Trade and asymmetric alliances

Abstract

Alliances are usually understood as a way for states to aggregate military capabilities in the face of a common threat. From this perspective, the willingness of relatively powerful states to form alliances with much weaker partners is puzzling. The weaker ally often adds little to the stronger state's security and may increase its chance of military entanglement. This article presents evidence that international trade helps explain these alliances. States that have the power to do so have incentives to protect their trading relationships against interference from either third states or internal conflict. Alliances are one means of providing this protection. This argument differs from most other research on trade and alliances, which reverses the causal arrow and suggests instead that alliances increase trade. Empirical analysis indicates that trade increases the probability of alliance formation in major power-minor power dyads and decreases the chance that alliances will dissolve. These results are robust to a variety of changes in the specification of the model and the data used for estimation. They also do not stem from any influence of alliance relationships on trade. An analysis of the effect of alliance formation on change in the level of bilateral trade turns up no evidence that the formation of an alliance increases commerce.

Capability Change, Economic Dependence and Alliance Termination

“…While these studies indicated some trade-generating effects of alliances, Fordham (2010) argued that, in asymmetric alliances, increasing trade led to alliance formation rather than vice versa. That is, rather than alliances having a trade-generating effect, states that share economic interests, especially trade interests, tend to form alliances to protect their trade interests, and these alliances are less likely to dissolve as well.…”

“…This conditional argument linking economic dependence and alliance termination is based on many studies indicating that non-security factors, especially economic ties, also play an important role in cementing ties between allies and consequently contribute to the continuation of alliances (Gowa and Mansfield 1993;Long and Leeds 2006;Leeds and Savun 2007;Fordham 2010). For instance, Gowa and Mansfield (1993) and Gowa (1994) emphasize a security externality that trade can generate.…”

“…By highlighting the autonomy concerns of the weak state, which was done by defining the notion of autonomy in a traditional sense, this study urged paying due attention to the autonomy concerns of the minor power, which has been relatively ignored even in Morrow's security-autonomy tradeoff model. Given that asymmetric alliances take up almost 50 percent of military alliances (Fordham 2010), and that military alliances have been recognized as an impor-tant policy tool for maintaining security and peace in the world, advancing our understanding of how to maintain alliances is important. In this regard, the empirical findings of this study suggest that paying more attention to the autonomy concerns of minor powers, and investigating further how they can impact alliance relationships, could be a promising direction for future research.…”

Why Do States Sign Alliances?

“…In other words, these alliances result from issue linkage, with weaker states offering other forms of support in return for military assistance (see also Palmer & Morgan, 2006). Fordham (2010) argues instead that because of trade relationships and other economic interests, strong states may have a self-interest in the security of smaller allies; defense of certain weaker states is defense of the large state's own economy.…”

Economics, security, and individual-level preferences for trade agreements

“…This gap in our understanding of trade policy preferences is curious given the large scholarship in international relations that investigates the security implications of trade (Hirschman 1980(Hirschman [1945; Oneal and Russett 1997;Tanaka, Tago, and Gleditsch 2017), links between economic interests and the formation of military alliances (Fordham 2010;Gowa and Mansfield 1993;Lee 2013), the diversionary use of force in times of economic distress (Ostrom and Job 1986; but see Levy 1989), and the extent to which trade and trade agreements follow the flag or reflect political preferences (Davis and Wilf 2017;Dixon and Moon 1993;Keshk, Pollins, and Reuveny 2004). To the extent that foreign policy, and foreign economic policy specifically, is shaped at least in part by constituents' interests and preferences, we may wonder about the role that national security considerations play at the level of individual and the general public.…”