Global Trade and Interstate Conflict: The Indirect Origins of Liberal Peace

• In Event: Conflict and Trade

Abstract

Liberal trade theory offers an optimistic vision of the ability of commerce to discourage conflict. Rising global trade and investment should reduce interstate conflict, especially in dyads that are economically interdependent. Yet, in its current form, the conventional logic glosses over a basic tension between the incentives of states as competitors and as trade partners. A globalized world is certainly better off if nations refrain from fighting, but individual states may still prefer to exercise force for national gain. The clearest impact of commerce on conflict should be to encourage trading states to restrain other nations from fighting. A simple three actor game re-specifies classical liberal trade theory in terms of these tensions. The argument and model have a paradoxical implication: the greatest impact of globalization on peace should be among states with limited commercial ties, not (necessarily) between major trading states. Large-sample statistical tests provide evidence that trade encourages peace mostly among non-trading states.

Author

• Erik Gartzke, UCSD