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Running head: Winning Coalition Causal Mechanism in the Trade-Peace Theory1
Credence to the Winning Coalition Causal Mechanism in the Trade-Peace Theory
Fernando, S, Mendez.
Florida State University
Winning Coalition Causal Mechanism in the Trade-Peace Theory2
Theoretical Debate
Does trade interdependence reduce conflict among autocracies? Since World War II, the world is
experiencing an unprecedented decrease in conflicts, an increase in the number of democratic states, and
an increase in economic interdependence; leading scholars to search for the causal mechanism for this
phenomenon, one of which is that an increase in economic interdependence produces a decrease in
initiation of interstate conflicts. However, scholars have found conflicting results in statistical studies of
empirical data and formal model studies. This leads to the conclusion that, only in democracies there is
statistically significant correlation between trade and a decrease in conflicts. This study suggests that the
conflicting results of those studies in regards to trade and its effect on conflicts contained in the annals of
social sciences could be explained by the utilization of measurements that are not a proper reflection of
the internal structures of all regime types. By selecting states classified as non-democratic and
differentiating those on winning coalition size, it should provide direct evidence amongst autocracies to
the effect that winning coalition size has on conflict initiation when trade is present.
Literature review
There is a plethora of studies with regards to conflict which aim to ascertain what causes conflict
and what prevents it. Montesquieu (1900) claimed famously, ‘Peace is the natural effect of trade. Two
nations who traffic with each other become reciprocally dependent; for if one has an interest in buying,
the other has an interest in selling.’ Globalization has increased foreign direct investment for the past half
of a century and this has exacerbated the interest of individuals and the government itself on the economic
wellbeing of the countries being invested in, further decreasing the probability of armed conflict (Gartzke,
Li, and Boehmer 2001; and Polachek, Seiglie, and Xiang 2007). However, there are inherent issues in this
theory that are not properly addressed: Whether the causal effects are due to exit cost or opportunity cost,
the endogeneity of the relation between trade and conflict, and the Trade-Peace Theory effects on all
types of regimes.
Winning Coalition Causal Mechanism in the Trade-Peace Theory3
Exit cost causal mechanism is where a state utilizes the benefit from trade received by the non-
belligerent state as an increase in the range of the request placed by the belligerent state. Therefore, trade
may create an unbalanced exit cost and dyadic conflict, because a state that is benefiting more from trade
is susceptible to its trade partner, who can coerce a change in the dyadic status quo (Keohane, 1977). Exit
cost is addressed by Timothy M. Peterson (2013) by using a strategic commodity variable such as fuels,
iron, steel, industrial machinery, and arms. Yet, these strategic commodities lack the resonance of
universally essential commodities, leaning more towards developing or developed states necessities. His
finding is that unilaterally high exit cost increases the probability of higher levels of conflict, while a high
exit cost from both party decreases the likelihood of conflict. All findings are more pronounced when
analyzed with the variable of strategic commodities. However, the exit cost mechanism does not account
for the alternatives available to the belligerent state, such as opportunity cost of peace and the subsequent
economic benefit of continuing peace, both of which have an impact on the range of bargaining (Solomon
Polachek and Jun Xiang January 2010). To address this, some studies utilize game theory framework in
conjunction with exit cost and opportunity cost. Polachek and Xiang (2010) argue that the opportunity
cost of conflict is the causal mechanism for an inverse trade-conflict relation in a game theory framework,
indicating that the states do not to rely on signaling. Polachek and Xiang (2010) postulate a theoretical
basis argument in the context of simplified models. They find that states are less likely to fight for “fear”
of losing the benefit of economic interdependence. They also conclude there is a negative correlation in
the amount of benefit from trade for each dyad and the likelihood of conflict. By including opportunity
cost of continuing trade, they provide theoretical basis to refute exit cost causal mechanism in the
coercion or signaling studies and provide support to the empirical evidence in today’s literature.
