Abstract

Can international trade cause harm through the spread of communicable diseases? This paper identifies the causal effect of importing live animals on animal disease outbreaks in the destination country. Ordinary Least Squares (OLS) estimates of the effect of imports on disease outbreaks are likely to be biased towards zero. This is because a disease outbreak dampens import demand of, or can trigger import restrictions on, the associated live animal species in the destination country. We address the potential endogeneity through a novel instrument that exploits exogenous increases in the import of halal live animals in Muslim countries during the festival of  Eid al-Adha (`Feast of the Sacrifice'). Results show that a 1 percent increase in the import of live animals results in about 0.7 percent increase in infections in related animal species. We rule out the instrument can impact infections through changes in economic activity or through the local distribution of livestock in the importing countries.