How Much Does Violence Tax Trade?

43 Pages Posted: 13 Jul 2004

See all articles by S. Brock Blomberg

S. Brock Blomberg

Ursinus College

Gregory D. Hess

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: June 2004

Abstract

We investigate the empirical impact of violence as compared to other trade impediments on trade flows. Our analysis is based on a panel data set with annual observations on 177 countries from 1968 to 1999, which brings together information from the Rose [2004] dataset, the ITERATE dataset for terrorist events, and datasets of external and internal conflict. We explore these data with traditional and theoretical gravity models. We calculate that, for a given country year, the presence of terrorism, as well as internal and external conflict is equivalent to as much as a 30 percent tariff on trade. This is larger than estimated tariff-equivalent costs of border and language barriers and tariff-equivalent reduction through GSPs and WTO participation.

Keywords: trade, conflict, terrorism

JEL Classification: E6, H1, H5, D74, O11

Suggested Citation

Blomberg, S. Brock and Hess, Gregory D., How Much Does Violence Tax Trade? (June 2004). Available at SSRN: https://ssrn.com/abstract=564161

S. Brock Blomberg

Ursinus College ( email )

Collegeville, PA 19426-2562
United States

Gregory D. Hess (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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