These two separate events last month once again raised the question of whether trade can prevent international conflict. The answer is not so simple, according to a study released in September by the London-based Center for Economic Policy Research. An increase in trade between two countries reduces the probability of conflicts between them but raises the probability of conflicts with other countries, the study found.
The rationale is that globalization, by enabling trade links with distant regions, has reduced countries dependency on local trade and thus reduced the opportunity costs of local wars, according to the study. The results were derived from an econometric model that was used to analyze data on military conflicts between 1948 and 2001.
The paper was written by Philippe Martin of the University of Paris, Thierry Mayer of the University of Paris-Sud, and Mathias Thoenig of the University of Geneva. The authors said their work was motivated by the growing concern that the end of the Cold War did not contribute to pacifying international relations.