Economic Peace Revisited

Dawid Walentek
University of Amsterdam

Introduction

  • Democracies do not go to war with one another – democratic peace (Bueno de Mesquita et al., 1999)
  • Democracies do not sanction one another – economic peace (Lektzian and Souva, 2003; Cox and Drury, 2006)​
  • Mixed empirical results on economic peace (Hafner-Burton and Montgomery, 2008; Wallace, 2013)

Literature

  • Structural argument for economic peace (Lektzian and Souva, 2003)
  • Normative argument for economic peace (Cox and Drury, 2006)
  • Public choice argument for economic sanctions (Kaempfer and Lowenberg, 1998)
  • Economic peace driven by the US (Hafner-Burton and Montgomery, 2008)
  • Economic peace driven by issue salience (Wallace, 2013)

Literature

  • Domestic audience benefit for democratic leaders regardless of the sanction outcome (Whang, 2011)
  • Democracies are not more resilient targets of economic sanctions (Bapat and Kwon, 2015)
  • Democratic leaders not less likely to impose sanctions on major trade partners (Bapat and Kwon, 2015)
  • Updated TIES data set (Morgan, Bapat and Kobayashi, 2014)

Puzzle

  • Building blocks of economic peace theory at odds with recent empirical research on economic sanctions.
  • Inconsistent results on economic peace – subject to data and methodological choices.
     
  • Is there an economic peace?

Hypotheses

  • H1: Democracies are less likely to sanction one another.

  • H2: Democracies are more likely to issue economic sanctions.

  • H3: Democracies are less likely to be a target of economic sanctions.

  • H4: The US is the only democracy less likely to sanction other democracies.

  • H5: Economic peace between democracies depends on issue salience.

Theory testing

  • H1 – economic peace
  • H1 and H3 – structural economic peace
  • H1 and H2 – normative economic peace
  • H2 – public choice theory of economic sanctions
     
  • H4 – economic peace driven by the US
  • H5 – economic peace driven by salience

Data

  • TIES (Morgan, Bapat and Kobayashi, 2014)
  • Polity IV (Marshall, Gurr and Jaggers, 2018)
  • Correlates of War (Barbieri, Omar and Omar, 2016)

Variables

  • DV: imposition after a threat has been issued.
  • IV: democracy score sender, democracy score target and dyad democracy score.
     
  • AUTOC and DEMOC score in Polity IV data
  • Democracy score as a continuous variable
  • Unconditional main effect and interaction term

Table I

Summary statistics

Econometric model

  • Problems with the rare-event logit
  • Threats as counterfactual observations
  • Consistency or accuracy
     
  • Model:
Y(Imposition)=β_0+β_1 (std) democracy \,score \,target +β_2 (std) democracy \,score \,sender +β_3 (std) interaction \,term+β_4 Control \,variables+ϵ

Results

  • Democracies more likely to sanction one another (weak)
  • Democracies more likely to issue sanctions
     
  • Results consistent with Public Choice approach (Kaempfer and Lowenberg, 1998)
  • No economic peace
  • No special role of US
  • No special role of issue salience

Table II

Democracy and economic sanctions (continuous score, all years)

Robustness

  • Replication of Wallace's (2013) study – years 1971 to 2000
  • Replication with dummy democracy score
  • Absent threats treated as a failed threat
     
  • All replications largely consistent with the main findings
  • Using dummies increases S.E.

Table III

Democracy and economic sanctions (continuous score, years 1971-2000)

Table IV

Democracy and economic sanctions (dummy score, all years & 1971-2000)

Summary

  • Main purpose: behaviour of democracies in respect to economic sanctions
     
  • New TIES data
  • New research design
     
  • Support for Public Choice theory
  • Absence of economic peace

Discussion

  • Rise of economic sanctions popularity, due to rise in democratisation?
  • Substitution of military conflict with economic coercion among democracies?

Thank you

Dawid Walentek

d.m.walentek@uva.nl