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ABSTRACT This paper extends the analysis of the conflict-trade relationship by introducing foreign direct investment (FDI). We present a formal model that shows why FDI can improve international relations. We then proceed to test the... more
ABSTRACT This paper extends the analysis of the conflict-trade relationship by introducing foreign direct investment (FDI). We present a formal model that shows why FDI can improve international relations. We then proceed to test the model empirically. Our empirical results in fact show that foreign direct investment plays a similar role to trade in affecting international interactions. More specifically, we find that the flow of FDI has reduced the degree of international conflict and encouraged cooperation between dyads during the period of the late 1980 and the decade of the 90s. This is an especially important finding since one of the main characteristics of globalization has been the reduction of barriers to international capital flows. As a consequence, these have expanded enormously relative to trade flows. Finally, we also find that trade and FDI complement each other in reducing conflict. The policy implication of our finding is that further international cooperation in reducing barriers to both trade and capital flows can promote a more peaceful world.
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In the developed world since the end of the Cold War, the theater of conflicts has moved from the military to the economic sphere. Globalization has modified the balance between economic, political, and international relations by... more
In the developed world since the end of the Cold War, the theater of conflicts has moved from the military to the economic sphere. Globalization has modified the balance between economic, political, and international relations by reinforcing the importance of geo-economics over geo-politics. From now on, the notion of power will be symbolized by the economy, even by diplomacy, rather than by the military. The new war is economic, and the United States was the first country to take note of this change. Since the early 1990s, the USA has incorporated economic security into national security. The emergence of new powers such as China or the cultural and structural approach to business intelligence of other countries such as Japan challenge the notion of American supremacy. In this new environment, knowledge and expertise represent the comparative advantage of the 21st century, which generates wealth. Although compared to these new powers France has been left behind, the country does have assets such as competitiveness, the basis for strategic intervention, and the evolution of legislation. The goal of the paper is to answer the following question: What are the strengths and weaknesses of the French system of business intelligence as compared to foreign ones (notably the American, the Japanese, and the Chinese)?
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By nowthere is a substantial literature in economics pioneered by George Stigler (1971) and refined by Sam Peltzman (1976) and Gary Becker (1985) that analyzes the role the state plays in redistributing wealth across different groups in... more
By nowthere is a substantial literature in economics pioneered by George Stigler (1971) and refined by Sam Peltzman (1976) and Gary Becker (1985) that analyzes the role the state plays in redistributing wealth across different groups in society. This transfer ofwealth can be effectuated implicitly by government laws and regulations or by direct taxation and the redistribution of the revenues
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Studying the determinants of international conflict, researchers have found a series of influential variables, but few have addressed the robustness of the results to changes in the definition of the dependent variable, conflict. The two... more
Studying the determinants of international conflict, researchers have found a series of influential variables, but few have addressed the robustness of the results to changes in the definition of the dependent variable, conflict. The two main sources for operationalizing conflict in empirical work are data on militarized interstate disputes (MIDs) and events data. In this paper, we find that a chi-square test indicates a correlation between events data and MIDs data. However, detailed regression analysis indicates that there are some contradictory findings depending on whether we use events data as opposed to MIDs data to measure conflict.
The theory of alliances allows us to understand the nature and the functioning of alliances, particularly NATO and its recent evolution. However, NATO remains a unique and specific example and the studies applying the numerous hypotheses... more
The theory of alliances allows us to understand the nature and the functioning of alliances, particularly NATO and its recent evolution. However, NATO remains a unique and specific example and the studies applying the numerous hypotheses and conclusions of alliance theory to other organizations are rare. Consequently, this article tries to compare the characteristics of three organizations (ECOWAS, SADC and ASEAN) with NATO. These three organizations are not explicitly military alliances and their statutes and missions are less precise and less defined than those of NATO. Indeed, they can pursue economic objectives, as for example, economic development. An analysis of data from these four organizations allows us to compare the similarities and the differences between these organizations according to their fundamental objectives and purposes.
