Rules Over Real Estate: Trade, Territorial Conflict, and International Borders as Institutions
Journal of Conflict Resolution, Vol 49, No. 6, pp. 823-848, December 2005
26 Pages Posted: 8 Dec 2009
Date Written: December 1, 2005
Territorial disputes between governments generate a significant amount of uncertainty for economic actors.Settled boundary agreements produce benefits to economic agents on both sides of the border.These qualities of borders are missed both by realists, who view territorial conflicts in overly zero-sum terms, and globalists, who claim borders are increasingly irrelevant. I argue that settled borders help to secure property rights, signal much greater jurisdictional and policy certainty, and thereby reduce the costs associated with international economic transactions. The plausibility of this claim is examined by showing that territorial disputes involve significant economic opportunity costs in the form of foregone bilateral trade. Theories of territorial politics should take into account the possibility of such joint gains in their models of state dispute behavior.
Keywords: trade, territorial conflict, international borders
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