FAQ: Political Alliances and Trade: Europe in a Polarized World
trade-wars
political-economy
A Q&A on new research showing NATO membership boosts bilateral trade by 24-63%, and what alliance expansion or collapse would mean for Europe.
This FAQ walks through research on how military alliances shape trade, finding that NATO membership raises bilateral exports between member states by 24–62.9%, well above the roughly 30% effect of generic defence pacts. The analysis projects sizeable economic gains for countries acceding to NATO or the EU, while modelling how alliance dissolution or the growth of rival blocs like the Shanghai Cooperation Organisation would drag on global trade flows. The effect is not static — it shifts with the geopolitical context — which is the core point: political alignment is doing real economic work alongside its security role.
Originally published on Substack, September 28, 2024.