Beyond Ricardo: The link between intra-industry trade and peace

In this article, it is argued that horizontal intra-industry trade is associated with reduced conflict propensity within dyads. Horizontal intra-industry trade is characterized by participation in international markets for similar-in many cases, branded-commodities, resulting from economies of scale and consumer tastes for variety. Conversely, inter-industry trade in accordance with the Ricardian and Heckscher-Ohlin models, while providing valuable trade gains, in some instances provokes vulnerability to trade partners, such that its overall impact on dyadic conflict is ambiguous. Support for this expectation is found in empirical tests spanning from 1963 to 2001. Additionally, there is evidence that development is insufficient to preclude conflict when jointly developed dyads engage in no intra-industry trade.