Evident in the Trade-Peace Theory are the three types of endogeneity issues, where there is a
confounding variable causing both the independent and dependent variable. Second, where some
variables or factors that are dependent on time. Lastly, where there is a reverse causality between the
independent and independent variable. To test the issues of time, studies such as Keshk, Pollins, &
Winning Coalition Causal Mechanism in the Trade-Peace Theory4
Reuveny (2004) and Kim & Rousseau (2005) incorporate years of peace to account for the endogeneity,
but they fail to account for the size of the country and the distance between dyadic. This causes the trade
variable to account for the previously mentioned omitted variables and produce an invalid result. In Oneal
and Russett (2010) the endogeneity issue of confounding variables in regards to trade and conflict is
addressed by incorporating the gravity model, which includes the size of the nation and the distance
between the states into the analysis of conflict. In economic terms, the sizes of the nations are
proportional to the quantities supplied and quantities demanded, the sizes is also proportional to possible
military capabilities. The distance between the nations is correlated to the cost of performing trade as well
as the cost of engaging in conflict. Additionally, Oneal and Russett (2010) account for the reverse
causality by performing simultaneous equations that capture the reciprocal effects of trade and conflict.
Thus, by incorporating these previously omitted variables and performing simultaneous equations Oneal
& Russett (2010) reaffirm the trade-peace theory by finding evidence of reduced likelihood of conflict
when trade is present.
The last issue that is not always address, or, when it is address, the results are not always
statistically significant is Trade-Peace Theory effects on all types of regimes. For instance, the study of
Gelpi and Grieco (2008) accounts for almost every single variable that could potentially affect the
dependent variable and introduces the idea that trade has a different effect(s) on democracy and
autocracy. They find that trade does not impact autocratic leaders’ disposition for conflict. In the case of
mixed regime type there is a restraining effect from trade. However, it is not statistically significant.
Lastly, democracies are statistically significantly associated with a decrease in likelihood for military
conflict and are even less likely to engage in military conflict with trade being present. Gelpi and Grieco
(2008) conclude that to a higher degree than trade, the type of regime affects the probability of initiating
conflict.
The findings in Gelpi and Grieco (2008) might be caused by the nature of the classification of
regime types. The variable for regime type is not necessarily a valid measurement for winning coalition
Winning Coalition Causal Mechanism in the Trade-Peace Theory5
size, which is the basis for their theory in regards to the difference between democracy and autocracies.
They utilize polity III which is a 9 variable measurement of governments: binary for autocracy or
democracy measured across eight indicators of political authority: regulation of executive recruitment,
competitiveness of executive recruitment, openness of executive recruitment, monocratism, constraints on
the chief executive, regulation of political participation, competitiveness of political participation, and
centralization of state authority (Jaggers, 1996). Which reflects more accurately winning coalition in
democracy and autocracy but fails to assess the winning coalition of mixed regimes.
Theoretical argument
This paper ascertains the relationship between winning coalition, defined as those who support is
necessary for victory or continuation of power within a state, and trade dependency, defined as the level
of dyadic trade as a portion of GDP, effect on the probability of conflict initiation classified by
identifying the first state to threaten or to use militarized force. The causal mechanism that explains why
there are different types of regimes based on the independent variable of winning coalition is established
by modernization theory. The second independent variable can be explained by Stolper-Samuelson’s
theorem and Rybczynski theorem’s under the frame of Heckscher-Olin theorem. Lastly, the dependent
variable can be explained by the selectorate theory.
