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This article investigates Granger causality between political conflict/cooperation and bilateral trade. The measures of conflict/cooperation are constructed by accumulating daily events and splicing the two datasets of the Conflict and Peace Data Bank and the World Events Interaction Survey. Trade data from the United Nations include ten commodity groups as well as total trade. Quarterly data are analyzed from the very early 1970s to the early 1990s for four dyads of USA-USSR, USA-China, Turkey-Greece, and Egypt-Israel. Yearly data are investigated from the early 1960s to the early 1990s for 16 dyads. Granger causality between bilateral trade and conflict/cooperation is generally reciprocal in most goods and dyad dependent, but independent of whether or not two countries are political rivals. For USA-USSR and USA-China, however, there is a tendency for bilateral trade to increase in some goods when political relations improve. For USA-USSR, in particular, causality from conflict to trade is pronounced in more goods than causality from trade to conflict. While the effect of cooperation in these dyads is mostly positive, the effect of an increase of trade on conflict is generally ambiguous. For 20 dyads collectively, conflict/cooperation tends to Granger-cause bilateral trade in minerals, iron and steel, fuels, basic manufactures and control and scientific equipment; whereas bilateral trade somewhat more frequently Granger-causes conflict/cooperation in food and live animals, beverages and tobacco, and machines and transport equipment. The concept of strategic goods, much debated in the literature, is further discussed in light of these results. The general result of reciprocal Granger causality calls for a model in which both bilateral trade and conflict/cooperation are simultaneously determined. Such a simultaneous equations model is briefly sketched.

Being two giant economic players of the world, China and India experienced a disastrous border conflict in the Ladakh area of the Line of Actual Control (LAC) during April 2020, just at the beginning of the Covid-19 outbreak. This theoretical paper is an effort to identify the tentative impact of that border clash on the bilateral trade between two countries from the perspective of regional geopolitics. The author has utilized secondary information such as newspapers articles, journal articles, online sources, and economists' opinions on this issue as well as has made some predictions based on the previous bilateral trade statistics. The author proposes that even though the border issue has become very sensitive and important for both countries regarding the geopolitical necessity, the bilateral trade scenario will not be much affected on a substantial scale on a long-term basis. The author further predicts that a likely trade conflict between the two economically promising countries will be contagious for both. Finally, the author expects this paper to be beneficial for further research attempts focusing on the geopolitical economy of bilateral trade.

The 1978 Long Term Trade Agreement between the People's Republic of China & Japan called for a special bilateral relationship between the two countries, but China's market-oriented reforms & internationalization have affected economic relations with Japan. With China's recognition of international economic interdependence, especially within the Asia Pacific region, & China's shift in its mix of goods, labor, & investments, Japan is no longer China's predominant trading partner. Domestic interests in both countries have affected exports, leading to trade friction. A centralized bilateral mechanism has proved to be unfeasible in the face of decentralized market forces. Japan & China have enormous differences in lifestyles, values, decision-making practices, & politics, but these may lessen as China approaches Japan & the West economically. A multilateral, rules-based framework in which Japan participates can facilitate China's integration into the world economy & resolve Sino-Japanese friction. 5 Tables. M. Pflum

"In many intermediate goods markets buyers and sellers both have market power. Contracts are usually long-term and negotiated bilaterally, codifying many elements in addition to price. We model such bilateral oligopolies as a set of simultaneous Rubinstein-Stahl bargainings over contracts specifying price and quantity, between pairs of buyers and sellers. Equilibrium quantities are efficient regardless of concentration. The law of one price does not hold. Prices depend on concentration of capital and concentration of sales. If the quantity sold represents a small share of both the firms' sales and purchases, the price is close to the Walrasian price." (author's abstract)

By using the issue-area approach, the article examines the socio-cultural, political and economic factors that informed and helped in the establishment of bilateral relations between the two countries. The essay begins with an analysis of the background conditions that shaped and determined the bilateral relations. (DÜI-Ott)

The trade-conflict model claimed that trade reduces conflict. This paper extends the trade-conflict model to incorporate foreign aid and tariff effects. The theoretical propositions supported by proofs are as follows: trade and foreign aid reduce conflict and tariffs increases conflict. Empirical tests show that trade reduces conflict between states and the causality from trade to conflict remains. Foreign aid directly decreases conflict. The marginal effect of foreign aid in reducing conflict is greater than that of trade. However, foreign aid is much smaller in magnitude than trade and trade is more important than aid in affecting international relationships. In addition, the foreign aid effect is greater for non-trading partners than trading partners. Foreign aid increases trade, and thereby indirectly decreases conflict since trade reduces conflict. However, the indirect effect of foreign aid decreasing conflict will be smaller than the direct effect. Tariffs, if over a critical level, will increase conflict. Adapted from the source document.