Trade Openness and Bilateral Relation: Exploring Verbal and Material Interactions between Countries

Details

Supervisors

Vannoorenberghe, Gonzague

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation économétrie, à finalité approfondie

Abstract

This paper examines the relationship between trade openness and bilateral relations between countries, with a focus on verbal and material cooperation and conflict. Using a panel data set constructed from the GDELT event dataset and CEPII’s gravity dataset, the study employs fixed effect models and instrumental variable techniques to estimate the causal impact of trade openness on bilateral relations. The results reveal that the size of economies and the distance between them largely explain verbal cooperative relations, while trade openness play a significant role in material cooperation. The instrumental variable approach confirms the significant relationships between trade openness and both verbal and material cooperation. Overall, this research contributes empirical evidence to the understanding of the causal link between trade openness and bilateral relationship.