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Title Bargaining during war: economic interdependence and conflict
Author Youngseok Park
Date 2019-11-12
File KIEP opinions_no175.pdf 

Will increased productive interdependence between the parties, due for example to greater productive specialization and expanding trade, necessarily reduce the incentive to engage in conflict? Correspondingly, if warfare becomes more destructive does that necessarily tend to promote increased concentration of resources upon productive rather than appropriative activity? In the first decade of the twentieth century, increasingly close productive ties among the national economies of Europe led to a widespread belief that large-scale war had become out of question. The First World War dashed these hopes. Amid hawkish signals from North Korea despite South Korea’s liberal policies, South Koreans ought to ask themselves a similar fundamental question, posed in the midst of bargaining during war: Will economic cooperation between the two Koreas lead to peace? Formal game-theoretical models indicate, “not necessarily.”