International Trade and The Onset and Escalation of Interstate Conflict: More to Fight About, or More Reasons Not to Fight?

Abstract

Although study of the relationship between international trade and militarized conflict has become more sophisticated, whether trade reduces the chance of conflict, exacerbates it, or has no effect, remains contested. Integrating expectations from schools of thought often portrayed as incompatible, I consider two aspects of trade -volume and interdependence -and model conflict as a two-stage process involving onset and escalation. This perspective leads to robust statistical findings that trade is Janus-faced, both facilitating and inhibiting conflict at different stages, supporting the conclusion that a focus on international conflict as a communication process promises better theory in international relations.

A Discussion on Geopolitical Risk of Taiwan Semiconductor Industry

“…heightened interdependence and trade volumes often lead to increased disputes and potential conflicts (Barbieri 1996;Goldsmith 2013;Krustev 2006). In line with…”

“…Such asymmetrical gains from economic interdependence may bolster military potential for one party, intensifying perceptions of a power transition (Fearon 2018;Nakano 2016). The less dependent state may exploit this asymmetry to coerce and threaten its partner, thereby heightening the risk of conflict onset (Goldsmith 2013). Dale C. Copeland (1996;2015) has provided a more nuanced understanding through the trade expectation theory, elucidating the complex causal relationship between interdependence and militarized conflict.…”

“…Conversely, the theory also recognizes neorealists' concerns that a state's dependence may be exploited as a means of coercion (Waltz 1979;Mearsheimer 1992). It portrays economic interdependence as a potential source of both relative gains and risks, such as trade cut-offs or coercion (Copeland 1996;2015;Goldsmith 2013). In essence, vulnerability diminishes a state's resilience to sudden changes (Keohane and Nye 2012), and the greater this vulnerability, the more insecurity a state may perceive in future international trade (Copeland 2015, 34).…”

A Financial Analysis Approach on the Impact of Economic Interdependence on Interstate Conflicts

“…Li and Reuveny (2011) argued that their theoretic model predicts the impact of bilateral trade on conflict and a combination of imports and exports in specific sectors of commercial relations such as agriculture and fisheries, energy, chemicals and minerals goods, can determine the state's intention concerning conflict. Goldsmith (2013) argued that trade interdependence mainly affects the onset of the conflict by inhibiting militarized disputes and has no relationship with conflict escalation and therefore trade volume reduces the likelihood of a more violent conflict. In addition, Seitz et al (2015) argued that lower trade cost will cause lower defense expenditure with domino effect on other countries and this will lead to more peaceful relations.…”

A Financial Analysis Approach on the Promotion of Peace through Economic Interdependence

“…Li and Reuveny [21] argued that their theoretic model predicts the impact of bilateral trade on conflict and a combination of imports and exports in specific sectors of commercial relations such as agriculture and fisheries, energy, chemicals and minerals goods, can determine the state's intention concerning conflict. Goldsmith [22] argued that trade interdependence mainly affects the onset of the conflict by inhibiting militarized disputes and has no relationship with conflict escalation and therefore trade volume reduces the likelihood of a more violent conflict.…”