Goods and Violence: Does Trade Influence Civil War? Shahdad Naghshpour The University of Southern Mississippi

INTRODUCTION Civil war and ethnic conflict tend to be mirror images of each other. In recent history most ethnic conflicts have escalated into civil war, while most civil wars have some sort of ethnic component. In this paper we explore how trade, globalization and political violence tend to create conditions where ethnic conflict and civil war becomes feasible. Conflict initiation is a phenomenon dependent upon multiple factors, with each anchored in the economic feasibility of conflict.

THE ARGUMENT Some assert that the rate of growth and structure of trade matters for the initiation of civil war, these arguments are limited and unconvincing. We investigate trade, globalization, and their influence on civil war. The “greed” based explanation of civil war is based upon the “feasibility hypotheses,” which asserts that rebellion against the central government occurs when feasible—that is economically feasible. We explore how trade raises income and how it can be a mechanism for civil war financing. We test this by examining imports, exports, the level of globalization, and the type of globalization. The magnitude of rebellion is used as dependent variable signaling the breakdown of government control.

DATA The data for this study consists of three parts. One set of data deals with globalization, which is obtained from KOF globalization data, which includes variables on economic, social, cultural, and political globalization (Derher 2006). The other set of data deals with trade. Import and export data are obtained from World Trade Organization. Finally, rebellion data are obtained from Minorities at Risk dataset (see references). Rebellion data are divided into categories from zero, no rebellion, to high of 7. Each rebellion represents an incident by a specific ethnic group. The classes of rebellion can bee seen in Table 1.

Table 1: Average Level of Rebellion Response FrequencyPercentValid Percent Cumulat ive Percent None Reported Political Banditry Campaigns of Terrorism Local Rebellion Small-scale Guerilla Activity Intermediate Guerilla Activity Large-scale Guerrilla Activity Protracted Civil War Totals Missing832.5 Totals

MODEL This work utilizes an ordinal model to analyze the relationship between trade and civil war. We find evidence that the feasibility hypothesis is supported by the data. The model is of the general form: Y = α + β X + ε Where Y is a vector of dependent variable, which is a categorical data with eight classes. The matrix X is a collection of trade, globalization, and related socioeconomic explanatory factors. Since the response variable is ordinal the assumed underlying distribution function for error is a logistic function with variance π2/3.

EMPIRICAL RESULTS Factor Model IModel II Export Import Economic Globalization Political Globalization Gross Capital Formation Population 1.89 (1.91)* (-13.38)*** 0.12 (2.50)** (-1.62) (1.62) (1.96)* (13.38)*** 0.11 (2.07) ** (-1.56) (-2.01)** Levels of significance corresponds to *** less than 0.01, ** less than 0.05, and * less than Table 2. Trade Influence on Rebellion with Eight Levels of Rebellion

Results The two models are identical except for the trade variable. One includes exports while the other includes imports. The signs for exports and imports are positive supporting the claim of increased rebellion when either one increases. This supports the feasibly hypothesis as there are the necessary economic resources to fund a rebellion. Attempts to include both exports and imports in the same model were not successful. Similarly, net trade (exports – imports) or total trade (exports + imports) failed the tests of significance.

Results Economic globalization and political globalization both are significant and have the expected sign, negative and positive, respectively. Gross capital formation is not significant in either model. The level significance is 11.8% in both model I and II. The only surprise comes from population variable. Although the hypothesized relation with rebellion is positive, the observed coefficient is negative in both models, albeit significant only in the second model. This could be due to the fact that some of the most populous countries such as China and US do not have any rebellion during the study period.

CONCLUSIONS The feasibility hypothesis asserts that rebellion will only occur when and where it is economically and materially feasible to do so. Our findings support the feasibility hypothesis. We find that increased imports as well as exports increase rebellion. While economic globalization tends to lower rebellion we see this as a function of trade openness as opposed to actual trade flows. The result that political globalization increases rebellion can be seen in the fact that more politically integrated nations may have more rebellion since rebel groups will want to have their cause publicized by the media or bring it to the attention of other governments.