In the developed world since the end of the Cold War, the theater of conflicts has moved from the military to the economic sphere. Globalization has modified the balance between economic, political, and international relations by... more
In the developed world since the end of the Cold War, the theater of conflicts has moved from the military to the economic sphere. Globalization has modified the balance between economic, political, and international relations by reinforcing the importance of geo-economics over geo-politics. From now on, the notion of power will be symbolized by the economy, even by diplomacy, rather than by the military. The new war is economic, and the United States was the first country to take note of this change. Since the early 1990s, the USA has incorporated economic security into national security. The emergence of new powers such as China or the cultural and structural approach to business intelligence of other countries such as Japan challenge the notion of American supremacy. In this new environment, knowledge and expertise represent the comparative advantage of the 21st century, which generates wealth. Although compared to these new powers France has been left behind, the country does ha...
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A Simple Growth Model of the Cuban Economy is part of the 2014 Annual Proceedings of The Association for the Study of the Cuban Economy.
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Currently there is a small, but growing, literature extending analysis of the conflict-trade relationship by introducing foreign direct investment (FDI). We present a formal model that illustrates how FDI can improve international... more
Currently there is a small, but growing, literature extending analysis of the conflict-trade relationship by introducing foreign direct investment (FDI). We present a formal model that illustrates how FDI can improve international relations, as does trade. We then proceed to test the model empirically adopting three innovations: First, we employ unique bilateral FDI data instead of systemic FDI used in most past studies. Second, we utilize a simultaneous two-equation estimation approach to account for the fact that multinational corporations typically invest only in politically stable countries. One equation defines FDI as determined by political stability, and the other defines international interactions as a function of FDI. Third, we employ new 1990-2000 Virtual Resource Associates (VRA) events data to measure cooperation and conflict between countries. Our empirical results show that foreign direct investment plays a similar role to trade in affecting international interactions....
Becker (1985) that analyzes the role the state plays in redistributing wealth across different groups in society. This transfer of wealth can be effectuated implicitly by government laws and regulations or by direct taxation and the... more
Becker (1985) that analyzes the role the state plays in redistributing wealth across different groups in society. This transfer of wealth can be effectuated implicitly by government laws and regulations or by direct taxation and the redistribution of the revenues to different groups (Meltzer and Richard 1981). The key feature of models in this literature is that the redistribution is implicitly assumed to occur repeatedly across the same groups at a given moment in time but not between different groups over time. These static models of govern-ment behavior contrast with macroeconomic models that view govern-ment policy from a normative prospective and analyze it within a dynamic framework. For example, Robert Barro (1979) assumes that the state chooses a tax path subject to the constraint that individual taxpayers seek to maximize their intertemporal utility. With notable exceptions, the public choice literature has not focused on the possibilities available to the state to transfer...
This paper presents empirical evidence which at first glance appears to show that firms are not pricing to maximize profits. We then present a model to explain how this behavior is in fact optimal when we account for additional... more
This paper presents empirical evidence which at first glance appears to show that firms are not pricing to maximize profits. We then present a model to explain how this behavior is in fact optimal when we account for additional constraints faced by firms in certain product markets.
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The last decade of the 20th century was marked by a profound change in the structure of the international political system and with it the foreign policy priorities of the United States. Yet, one policy that has remained unchanged for... more
The last decade of the 20th century was marked by a profound change in the structure of the international political system and with it the foreign policy priorities of the United States. Yet, one policy that has remained unchanged for close to 40 years has been the use of a unilateral embargo on Cuba with the presumed objective of provoking a change in the behavior of a dictatorial and repressive government. That policy has continued in light of the evidence that the efficacy of unilateral economic sanctions in effectuating political change is at best inconclusive. In fact, Kaempfer and Lowenberg (1988) illustrate how domestic politics influences the design and severity of the sanctions to account for the varying interests of different constituencies (see Seiglie 1997 for an application to the case of Cuba).
