International Friends and Enemies

TY - JOUR

T1 - International Friends and Enemies

AU - Kleinman, Benny

AU - Liu, Ernest

AU - Redding, Stephen J.

N1 - Publisher Copyright: © (2024), (American Economic Association). All rights reserved.

PY - 2024

Y1 - 2024

N2 - We examine whether, as countries become more economically dependent on a trade partner, they realign politically toward that trade partner. We use network measures of economic exposure to foreign productivity growth derived from the class of trade models with a constant trade elasticity. We establish causality using two different sources of quasi-experimental variation: China’s emergence into the global economy and the reduction in the cost of air travel over time. In both cases, we find that increased economic friendship causes increased political friendship and that our theory-based network measures dominate simpler measures of trading relationships between countries.

AB - We examine whether, as countries become more economically dependent on a trade partner, they realign politically toward that trade partner. We use network measures of economic exposure to foreign productivity growth derived from the class of trade models with a constant trade elasticity. We establish causality using two different sources of quasi-experimental variation: China’s emergence into the global economy and the reduction in the cost of air travel over time. In both cases, we find that increased economic friendship causes increased political friendship and that our theory-based network measures dominate simpler measures of trading relationships between countries.

UR - https://www.scopus.com/pages/publications/105001532314

UR - https://www.scopus.com/pages/publications/105001532314#tab=citedBy

U2 - 10.1257/mac.20220223

DO - 10.1257/mac.20220223

M3 - Article

SN - 1945-7707

VL - 16

SP - 350

EP - 385

JO - American Economic Journal: Macroeconomics

JF - American Economic Journal: Macroeconomics

IS - 4

ER -