According to an abundance of literature and empirical evidence regarding to modernization
theory, it provides causal mechanism to explain the process by which states become different type of
governance. Modernization and democracy are symptoms of changes within a country based on
industrialization. Once the development of industrialization is set in motion, factors of socioeconomic
nature begin to increase: occupational specialization, urbanization, education levels, life expectancy, and
economic growth. This creates a self-reinforced mechanism and institutions that increase the probability
of sustain democratic government. While modernization theory predating the fall of the Soviet Union was
mostly correct, it lacked essential caveats to the causal mechanism. First, it is not only a matter of per-
Winning Coalition Causal Mechanism in the Trade-Peace Theory6
capita GDP, exemplified by the case study of Qatar, but also a matter of shift in production from labor
intensive goods to capital intensive goods. Second, the process of modernization is not linear. It has
inflection points at different levels that must have a catalyst to be overcome (Welzel, 2009). Lastly, the
shift in production must provide a credible exit strategy for its citizens and the government must be
dependent to its citizens; therefore production of non-movable resources such as oil or precious minerals
do not provide the means for citizens to have bargaining power within their government to request
democratic institutions, and a state that is not dependent on their citizen has no inclination to oblige their
requests regardless of their exit strategy (Ross, 2001).
The second independent variable, comes together under the frame of Heckscher-Olin theorem,
Stolper-Samuelson theorem and Rybczynski theorem explaining that the reason why states trade is due to
comparative advantage differences. These are defined as the ability for a nation to produce goods and
services at a lower opportunity cost than others. Five main factors go into the differences in trade when
comparing states. First factor is the differences in production function, which is the output of production
given the factors input to the production process or in laymen’s terms the efficiency of production. The
second factor is differences in relative endowment: the land, labor, and capital allocated within the state
that can be used in production. It is important to note that different production utilize intensively of
different factors. The third factor is different return of scale for production, defined as the increased in
output given an increase in input. Fourth factor is the taste of consumers, which is the preference of
people for a given product. The last factor is the distortion of trade such as: taxes subsidies, imperfect
competition, and barriers to entry (Keith, 1995).
The selectorate theory introduced by Bueno de Mesquita (2003) explains the dependent variables
effect on the independent variable. Bueno de Mesquita (2003), describes three components of the
individuals in any given state: disenfranchised, selectorate, and winning coalition. The disenfranchised
are defined as those who live within the state but do not have input into the selection of political leaders.
Historically, slaves were the prime examples. The selectorate are defined as those who can choose the
Winning Coalition Causal Mechanism in the Trade-Peace Theory7
government’s leadership and that enjoy benefits given by the government. The winning coalition is
defined as a subset of people within the selectorate that can leverage the political selection to their favor.
The theory centralizes on how the proportions of winning coalition to the selectorate produce different
types of constrains and how these constrains modify political behavior under the auspice of Political
Ambition Theory. These theories state that the primary goal of politicians and heads of states is to remain
in power (Bueno de Mesquita & James Morrow, 1990). To do so, leaders must satisfy their winning
coalition. In cases where the winning coalition is small, such as autocracies, the leader will use private
goods to satisfy the coalition. When the winning coalition is large, such as democracies, the leader will
use public goods to satisfy the coalition (Olson, 1993). Furthermore, political leaders make foreign policy
decisions with both domestic, as well as international threats to their continuation of power in mind (Ray,
2014).
The effects of trade, embodied in studies that include international trade and globalization,
establish a solid foundation that indicates that the quality of life and human development are positively
correlated to an increase in trade (Sirgy, Lee, Miller, & Sirgy, 2004). Therefore, the theories presented in
the theoretical argument provide the causal mechanism, founded in empirical evidence, that, in a
democracy where winning coalition is the largest, general trade has the greatest impact to the survival of
political leaders over all other types of regimes. This is due to the inability of democratic political leaders
to remunerate the winning coalition for the losses incurred by military conflict (Grieco, 2008). Eloquently
expressed by Immanuel Kant “democratic states would be inherently peaceful simply and solely because
in these states, citizens rule the polity and bear the costs of wars” (Doyle, 1983).
The literature establishes that democracies are less likely to initiate military conflict than
autocracies, however these binary measurements of governments are the ends of the spectrum of winning
coalitions. Thus, regardless of the accuracy and validity they provide to the democratic peace, they fail to
ascertain the causal mechanism behind the theory, which is the winning coalition size. Extrapolating the
literature consensus guided by the theoretical argument, this research asserts that the benefit of trade in
Winning Coalition Causal Mechanism in the Trade-Peace Theory8
autocratic states is the same benefit as those enjoyed by democracies. Thus, an increase in trade
interdependence should increase the opportunity cost and decrease the probability of initiating conflict.
