U.S. Department of Defense
Date of this Version
2010
Citation
Explorations in Economic History 47 (2010) 28–48; doi:10.1016/j.eeh.2009.05.007.
Abstract
How have large naval powers affected international commerce in history? Using a panel gravity model, we investigate the interactions of wars, alliances, naval power and trade from the 18th to mid-20th centuries. Striking an alliance with a naval power helps a country’s interstate commerce. Fighting a naval power on the other hand limits a country’s interstate commerce. Further, we split this effect on trade between an extensive effect (effect on a country’s trade when fighting a naval power) and an intensive effect (effect of that power gaining more naval strength). We conclude that the intensive effect is a powerful one – large navies have historically been destroyers of trade when mobilized to combat.