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Business as Usual? Economic Responses to Political Tensions

2011; Wiley; Volume: 55; Issue: 3 Linguagem: Inglês

10.1111/j.1540-5907.2010.00507.x

1540-5907

Christina L. Davis, Sophie Meunier,

Corruption and Economic Development

American Journal of Political ScienceVolume 55, Issue 3 p. 628-646 Business as Usual? Economic Responses to Political Tensions Christina L. Davis, Christina L. Davis Princeton UniversitySearch for more papers by this authorSophie Meunier, Sophie Meunier Princeton UniversitySearch for more papers by this author Christina L. Davis, Christina L. Davis Princeton UniversitySearch for more papers by this authorSophie Meunier, Sophie Meunier Princeton UniversitySearch for more papers by this author First published: 08 February 2011 https://doi.org/10.1111/j.1540-5907.2010.00507.xCitations: 95 Christina L. Davis is Associate Professor of Politics and International Affairs, Department of Politics and Woodrow Wilson School of Public and International Affairs, 442 Robertson Hall, Princeton University, Princeton, NJ 08544 ([email protected]). Sophie Meunier is Research Scholar in Public and International Affairs, Woodrow Wilson School of Public and International Affairs, 437 Robertson Hall, Princeton University, Princeton, NJ 08544 ([email protected]). Earlier versions of this article were presented at the 2006 International Political Economy Society Inaugural Meeting, Princeton, New Jersey, the 2007 International Studies Association Convention, Chicago, the 2007 Princeton International Relations Colloquium, the 2007 annual meeting of the American Political Science Association, the 2008 Political Economy seminar at Sciences Po, Paris, and the 2008 "Theories of International Political Economy and China" Conference, Beijing, China. We wish to thank Joanne Gowa, John Ikenberry, Nicolas Jabko, Jonathan Kirshner, Daniel Yuichi Kono, Andrew Moravcsik, Brian Pollins, Jordan Tama, Nicolas Véron, Cornelia Woll, and Jing Vivian Zhan, as well as three anonymous reviewers for comments on an earlier version of this article. We are especially grateful to Raymond Hicks for help with collecting the data. Min Ye, Jennifer Oh, and Ledina Gocaj provided valuable research assistance. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Abstract Do political tensions harm economic relations? Theories claim that trade prevents war and political relations motivate trade, but less is known about whether smaller shifts in political relations impact economic exchange. Looking at two major economies, we show that negative events have not hurt U.S. or Japanese trade or investment flows. We then examine specific incidents of tensions in U.S.-French and Sino-Japanese relations over the past decade—two case pairs that allow us to compare varying levels of political tension given high existing economic interdependence and different alliance relations. Aggregate economic flows and high salience sectors like wine and autos are unaffected by the deterioration of political relations. In an era of globalization, actors lack incentives to link political and economic relations. We argue that sunk costs in existing trade and investment make governments, firms, and consumers unlikely to change their behavior in response to political disputes. Supporting Information Table 1: Gravity Model of U.S. Bilateral Imports of High Salience Products, 1990-06. Table 2: Gravity Model of Japanese Exports of High Salience Products, 1990-06. 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