However, as is unlike in a democracies, in an autocracies the winning coalition size varies substantially;
producing diverse levels of incentive for the leaders. The opportunity cost for leaders in autocracy should
be positively correlated to the size of the winning coalition within the states, thus producing a negative
correlation to the probability of the conflict initiation.
Base on the theoretical argument we conclude that countries have a varied levels of winning
coalition size based on the dependence of the state to its citizen, and the citizen ability to shift their
resources to another country. Regardless of the winning coalition size, countries trade with each other
because differences between them make the purchase of certain product or service more economical
rather than producing it themselves. Lastly, international trade benefits the general population by creating
employment and reducing the prices of goods. Thus, when a country depends on its citizens and their
citizens have a credible exit strategy such as in the case of Singapore we expect it to have a large winning
coalition size. On the contrary such as in the case of Iraq we expect it to have a low winning coalition
size. Furthermore, we expect that in cases of large winning coalition size and high trade, such as
Singapore, the leadership will be less likely to initiate conflict because the leadership are susceptible to be
replaced, unlike the Iraqis example.
This study will focus on autocracies by making a distinction between winning coalition’s size to
be able to observe the effect of trade on the probability within autocracies to initiate a military conflict.
Basing the study on theoretical support, while controlling for the issues of endogeneity, will provide
further evidence to the causal mechanism for democratic peace and the causal mechanism of the
selectorate theory.
Winning Coalition Causal Mechanism in the Trade-Peace Theory9
Hypothesis
The marginal effect of autocratic winning coalition size and trade dependence is negatively
related to the initiation of conflict.
Data and Research design
This study is based on the study by Gelpi and Grieco (2008), not to refute it, but with the purpose
of giving credence to the winning coalition causal mechanism in the trade-peace theory. Thus it will
employ as much of the data and research design as possible to replicate the results of Gelpi and Greco
under the lens of winning coalition. The initiation of militarized dispute will be tested on a sample of
directed interstate dyad years from 1950 to 1992. All data with the exception of trade dependence and
winning coalition size will be generated using EUGene data management program (Scott Bennett, 2008).
Initiation of Militarized Dispute
The dependent variable is the initiation of militarized dispute by the challenger state (State A)
against the target state (State B) during a given year. We coded the initiation of militarized disputes on the
basis of the Correlates of War (COW) Militarized Inter-State Disputes (MID) dataset. We identify the
first state to threaten or to use military force as the initiator of the dispute. If the State A initiated a dispute
against the State B in a particular year, this variable takes on a value of 1; a value of 0 is coded otherwise.
Winning Coalition Causal Mechanism in the Trade-Peace Theory10
State A and State B Trade Dependence
Because of the important debates over the construction of trade-dependence measures, we
conducted our analyses on both the Oneal & Russett and Barbieri datasets. Following Oneal & Russett,
we code each country's trade dependence as the level of dyadic trade as a proportion of GDP. That is, for
the State A we calculate:
With the challenger identified as “State A”. Then, to determine the State B's trade dependence on
the State A, we calculate the same ratio but with the State B identified as “State A”.
Joint Trade Dependence
This interaction term allows us to estimate changes in the impact of State A trade dependence as a
function of the State B's level of trade dependence. The variable is calculated as State As’ trade
dependence
In addition to the variables of central theoretical interest for our analysis, we also included a
number of control variables that have become standard in the study of militarized conflict.
Relative Military Capabilities
We code this measure as the proportion of dyadic military capabilities controlled by the State A.
