THE POLITICAL DETERMINANTS OF INTERNATIONAL-TRADE - THE MAJOR POWERS,1907-90

We test three arguments about the effect of international politics on trade flows, The first argument states that a ade flows are greater be tween states with similar interests than those with dissimilar interes ts, the second that trade flows are greater in democratic dyads than n ondemocratic dyads, and the third that trade flows are greater between allies. We examine trade flows between the major powers front 1907 to 1990. This period provides variation on all three independent variabl es of interest and allows us to separate the three arguments Empirical ly. We estimate a gravity model of trade with the above political vari ables added. Our results demonstrate that joint democracy and common i nterests increase trade in a dyad, but alliances generally do not, eve n when controlling for polarity of the system.