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US Security Strategy and the Gains from Bilateral Trade

Authors

  • Vincenzo Bove,

    1. Department of Government, University of Essex and DISPO, University of Genoa, Colchester, UK
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  • Leandro Elia,

    1. Centre for Research on Impact Evaluation, Institute for the Protection and Security of the Citizen, European Commission–DG Joint Research Centre, Ispra, Italy
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  • Petros G. Sekeris

    1. Department of Economics, University of Portsmouth, Portsmouth, UK
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    • We are highly thankful to the associate editor, Scott Baier, and to two anonymous referees of this journal for their comments that have significantly improved our paper. We are also grateful to Alex Braithwaite, Mathieu Couttenier, Han Dorussen, Davide Ticchi, Stergios Skaperdas and Eik Swee for their extremely helpful insights. We also thank seminar participants at the University of Essex, University of Amsterdam, IMT Lucca and at the Catholic University of Milan, as well as participants at the ISA conference in San Francisco for valuable comments on earlier versions of the manuscript. The responsibility for any remaining errors or omissions is our own. The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.

Abstract

We explore the geo-strategic determinants of bilateral trade flows between the USA and the rest of the world. We develop a three-party model of security and trade patterns and use data on military assistance and troop deployments over the 1950–2009 period to validate its predictions. We find that security assistance has significant, positive impacts on the shares of bilateral trade between the USA and the recipient country, results that are robust to issues of reverse causality and hold across different sectors.

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