That is, we calculate:
Winning Coalition Causal Mechanism in the Trade-Peace Theory11
Difference in Alliance Patterns
We measure common security interests through the similarity of alliance portfolios (Bueno de
Mesquita, 1981; Bueno de Mesquita & Lalman, 1992). We calculate the alliance similarity 'S' score
between each state and the United States (Signorino & Ritter, 1999). We then measure the difference in
security interests between the State A and defender as the absolute value of the difference in these
similarity scores. This variable ranges from a minimum of 0 (reflecting identical portfolios) to a
maximum of 2 (indicating diametrical opposed security ties).
Major-power Dyad
Our measure of major-power status takes on a value of 1 if either state in the dyad is a major
power. It is coded 0 otherwise. For the period 1950-92, the major powers are the United States,
Russia/USSR, the Peoples Republic of China, Britain, and France.
Contiguous Dyad
This dummy variable takes on a value of 1 if the states share a border (including colonial
borders) or are separated by less than 150 miles of water. A value of 0 is coded otherwise.
Log of Distance Between Capitals
This variable is the natural log of the distance between capital cities of the two states in the dyad.
Because of their tremendous size and their access to both the Pacific and Atlantic Oceans, distances to the
United States, Canada, and Russia/USSR are calculated to the nearest major port city in those countries.
Winning Coalition Causal Mechanism in the Trade-Peace Theory12
Peace Years Consistent with Beck, Katz &Tucker (1998), we correct for temporal dependence in this
binary time-series cross-sectional analysis by accounting for the number of years that have elapsed since
the previous conflict. We model the impact of time with a series of coefficients that create a spline
function.
Peace Years
Consistent with Beck, Katz &Tucker (1998), we correct for temporal dependence in this binary
time-series cross-sectional analysis by accounting for the number of years that have elapsed since the
previous conflict. We model the impact of time with a series of coefficients that create a spline function.”
(Grieco, 2008)
Winning Coalition Causal Mechanism in the Trade-Peace Theory13
Data Analysis
Linear Regression
initiate Coef. Std. Err. t P>t [95% Conf.Interval] Trade Dep A 0.3861270 0.2008628 1.92 0.055 -0.00757 0.779828Trade Dep B 0.0452603 0.1556877 0.29 0.771 -0.25989 0.350415Trade Dep Join 0.4024284 0.8023853 0.50 0.616 -1.17029 1.975141Trade Dep A 0 (omitted) Winning Co A -0.0171045 0.007691 -2.22 0.026 -0.03218 -0.00203 TDA & WCA -1.0837640 0.3256465 -3.33 0.001 -1.72205 -0.44548 Winning Co A 0 (omitted) Winning Co B 0.0122199 0.0059813 2.04 0.041 0.000496 0.023944 WCA &WCB 0.0121480 0.0123536 0.98 0.325 -0.01207 0.036362 Military Capa 0.0130837 0.0024883 5.26 0.000 0.008206 0.017961Alliance diff 0.0737175 0.0068580 10.75 0.000 0.060276 0.08716Major Power 0.1196326 0.0079647 15.02 0.000 0.104021 0.135244Border 0.3657929 0.0129203 28.31 0.000 0.340469 0.391117Ln Capital Dist -0.0204087 0.0020121 -10.14 0.000 -0.02435 -0.01646Peace Year 1 -0.0263063 0.0014274 -18.43 0.000 -0.0291 -0.02351Peace Year 2 0.0017134 0.0007053 2.43 0.015 0.000331 0.003096Peace Year 3 -0.0009989 0.0004276 -2.34 0.019 -0.00184 -0.00016Peace Year 4 0.0002116 0.0002770 0.76 0.445 -0.00033 0.000755_cons 0.2701195 0.0178282 15.15 0.000 0.235175 0.305064
Regression of Winning Coalition & Trade Dependence Number of obs = 28,523F(16, 28506) = 136.32Prob > F = 0.0000R-squared = 0.3154Root MSE = 0.16482
Winning Coalition Causal Mechanism in the Trade-Peace Theory14
The regression’s F-statistic is F=136.32. This clearly exceeds the critical value to reject the null
hypothesis that all of the model coefficients are 0. In this case, we find that the regression is statistically
significant. The entry labeled R-Squared measures the proportion of variance in the dependent variable
(initiate) that can be explained by the independent variables (Trade Dep A, Trade Dep B, Trade Dep Join,
Winning Co A, TDA & WCA, Winning Co B, WCA &WCB, Military Capa, Alliance diff, Major Power,
Border, Ln Capital Dist, Peace Year 1, Peace Year 2, Peace Year 3, Peace Year 4). R-Squared is a
measure of the strength of association of the regression as a whole expressed as a percentage from 0 to 1,
in this regression the R-Squared is 0.3154.
