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This research aims at investigating the prime causes of trade disputes and whether and how countries’ macroeconomic environments influence the world trade disputes.The main purpose of the research is to contribute to an understanding of the reasons behind trade dispute escalation and investigate if there is a relationship between dispute initiation and the state of the economy of the country-complainant.The main focus of the research is to determine to what extent economic problems facing the country-complainant affect its decision to open a trade dispute using statistical methods and whether and how differently high-,middle-and lowincome countries respond to their internal macroeconomic environments in terms of trade disputes escalation.The primary research method for this study includes quantitive and statistical methods.Accordingly,corresponding data as independent variables(including GDP growth,inflation,employment,external debt etc)on the state of the economy of the country-complainant has been collected and analyzed using fixed effects panel data regression to find patterns and possible effects on the dependent variable-arise of trade dispute.There has been found evidence of a statistically significant positive impact of GDP and GNI per capita on trade dispute initiation.GDP growth indicators,unemployment rate,and inflation rate do not surface with significance in explaining the number of world trade disputes.However,there have been found examples of trade disputes that have been initiated by purely case-specific reasons such as the intention of the company-complainant to protect the domestic labor market.It has also been confirmed that different income groups are found to respond in different ways as different macroeconomic variables matter for different income groups.What strikes the most here is not the different level of response to the variables among the income groups,but the fact that GNI per capita,GDP growth,inflation,and unemployment rate show opposite impacts on the initiation of trade disputes depending on the income level of the economy.