While economic growth in developing countries over the last ten years has lifted more people out of poverty than in any previous time, more than one billion people still live in countries affected by violent conflict. Conflict weakens governance, undermines economic development and threatens both national and regional stability. Trade shocks, in particular, can have widely varying impacts on conflict. This report sets out to empirically test these linkages between trade shocks and conflict via cross-country and intra-country analysis. On the basis of the analysis, it offers trade-related policy directions to reduce this risk in fragile economies. The results provide convincing evidence that trade and trade policy have a large impact on the risk and intensity of conflict. This report is composed of three main chapters.
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