2017/11/23 by Christina L. Davis, Andreas Fuchs, Kristina Johnson · 165 citations
Economics, Econometrics and Finance · Social Sciences · #Bilateral trade #China #Control (management) #Corruption and Economic Development #Differential (mechanical device) #Economics #Global trade and economics #Globalization #Government (linguistics) #International Development and Aid #International economics #International trade #Market economy #Political science #Politics #State (computer science) #Voting
paper · open access · doi:10.1177/0022002717739087
published in Journal of Conflict Resolution 63(2), 405-438 (SAGE Publishing)
openalex publication_date 2017/11/23 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25
Can governments still use trade to reward and punish partner countries? While World Trade Organization (WTO) rules and the pressures of globalization restrict states’ capacity to manipulate trade policies, politicization of trade is likely to occur where governments intervene in markets. We examine state ownership of firms as one tool of government control. Taking China and India as examples, we use new data on bilateral trade disaggregated by firm ownership type as well as measures of political relations based on bilateral events and United Nations voting data to estimate the effect of political relations on import flows since the early 1990s. Our results support the hypothesis that imports controlled by state-owned enterprises are more responsive to political relations than imports controlled by private enterprises. This finding suggests that politicized import decisions will increase as countries with partially state-controlled economies gain strength in the global economy. Extending our analysis to exports for comparison, we find a similar pattern for Indian but not for Chinese exports and offer potential explanations for these differential findings.