Political stability and trade agreements

In the following paper the relationship between political stability and trade agreements as well as the empirical model of political stabilization in WTO member states that affects international trade, are analyzed. The author considers three approaches to domestic political economy of trade agreements setting special focus on national security, which safeguards their simplicity, stability and neutrality. Social and economic development provides for political stability, crucial for ensuring democracy and healthy economic processes in the WTO countries. Dramatic political changes, like a coup d’etat, cause shock, slow down/reverse of economic growth and deteriorate welfare of the population. On the other hand, trade stability is achieved through the unique political arrangement of the World Trade Organization, the complex mechanism of power redistribution (checks and balances), the diversity of member states, and the constant struggle between supra-nationalism and intergovernmentalism in decision-making. The author explores the level of trade stability, simplicity and neutrality in view of the specific cases as well as the conducted research. It is concluded, that political stability promotes regional and good neighborly relations, thus affecting the trade stability of the EU/WTO countries at different degrees. The research is based on the theorists’ arguments on political stability.