Variables
State A trade dependence (Trade Dep A) has a Coefficient of 0.386127. It indicates that for every
unit increase in (Trade Dep A) the dependent variable (initiate) will increase by 0.386127 holding all
other variables constant. This variable has a P-value of 0.055, thus the effect of State A trade dependence
is statistically significant.
State B trade dependence (Trade Dep B) has a Coefficient of 0.0452603. It indicates that for
every unit increase in (Trade Dep B) the dependent variable (initiate) will increase by 0.0452603 holding
all other variables constant. This variable has a P-value of 0.771. The results indicate that in autocracies
the dependence of the State B states does not have a statistically significant effect in the initiation of
conflict.
Joint trade dependence (Trade Dep Join) has a Coefficient of 0.4024284, it indicates that for
every unit increase in (Trade Dep Join) the dependent variable (initiate) will increase by 0.4024284 with a
P-value of 0.616.
Winning Coalition Causal Mechanism in the Trade-Peace Theory15
Winning coalition of the State A (Winning Co A) has a Coefficient of -0.0171045 together with a
P-value of 0.026. These values indicate that although Winning Co A has a low negative marginal effect
on the likelihood of conflict initiation, it is statistically significant. This means that as winning coalition
size increases, the probability of conflict initiation decreases, supporting the hypothesis presented in this
paper.
However my complete hypothesis ascertains the relation of winning coalition conjointly with
trade dependence effect on the initiation of conflict. To do this we have created (TDA & WCA).
Combination of State A trade dependence with state A Winning coalition (TDA & WCA) has a
Coefficient of -1.083764 and a P-value of 0.001. This variable has the highest coefficient in the model,
and is statistically significant. This provides clear support for my hypothesis, discussed in the conclusion
of the variable analysis.
Combination of state A Winning coalition with state B Winning coalition (WCA &WCB) has a
Coefficient of .012148 and a P-value of 0.325.
The regression model shows that important factors attributed to the initiation of conflicts are not
sufficient to ascertain the phenomenon in autocracies. Only when there is a combination of State A trade
dependence with State A Winning coalition (TDA & WCA), we are able to find a statistically significant
negative correlation in regards to the initiation of conflict amongst non-democratic states. This means that
as winning coalition size increases together with trade dependence, the probability of conflict initiation
decreases, supporting the hypothesis that the marginal effect of autocratic winning coalition size and trade
dependence is negatively related to the initiation of conflict.
Winning Coalition Causal Mechanism in the Trade-Peace Theory16
Margins
Next, I describe the substantive effect of the variables of interest by calculating the expected
probability of conflict initiation for different values of winning coalition size and State A trade
dependence. The first model shows, the effects of State A trade dependence on conflict initiation as
winning coalition size varies from 0 to 1. For a winning coalition size of 0, an increase in State A trade
dependence increases the probability of conflict initiation by about .386. For a winning coalition size of
1, an increase in State A trade dependence decreases the probability of conflict initiation. Clearly
showing that the effect of increasing State A trade dependence as winning coalition increases has a
statistically significant negative expected probability of conflict initiation.
