Page 16 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.79, # 2, 2022, pp. 4-18

CONCLUSION AND RECOMMENDATION
One of the topics and fields of thought is the study of the possibility of economic
cooperation such as trade and mutual investment, while there are political differences
and the effect of this cooperation on the spread of peace and the prevention of war.
Today, investors pay attention to the international concept of investment more than at
any other time. Since the formation of international markets and the creation of
investment opportunities, investors no longer limit themselves to the local and
domestic markets. On the other hand, countries intend to make sure that local capital
be utilized in the fulfillment of local objectives and avoid capital outflow as much as
possible. Many thinkers believe unlike politics, it can be a factor of connection and
convergence; where the economic cooperation of governments, based on absolute
achievements, despite the possibility of differences in the benefit of the parties, causes
the benefit of all parties to the cooperation.

In this paper, by using game theory and presenting a dynamic game between players,
the game modeling between investors and countries has been studied.

The results indicated that the higher b (less risk in foreign markets) and K are (local
economic power), the more local risk and return will be and vice versa. The higher b
(less risk in foreign markets) and K are (local economic power), the higher risk and
return in foreign countries will be and vice versa. Moreover, an increase in b (less risk
in foreign markets) and K (economic power) would lead to a decrease in investor's
utility and in the end, if the hostility between countries ( ) is zero, then, the countries
will achieve the maximum positive outcome. These results clearly show the
relationship between two very important categories and the basis of financial sciences
(risk and return) and their mutual effects on each other in the domestic and foreign
economies on the consequences of both players (governments and investors). These
results confirm that economic cooperation, while reducing conflicts between
countries, can also prevent military conflicts and strengthen peace. In addition,
convergence and economic interdependence not only reduce the likelihood of war, but
also increase the welfare of the parties involved, and this result is a significant reason
to strengthen the avoidance of war.

Finally, investors and countries are recommended to use the results of this study and
pave the way for world peace by creating international markets.

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