficulty in agreeing upon what exact “concepts” to operationalize variables from (53). Ripsman and Blanchard (2003) explain that scholars have a difficult choice to make when deciding what conceptualization of trade to follow, selecting between liberal conceptualizations and realist conceptualizations, specifically “choos[ing] whether to focus on openness or the economic opportunity costs of conflict” (312; also citing Stein, 1993: 258-59; McMillian, 1997; Mansfield & Pollins, 2003). To highlight just how un-unified the field is in terms of conceptualizing and operationalizing trade, Barbieri (2002) cites Hirsch (1986) who, in attempting to gather different conceptualizations of trade, had over sixteen operationalizations of trade due to a lack of consistency in theory about trade.

International Trade and Interdependence

The literature in the field has examined different conceptions of international trade and interdependence. For example, in conceptualizing international trade between states, scholars explain that the field “has two meanings” (Mansfield & Pollins, 2003: 11). The first conceptualization of trade and interdependence is understood as “sensitivity” which occurs when economic events in one state impact another state’s economy, and the second being “vulnerability,” namely where high costs are involved for ending trading between two states (Mansfield & Pollins, 2003). Mansfield and Pollins (2003: 11) explain that “[t]he key difference between sensitivity and vulnerability interdependence hinges on the costs that countries would bear should relations between them be disrupted” (11). While trade is conceptualized in a way to take into account liberal and realist theories of international trade, the most frequent measure of trade is actually the use of trade openness, due to the difficulty of combining sensitivity and vulnerability into one measure, and also because of “a paucity of data available on other forms of economic exchange (Mansfield & Pollins, 2003: 11).[1] This measure has been found to be related to the liberal argument that trading states are less likely to conflict. However, realists argue that this measurement does not accurately capture vulnerability since states are able to find other avenues to receive needed goods, that the measure “tends to be highly correlated with each partner’s economic size[,]” and the concern that how “cost” is measured may not truly stop the larger of the two trading states from militarily forcing the smaller state to continue to trade (Mansfield & Pollins, 2003: 13). Since the measurements of international trade may be adequate to those who prescribe to a liberal theory of trade, what is needed is to accurately indicate the costs each state would accrue if they stopped trading, a measurement more in line with realist theory of international trade. The problem with this again is the“[difficulty] obtaining reliable estimates of the situation” of the exact costs in that specific trading relationship (11).[2]

We see such debates about concept of trade played out in the discussion of the impact of international trade and interdependence on conflict and cooperation. In fact, scholars as recently as this year and have said that despite the heavy emphasis on examining the relationship the theories of trade on conflict, “there is no agreement on the nature and direction of this relationship” (Maoz, 2009: 223). Scholars on both sides have argued for the benefit (or lack thereof) of trade on conflict. For decades we have heard that interdependence leads to “cooperation” among states (Nye, 1971, in Gasiorowski, 1986; Hirschman, 1977, in Pevehouse, 2004; Viner, 1985). Numerous studies in the last twenty years have supported the notion that trade reduces conflict, finding dyads heavily reliant on trade with one another are less likely to be involved in conflict because states aim at “maximize[ing] their own social welfare” by developing and trading a particular product that gives them a comparative advantage. The liberal argument is thus that a high level of interdependence should lead to a reduction in conflict, since conflict is expected to negatively impact trade benefits (Polacheck, 1980 60; Copeland, 1996). Oneal, Russett, and Maoz (1996) and Oneal and Russett (1997; 1999) find in various studies that liberal factors of trade and democracy (and membership in organizations) lead to a decrease in conflict. More recent research by Maoz (2009) also rejects the notion that trade increases conflict.

Realists take objection to this line of thinking however, and instead adopt the theory that that interdependence is “costly” (Gasiorowski, 1986), and that international trade actually leads to more conflict (Mastanduno, 1991; Vogel, 1992, in Kang & Reuveny, 2001), since states will resort to conflict to ensure that the trading continues (North, 1975; Park et. al, 1976; Ashley, 1980, in Kang & Reuveny, 2001; Copeland, 1996). We have seen scholars highlight the problems of “asymmetric interdependence” (Keohane & Nye, 1973) where a more powerful state can use its might to increase resources from other interdependent states (Gasiorowski, 1986: 26). Copeland (1996) (citing Waltz, 1979) explains that since states are always concerned with security in an anarchical system, a state will do what it can to reduce “vulnerability” associated with a particular product being cut off. Copeland (1996) argues that we see this with oil. Along with this, Copeland (1996) also finds that if a country expects that trade relations will be high for a long time, international trade is likely to reduce conflict. However, if states expect trade to decline in the future, then the country losing out most may be more likely to begin a conflict with the other trading state. Other work by Barbieri (1996; Barbieri & Peters, 2003) also suggest that strong interdependence is more likely to increase conflict, or “that political relations affect flows of commerce between nations, and that when this effect is accounted for, the apparent impact of trade on conflict disappears” (Keshk, Pollins, & Reuveny, 2004: 1176).

Thus, one of the major differences in the findings of international trade and conflict between the works of Oneal and Russett (1997, 1999) and Barbieri (1995, 1996, 1998 (in Gartzke & Li, 2003) has to do with measurement of the concept of international trade. We notice in the academic literature that much of the recent discussions on the impact of trade on conflict among scholars have been centered on data issues” (Stein, 2001) and the different datasets used (Benson, 2005), as well as how variables are operationalized. For example, Gartzke and Li (2003) find that results of interdependence on conflict depend on how interdependence is operationalized. When interdependence is operationalized as trade share, trade does increase conflict, whereas if a trade dependence measure is used, this leads to the finding that interdependence does reduce conflict, whereas trade openness is found to be “negatively correlated with MID onset” (2003). From this, Gartzke and Li (2003) explain that there actually may not be a theoretical divide on the question of trade and conflict since it may just depend on how interdependence is operationalized.

Conclusion: International Trade

From this discussion, it is necessary to improve the concept of trade (as well as existing data) so that we can accurately understand the complex effects of international trade on a state (Barbieri, 2003), but also in the framework of international trade as related to conflict. Thus, in order to better establish concepts of trade, new concepts should include joint aspects from liberal and realist theories of international trade, particularly focusing on trade vulnerability and “opportunity costs” (Ripsman & Blanchard, 2003: 310), since it is now the case that “[s]upporters of liberal claims tend to employ indicators emphasizing the themes of openness and absolute gain,…supporters of realist and neomercantilist arguments tend to highlight the theme of vulnerability and relative gain”(Mansfield & Pollins, 2003: 16). New concepts should also consider specifying the impact of particular products (Dorussen, 2006) in order to ensure that the findings in the literature are accurately measuring the concept of international trade. Mansfield and Pollins (2001) even argue for “drawing on the Stolper-Samulsen theorem” to examine which groups in a society benefit from international trade and which ones don’t, specifically drawing attention to domestic factors (841), or even how conflict affects groups within a “specific-factors framework” (842).


[1] Other indicators such as gain (which emphasizes the liberal argument of “gains”), as well as “vulnerability” (which that focus more on “trade asymmetry” have also been used (Mansfield & Pollins, 2003: 12).

[2] Ripsman and Blanchard (2003) argue for conceptualizing and operationalizing trade as “opportunity costs of conflict” because they believe that this measurement would work in even testing the liberal argument that trade pacifies conflict, because if the theory was right, one would expect to see a lack of conflict regardless of the type of war because of the expected importance of trade.


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