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This paper extends the analysis of the conflict-trade relationship by introducing foreign direct investment (FDI). We present a formal model that shows why FDI can improve international relations. We then proceed to test the model... more
This paper extends the analysis of the conflict-trade relationship by introducing foreign direct investment (FDI). We present a formal model that shows why FDI can improve international relations. We then proceed to test the model empirically. Our empirical results in fact show that foreign direct investment plays a similar role to trade in affecting international interactions. More specifically, we find that the flow of FDI has reduced the degree of international conflict and encouraged cooperation between dyads during the period of the late 1980 and the decade of the 90s. This is an especially important finding since one of the main characteristics of globalization has been the reduction of barriers to international capital flows. As a consequence, these have expanded enormously relative to trade flows. Finally, we also find that trade and FDI complement each other in reducing conflict. The policy implication of our finding is that further international cooperation in reducing bar...
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Reflections on the State of the Cuban Economy is part of the 2015 Annual Proceedings of The Association for the Study of the Cuban Economy.
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This paper presents empirical evidence that interdependence between countries reduces conflict. In particular looking at the United States and Cuba, I argue that it has been Cuban-American relations with their Cuban family which began the... more
This paper presents empirical evidence that interdependence between countries reduces conflict. In particular looking at the United States and Cuba, I argue that it has been Cuban-American relations with their Cuban family which began the process of interdependency. Later on this was augmented by a policy change by the United States permitting trade between the United States and Cuba in agricultural products and other designated humanitarian commodities. Evidence shows that during this period of time the number of conflicts between the United States and Cuba diminished. Some evidence is provided to show the dynamics between South and North Korea and interdependency as measured by trade.
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The Optimal Size of the Military in a Post-Castro Cuba is part of the 1996 Annual Proceedings of The Association for the Study of the Cuban Economy.
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An arms race exists when a country’s propensity to acquire arms is influenced by a potential adversary’s military spending. When evaluating the impact of economic policies towards the developing world, e.g., foreign assistance programs,... more
An arms race exists when a country’s propensity to acquire arms is influenced by a potential adversary’s military spending. When evaluating the impact of economic policies towards the developing world, e.g., foreign assistance programs, it is important to identify if an arms race exist between dyads of recipient nations. The reason is that if the impact of the policy is favorable to the country deemed to be “causing” an arms race, then the policy will not only increase the amount of weapons of the recipient country, but of the other as well. This will increase the probability of war if it is positively related to the stock of weapons of these adversaries.Consequently, this paper investigates the direction of prima facie casual relationship between the military expenditures of potential adversaries in the developing world by using parametric causality tests. We conclude that some of these country’s expenditures seem to reflect an arms race while other proposed dyads seem not to be ad...
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Economic Development in the Tropics: Fiction or Possibility is part of the 1998 Annual Proceedings of The Association for the Study of the Cuban Economy.
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The Political Economy of State-Owned Enterprises is part of the 1993 Annual Proceedings of The Association for the Study of the Cuban Economy.
Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable... more
Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat. Copyright 1996 Blackwell Publishers Ltd..
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The Asian crisis and the problems in many transition economies, especially Russia, have brought to the surface a number of issues that implicitly or explicitly involve addressing one of these two questions: Is eco- nomic development... more
The Asian crisis and the problems in many transition economies, especially Russia, have brought to the surface a number of issues that implicitly or explicitly involve addressing one of these two questions: Is eco- nomic development feasible for some countries? Or its variant: Under what circumstances is economic development feasible for some countries? Over the last thirty years the rapid
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This paper shows that Ricardian equivalence no longer holds once it is recognized that government acts as an intermediary between generations in the provision of national defense. Consequently, the level of public debt is positively... more
This paper shows that Ricardian equivalence no longer holds once it is recognized that government acts as an intermediary between generations in the provision of national defense. Consequently, the level of public debt is positively related to defense spending since this component of government expenditures insures the transferability of bequests, as well as protecting savings. It is shown that defense