Investing in the Peace strongEconomicstrong Interdependence and.pdf

Investing in the Peace: Economic Interdependence and International Con ict Erik Gartzke, Quan Li, and Charles Boehmer Research appears to substantiate the liberal conviction that trade fosters global peace. Still, existing understanding of linkages between con ict and international economics is limited in at least two ways. First, cross-border economic relationships are far broader than just trade. Global capital markets dwarf the exchange of goods and services, and states engage in varying degrees of monetary policy coordination. Second, the manner in which economics is said to inhibit con ict behavior is implausible in light of new analytical insights about the causes of war. We discuss, and then demonstrate formally, how interdependence can in uence states’ recourse to military violence. The risk of disrupting economic linkages—particularly access to capital—may occasionally deter minor contests between interdependent states, but such opportunity costs will typically fail to preclude militarized disputes. Instead, interdependence offers nonmilitarized avenues for communicating resolve through costly signaling. Our quantitative results show that capital interdependence contributes to peace independent of the effects of trade, democracy, interest, and other variables. Students of world politics have long argued that peace is a positive externality of global commerce. Theorists like Montesquieu and Kant and practitioners like Woodrow Wilson asserted that economic relations between states pacify political interaction. Mounting evidence in recent years appears to substantiate these claims. Multiple studies, many identi ed with the democratic peace, link interstate trade with reductions in militarized disputes or wars. 1 While we concur with the evolving consensus, we see existing analyses of economics and peace as incomplete. On the We thank E