This research investigates how international politics influences trade flows between major powers from 1907 to 1990.
➡️ Three Political Arguments Tested
- Similar political interests should increase trade.
- Democratic dyads (pairs of democracies) promote greater trade compared to non-democratic pairs.
- Alliances should stimulate increased trade flows between states.
➡️ Methodology & Data
We estimated a gravity model of trade, incorporating these three independent political variables. The long historical period provided variation across all key factors and allowed clear empirical separation between the arguments.
➡️ Key Findings
- Joint democracy significantly boosts trade in bilateral pairs.
- Shared interests also positively influence trade flows.
- Contrary to expectations, alliances do not consistently increase trade when considering system polarity.
