The Economics of War and Peace

Oct 13, 2025 by wbrum.org 88 views

The Impact of Economic Interdependence on International Relations: A Liberal Perspective

Economic interdependence has long been a topic of interest in the field of international relations, with many scholars debating its effects on global politics. One of the key arguments made by liberal theorists is that economic interdependence can increase the costs of war, making it less likely between states. In this article, we will explore this argument and examine the evidence to support or refute it.

The Argument for Increased Costs of War

Liberal theorists argue that economic interdependence can increase the costs of war in several ways. Firstly, when two states are economically interdependent, they have a vested interest in maintaining peaceful relations. This is because economic interdependence creates a situation where both states rely on each other for trade, investment, and other economic benefits. As a result, the costs of war, including the loss of trade, investment, and economic growth, become prohibitively high for both states.

Secondly, economic interdependence can create a situation where states are more likely to engage in diplomacy and negotiation to resolve conflicts peacefully. This is because states that are economically interdependent have a greater stake in maintaining good relations with each other, and are therefore more likely to engage in dialogue and compromise to resolve disputes.

Thirdly, economic interdependence can also create a situation where states are more likely to cooperate on issues of common interest, such as trade, security, and environmental protection. This is because states that are economically interdependent have a greater incentive to cooperate on issues that affect their mutual interests.

The Argument for Decreased Costs of War

On the other hand, some scholars argue that economic interdependence can actually decrease the costs of war, making it more likely between states. This argument is based on the idea that economic interdependence can create a situation where states are more likely to engage in aggressive behavior, as they become more dependent on each other for economic benefits.

For example, if one state is heavily reliant on another state for trade and investment, it may be more likely to engage in aggressive behavior to maintain its economic interests. This can create a situation where the costs of war are actually lower for one or both states, as they are more willing to take risks to protect their economic interests.

The Impact of Economic Interdependence on Democracy

Another argument made by liberal theorists is that economic interdependence can actually make states less democratic, rather than more democratic. This argument is based on the idea that economic interdependence can create a situation where states are more likely to prioritize economic interests over democratic values.

For example, if a state is heavily reliant on another state for trade and investment, it may be more likely to compromise on democratic values in order to maintain good relations with the other state. This can create a situation where the state is less democratic, as it prioritizes economic interests over the rights and freedoms of its citizens.

The Evidence

So what does the evidence say? There are several studies that have examined the relationship between economic interdependence and the likelihood of war. One of the most well-known studies is the "democratic peace" theory, which argues that democratic states are less likely to go to war with each other.

However, this theory has been challenged by some scholars, who argue that economic interdependence is a more important factor in determining the likelihood of war. For example, a study by Mansfield and Pollins (2001) found that economic interdependence was a significant predictor of the likelihood of war, even after controlling for democratic variables.

Another study by Oneal and Russett (1997) found that economic interdependence was associated with a decrease in the likelihood of war, but only for democratic states. This suggests that economic interdependence may have a different impact on the likelihood of war for democratic and non-democratic states.

Conclusion

In conclusion, the relationship between economic interdependence and the likelihood of war is complex and multifaceted. While some liberal theorists argue that economic interdependence can increase the costs of war, making it less likely between states, others argue that it can actually decrease the costs of war, making it more likely between states.

The evidence suggests that economic interdependence may have a different impact on the likelihood of war for democratic and non-democratic states. However, more research is needed to fully understand the relationship between economic interdependence and the likelihood of war.

References

Mansfield, E. D., & Pollins, B. M. (2001). The study of interdependence and conflict. Annual Review of Political Science, 4, 295-315.

Oneal, J. R., & Russett, B. M. (1997). The classical liberals were right: Democracy, interdependence, and conflict, 1950-1985. International Studies Quarterly, 41(2), 267-294.

