International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

“Effect of Non-Militarized Disputes on the Economy: Natural Gas Disputes”
Fabio Franch

Liberalists attribute a positive effect to interdependence in that the more a disputing dyad is mutually economic dependent, the smaller the probability that that dyad goes to war. This theory is based on the assumption that militarized disputes disrupt the economy, assumption which has been empirically supported only by part of the literature on the topic. In this paper it is argued that even non-militarized disputes like natural gas disputes can play a key role in affecting the economy of disputing countries. The PP-NGARCH model shows moderate evidence of significant and negative effects of gas disputes on the economy of several European countries. Given the relevance of these crises at the international level, it is concluded that the militarization requirement entirely disregards a whole set of relevant disputes. This issue may be the cause of a systematic bias in the results of a large portion of the literature on the effects of political disputes on the economy.

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