I see a few people questioning the idea that trade promotes peace, and I'm not quite sure what to make of this. Here are two recent examples from ex-Twitter:
- This is from Paul Krugman:
"Not just strategic relations. People underestimate the role of geopolitical ideas in economic policy — the push for freer trade since World War II had a lot to do with the belief that trade promotes peace, which is increasingly hard to defend."
- He was quoting Phillips O'Brien, who had said:
"This story points out one of the great fallacies of strategic relations over the last 150 years. There has been a notion that if states establish mutually beneficial economic relations it will make war less likely between then. Doesn’t seem to work."
I offered a quick snarky response to Krugman, which was:
These two things can both be true:
1. Trade promotes peace
2. Trade doesn't prevent all war
Other people then weighed in with actual evidence. Here is economist Chris Auld:
The claim is not that trade eliminates the possibility of conflict, but rather greatly reduces it, and that claim cannot be overturned by anecdotes. The statistical evidence strongly supports the idea that trade reduces propensity for conflict.
He cited to an article entitled "Does Trade Integration Contribute to Peace?" Here is the abstract:
We investigate the effect of trade integration on interstate military conflict. Our empirical analysis, based on a large panel data set of 243,225 country-pair observations from 1950 to 2000, confirms that an increase in bilateral trade interdependence significantly promotes peace. It also suggests that the peace-promotion effect of bilateral trade integration is significantly higher for contiguous countries that are likely to experience more conflict. More importantly, we find that not only bilateral trade but global trade openness also significantly promotes peace. It shows, however, that an increase in global trade openness reduces the probability of interstate conflict more for countries far apart from each other than it does for countries sharing borders. The main finding of the peace-promotion effect of bilateral and global trade integration holds robust when controlling for the simultaneous determination of trade and peace.
Also providing evidence was Per Altenberg of Sweden's National Board of Trade, who said:
Yes, as we @sweboardoftrade describe it here "economic interdependence has a moderating influence on great power relations". It does not mean that interdependence always dominates other factors (structural or unit-level) that determine war and peace.
And Scott Lincicome pointed to a Cato piece which cites a number of studies on this issue, including this one:
In a 2016 Review of Development Economics paper, Jong‐Wha Lee and Ju Hyun Pyun examined 243,225 country pairs from 1950 to 2000 and found that “an increase in bilateral trade interdependence significantly promotes peace,” with this effect strongest for contiguous countries (e.g., the United States and Canada). They also showed that peace is separately promoted by a nation’s openness to global trade and that “an increase in global trade openness reduces the probability of interstate conflict more for countries far apart from each other than it does for countries sharing borders.” Finally, they found that “states more dependent on the world economy tend to have fewer conflicts than those less dependent,” thus providing a strong “security motive” for nations’ efforts to increase other countries’ global economic integration.
Finally, as I was preparing this blog post, I came across a speech from Alan Wolff from last week entitled "Trade for peace: Can trade be an effective tool to support peace? Lessons from history." Here's a passage from it:
Studies have found that WTO Membership does not guarantee the reduction of militarized inter-state disputes and major inter-state wars between pairs of Member states. However, they also found that states were less likely to do so when they were WTO Members and benefited from increased trade.
As I see it, on one side of the trade and peace debate, there is logic and lots of evidence, and on the other side there are a couple of anecdotes that simply show that trade does not guarantee peace in all circumstances. Yes, Russia and Ukraine both joining the WTO did not prevent war, but as I said, trade does not prevent all war, and I'm pretty sure no one ever argued that it would.
