Research Seminar

Heterogeneity Matters: On the dynamic interaction between trade, development, democracy and conflict — Katrin Kamin

15 Oct 2019

Institut für Weltwirtschaft


Katrin Kamin (Kiel University (CAU) and GIGA Hamburg)


The past decade has witnessed a  return to protectionist measures as well as a global rise in nationalist movements. Understanding the economic and political effects of such changes in trade policies or levels of democracy has gained renewed importance. There is a vast amount of literature studying the bilateral relationships between international trade flows, democracy, development and conflict. While it finds strong evidence for correlations between the four factors so far no conclusive evidence has been presented as to the direction of causal links between the factors. This paper employs a country specific vector autoregressive model allowing for endogenous dynamic interactions between trade, democracy, development and conflict. More specifically, it analyzes how shocks in one of these variables affect the others over time. The dataset used covers 110 countries and the years 1960 to 2017. Results confirm the presence of simultaneous effects from all variables on one another. In addition, effect size and sign are substantially heterogeneous across countries providing strong evidence against the validity of the homogeneous slope parameter assumption.


Katrin Kamin (Kiel University (CAU) and GIGA Hamburg) – Vanessa A. Boese (V-Dem Institute, University of Gothenburg)


Lecture Hall (A-032)