Additional Resources

For further reading on the topic of economic interdependence and international relations, we recommend the following resources:

The Democratic Peace by Michael W. Doyle (1997) - This book provides a comprehensive overview of the democratic peace theory and its implications for international relations.
The Economics of War and Peace by Edward D. Mansfield (2004) - This book examines the relationship between economic interdependence and the likelihood of war, and provides a comprehensive overview of the literature on the topic.
The Politics of Economic Interdependence by Robert O. Keohane and Joseph S. Nye (1977) - This book provides a classic analysis of the politics of economic interdependence and its implications for international relations.
Q&A: Economic Interdependence and International Relations

In our previous article, we explored the relationship between economic interdependence and international relations, including the arguments made by liberal theorists that economic interdependence can increase the costs of war, making it less likely between states. However, there are many more questions and topics related to this issue that we would like to address in this Q&A article.

Q: What is economic interdependence, and how does it affect international relations?

A: Economic interdependence refers to the degree to which two or more countries rely on each other for trade, investment, and other economic benefits. When countries are economically interdependent, they have a vested interest in maintaining peaceful relations, as the costs of war, including the loss of trade, investment, and economic growth, become prohibitively high for both countries.

Q: How does economic interdependence affect the likelihood of war?

A: The relationship between economic interdependence and the likelihood of war is complex and multifaceted. While some liberal theorists argue that economic interdependence can increase the costs of war, making it less likely between states, others argue that it can actually decrease the costs of war, making it more likely between states.

Q: What are the benefits of economic interdependence?

A: The benefits of economic interdependence include increased trade, investment, and economic growth, as well as improved relations between countries. When countries are economically interdependent, they are more likely to cooperate on issues of common interest, such as trade, security, and environmental protection.

Q: What are the drawbacks of economic interdependence?

A: The drawbacks of economic interdependence include the risk of economic instability, as well as the potential for one country to take advantage of the other country's economic dependence. Additionally, economic interdependence can create a situation where countries are more likely to compromise on democratic values in order to maintain good relations with each other.

Q: How does economic interdependence affect democracy?

A: Economic interdependence can have both positive and negative effects on democracy. On the one hand, economic interdependence can create a situation where countries are more likely to cooperate on issues of common interest, such as trade, security, and environmental protection. On the other hand, economic interdependence can create a situation where countries are more likely to compromise on democratic values in order to maintain good relations with each other.

Q: What are the implications of economic interdependence for international relations?

A: The implications of economic interdependence for international relations are significant. When countries are economically interdependent, they are more likely to cooperate on issues of common interest, such as trade, security, and environmental protection. Additionally, economic interdependence can create a situation where countries are more likely to engage in diplomacy and negotiation to resolve conflicts peacefully.

Q: How can countries balance their economic interests with their democratic values?

A: Countries can balance their economic interests with their democratic values by prioritizing democratic values and principles, such as human rights and the rule of law, in their economic relationships with other countries. Additionally, countries can engage in diplomacy and negotiation to resolve conflicts peacefully, and can work to create a more stable and secure international environment.

Q: What are the future implications of economic interdependence for international relations?

A: The future implications of economic interdependence for international relations are significant. As the global economy continues to integrate, countries will become increasingly dependent on each other for trade, investment, and other economic benefits. This will create a situation where countries are more likely to cooperate on issues of common interest, such as trade, security, and environmental protection. However, it also creates a situation where countries are more likely to compromise on democratic values in order to maintain good relations with each other.

Q: How can countries prepare for the future implications of economic interdependence?

A: Countries can prepare for the future implications of economic interdependence by prioritizing democratic values and principles, such as human rights and the rule of law, in their economic relationships with other countries. Additionally, countries can engage in diplomacy and negotiation to resolve conflicts peacefully, and can work to create a more stable and secure international environment.

Q: What are the key takeaways from this Q&A article?

A: The key takeaways from this Q&A article are:

Economic interdependence can have both positive and negative effects on international relations.
Economic interdependence can increase the costs of war, making it less likely between states.
Economic interdependence can create a situation where countries are more likely to compromise on democratic values in order to maintain good relations with each other.
Countries can balance their economic interests with their democratic values by prioritizing democratic values and principles, such as human rights and the rule of law, in their economic relationships with other countries.
Countries can engage in diplomacy and negotiation to resolve conflicts peacefully, and can work to create a more stable and secure international environment.