Academic journal article Journal of Economic Cooperation & Development

Trade, Interdependence and Its Effect on Interstate Conflict: The Case of the East African Region

Academic journal article Journal of Economic Cooperation & Development

Trade, Interdependence and Its Effect on Interstate Conflict: The Case of the East African Region

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The literature on the effect of trade on conflict/cooperation, or the effect of trade on peace between countries, shows that with regard to theory, there is a difference of opinion among Marxists, realists and liberals. Most of the empirical studies deal with the dyadic approach to examining the effect of trade on peace. As the findings of the vast majority of empirical studies show, integration through trade inhibits conflict between countries. In some countries policy-makers use this assertion in their dealings with issues of peace or conflict. As Goenner (2011)2 indicates, Susan Schwab (2008:6), US representative, claimed that trade has strengthened peace in the Central American region.

Peace is one of the decisive factors for a country's economic growth and development, which is evidenced by the vast amount of research done on the relationship between economic interdependence and interstate conflict. Research on trade and conflict, which focuses on conflict resolution, cooperation and peace-building, is becoming a perennial topic of interest in academia. In the past few years, a significantly large number of empirical studies have been conducted with due emphasis on interstate and intraregional relations and conflict/cooperation.

Several studies on the issue of interdependence explore the cause-andeffect relationships between determinants and bilateral trade within a bloc. Various economic blocs are established in our world and various studies are undertaken to examine their validities. Hassan (2001) adopted a gravity model to examine the validity of the South Asian Association for Regional Cooperation (SAARC). The study disclosed the existence of a potential benefit that must be exploited through cooperation. To realise the potential benefit for SAARC countries, it is suggested that they liberalise trade by removing trade and non-trade barriers.

Hossain and Naser, (2008) analysed the effectiveness of trade and regional integration in the Gulf Cooperation Council (GCC). They found that the key success factor for GCC's regional integration is attributed to the execution of continuous evaluation and analysis of the progress at state level. The GCC has been examining regularly proposals that should be executed collectively and analysing thoroughly issues pertaining to GCC. They revealed that all the six member countries of GCC have exhibited almost the same level of development. Furthermore, an increasing trend is observed in intra-regional trade (imports and exports) and export of high-tech manufactured goods after the implementation of customs union. Similarly, a dramatic rising trend is observed in joint ventures, total capital investment as well as the amount of capital investment per single project after the implementation of customs union. The study revealed that FDI has increased on GCC because of an increased domestic market and stable economic growth success it achieved through the regional integration.

Ghani (2011) examined the impact of trade liberalization on the economic performance of OIC countries. The study revealed that, while trade liberalization has favourable effect on the GDP per capita of the region in the medium term, it does not have significant effect on import and export of the region. After liberalization, it is revealed that no improvement is shown on the ratio of import, export and trade to GDP in OIC region.

It is stated that sub-Saharan Africa is one the most food-insecure regions in the world. This is attributed to the reliance of the region's 85 percent of agriculture on rain. Furthermore, 80 percent of the region's consumption is from the domestic production. Food insecurity has emerged to be a cause for political instability and civil strife in Africa. Food crisis occurred in Africa at the end of 2010 followed by a hiking price of food by 40 percent from January 2010 to February 2011. The food crisis has been associated with instabilities that food riots began in Algeria and in Tunisia in 2011, leading to removal of the regime of Ben Ali in Tunisia followed by Mubark's regime in Egypt. …

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