The Impact of Leadership Turnover on Trading Relations between States

Abstract We test how domestic political institutions moderate the effect of lead-ership turnover on relations between states+ Deriving hypotheses from recent theo-retical work, Bueno de Mesquita et al+ and McGillivray and Smith, we examine how leader change affects trading relations between states using dyadic trade data+ Con-sistent with hypotheses, we find that large winning coalition systems, such as democ-racies, are relatively immune from the vagaries of leadership change+ In such systems, trade remains relatively constant whether leader change occurs or not+ In contrast, when winning coalition size is small, as in autocratic states, leadership change pro-foundly alters relations, causing a decline in trade+ Finally, we examine instances of poor relations, measured by a significant decline in trade compared to historical lev-els+As predicted, instances of poor relations are less common between pairs of democ-racies than other dyadic pairings+ Further, leadership turnover in autocratic systems restores trading relations between states+ The effect of leadership change in democ-racies is much less pronounced+ Since first drafting this article, the United States has invaded Iraq and deposed it