-1-.5
0.5
1E
ffect
s on
Lin
ear P
redi
ctio
n
0 .25 .5 .75 1winning coalition State A
Average Marginal Effects of ordepa with 95% CIs
Winning Coalition Causal Mechanism in the Trade-Peace Theory17
The second model shows, the effects of winning coalition size as trade dependence increases. For
a State A trade dependence of 0, an increase in winning coalition size decreases the probability of conflict
initiation by about -0.0102744. For a State A trade dependence of 0.06, an increase in winning coalition
size decreases the probability of conflict initiation by about -0.0753002. Clearly showing that as trade
dependence increases an increase in winning coalition size has an increasingly statistically significant
negative expected probability of conflict initiation.
-.1-.0
50
Effe
cts
on L
inea
r Pre
dict
ion
0 .005 .01 .015 .02 .025 .03 .035 .04 .045 .05 .055 .06challenger trade dep, or
Average Marginal Effects of w1 with 95% CIs
Winning Coalition Causal Mechanism in the Trade-Peace Theory18
Cross tabulation
Cross tabulation of Low Trade Dependence & Winning Coalition
High Trade Dep A = 0initiate
WCA >= .75 Not Initiated Initiated Total
Small 17,189 451 17,640 17,188.5 451.5 17,640.0
Large 4,166 110 4,276 4,166.5 109.5 4,276.0Total 21,355 561 21,916
21,355.0 561.0 21,916.0
Pearson chi2(1) = 0.0034 Pr = 0.953
When trade dependence is low, there is no difference in conflict initiation between countries with
large and small winning coalitions.
Cross tabulation of High Trade Dependence & Winning Coalition
High Trade dep A = 1initiate
WCA >= .75 Not Initiated
Initiated Total
Small 4,746 515 5,261 4,768.1 492.9 5,261.0
Large 1,242 104 1,346 1,219.9 126.1 1,346.0Total 5,988 619 6,607
5,988.0 619.0 6,607.0
Pearson chi2(1) = 5.3691 Pr = 0.020
When trade dependence is high, states with a large winning coalition are less likely than states
with a small winning coalition to initiate conflict.
Winning Coalition Causal Mechanism in the Trade-Peace Theory19
Conclusion
Democracies are less likely to initiate military conflict than autocracies. However, conflicting
results in the literature failed to establish a causal model that sufficiently explained the phenomenon
across all types of regimes. This study found contradicting evidence to the exit cost/opportunity cost
causal mechanism for the Trade-Peace Theory, because each individual trade dependence variables where
positively correlated to the initiation of conflict. Additionally, even though that years of peace, size of the
country, and the distance between dyadic were accounted for, thus eliminating the endogeneity issue of
trade and conflict by incorporating the gravity model, each individual trade dependence variables where
not statistically significant. This lack of statistical significance of all the trade dependence variables,
makes it difficult to determine any conclusions about the states trade dependence in relation to the
initiation of conflict. The classification of regime types in categorical variable based on factors that where
outside the causal mechanism of winning coalition was failing to ascertain the causal mechanism of the
Trade-Peace Theory effects on all types of regimes. This study tried to ascertain the causal mechanism by
selecting states classified as non-democratic and differentiating those on winning coalition size to test the
hypothesis that the winning coalition size and trade dependence within autocracies are negatively
correlated to the probability of the initiation of conflict. To answer the question, “does trade
interdependence reduce conflict among autocracies?”, the evidence presented provides support to the
negative correlated effect that winning coalition size has on conflict initiation when trade is present
among autocracies. Diving into the data provides supporting examples for the findings. For example, an
autocracy with high trade dependence that is likely to initiate conflict is Russia. In the data there were 50
observations of conflict initiation by Russia. Conversely, Bahama and Singapore are two examples of
autocratic countries with high trade dependence that are not likely to initiate conflict. In the data there
Winning Coalition Causal Mechanism in the Trade-Peace Theory20
were 59 observations that met the criteria for Bahama and 97 observation for Singapore whit out any
observations of conflict initiation. Trade dependence is negatively correlated with the likelihood of
initiating conflict on all types of regime, with the caveat that the winning coalition is the causal
mechanism for the phenomenon.
Winning Coalition Causal Mechanism in the Trade-Peace Theory21
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