Trade Interdependence and the Use of Force: Do Issues Matter?

ABSTRACT

In this project, we investigate the relationship between the use of military force and trade interdependence, suggesting that the influence of trade on militarized conflict varies based on the issue under dispute. For some issues, trade is likely to attenuate the chances that states escalate a dispute to the use of military force, while for others trade can intensify disputes so that military conflict is more likely. Specifically, we hypothesize that greater trade interdependence decreases the probability of military conflict over realpolitik issues like territory. On the other hand, greater trade interdependence increases the probability that states use military force when the issue under dispute concerns the regime, policies, and conditions in the target. To test our hypotheses, we employ new data on dyadic uses of force from the International Military Intervention data set that records the initiator’s reason(s) for using force against the target. The statistical tests support our hypotheses; trade decreases the use of force against a target for territorial and military/diplomatic reasons, which is consistent with arguments from the liberal paradigm. However, trade interdependence increases the use of force for humanitarian and economic reasons as well as to affect the regime or policy of the target. Thus, our study improves upon current research about the relationship between economic interdependence and foreign policy by specifying a conditional relationship based on the issues under contention.

KEYWORDS:

• Conflict
• interdependence
• issues
• trade

Acknowledgments

The authors thank Melia Pfannenstiel for research assistance and Patrick Shea and three anonymous reviewers for useful comments. Replication materials can be obtained at the journal’s dataverse page: http://dvn.iq.harvard.edu/dvn/dv/internationalinteractions.

Funding

The Office of Research of Kansas State University supplied financial support.

Supplemental Material

Supplemental data can be found at http://samrbell.com/public/Research_files/OnlineAppendix.pdf

Notes

¹ See Barbieri and Schneider (1999), McMillan (1997), Mansfield and Pollins (2003), and Schneider (2014) for reviews and critiques of the economic interdependence and conflict research program.

² Additional research correlates international trade with measures of hostility constructed from a wider range of events. Conflict, in these measures, can vary from verbal statements of disagreement to war. The effects of trade on these aggregated measures of conflict are inconsistent, depending upon the sample and model specification (Gasiorowski 1986; Gasiorowski and Polachek 1982; Polachek 1980; Reuveny and Kang 1996, 1998). See Pevehouse (2004) for a possible explanation of these inconsistent results.

³ Xiang, Xu, and Ketuku (2007) and Gartzke and Li (2003) challenge Barbieri’s (2002) results.

⁴ Our approach to thinking about the relationship between trade and conflict is consistent with Hegre (2009), who finds that there is a lower probability of conflict if trade flows between two states are greater than expected by economic fundamentals.

⁵ The idea that trade can be a source of conflict between states is represented in the trade-conflict literature. Scholars identify trade wars (Conybeare 1987; Levy and Ali 1998) emerging from commercial competition, describe how trade policy serves as a coercive tool of foreign relations (Baldwin 1985; Hirschman 1980 [1945]), and suggest that trade can cause greater levels of violent and nonviolent conflict (Barbieri 1996, 2002; Crescenzi 2005; Pevehouse 2004; Stein 1993, 2003).

⁶ Obviously, many uses of force can fit both categories to some degree. See the research design section of the article for details.

⁷ Models of trade (Hecksher-Olin, Ricardo-Viner) and the Stolper-Samuelson theorem suggest that there are also domestic groups that will benefit if trade decreases; hence the net effect of a loss of trade to the economy should be considered by national governments (Schneider 2014).

⁸ The use of force against state B may, in the short term, disrupt economic activity in state B and even decrease trade between state A and state B. We assume that leaders consider both the potential costs and benefits of their actions for the short term and long term in advance of any decision to use force and thus make decisions based on the net effects of their behavior on trade and that the long-term economic gains from intervening and attempting to resolve a domestic crisis in a state outweighs any potential short-term loss in trade. We thank an anonymous reviewer for suggesting the clarification.

⁹ It is possible for interventions, especially those motivated by humanitarian concerns, to occur with the cooperation of the target government. Our question concerns the decision by the intervener to use force and does not stipulate that the two governments are in a “dispute” over an issue. Given the risk and the high costs, in lives and treasure, that result from any type of military use of force, we believe it is important to determine all of the consequences that may result from greater trade between countries.

¹⁰ All models are reanalyzed with a standard probit model with time, time², time³ included to control for temporal dependence (Carter and Signorino 2010). Those results are included in Table 1 of the online appendix.

¹¹ Specifically, scholars have already noted that a number of MIDs are recorded because of “standard operating procedure” by the military forces of states (Fordham and Sarver 2001; Gleditsch and Hegre 1997; Huth, Gelpi, and Bennett 1993; Sechser 2011). It is unlikely that governmental leaders are calculating the opportunity cost of lost trade for incidents like naval patrols using force to protect maritime fishing rights, air defenses alerting because of accidental violations of air space, or isolated firefights resulting from regular patrols of border areas.

¹² Although the title of the data includes the word intervention, the actual data capture a broad cross-section of uses of force, not just interventions into existing conflicts.

¹³ Strategic motivation appears to be an underdefined category that is likely to be overrepresented in the data. We believe that just about any conflict could be considered strategic. So, we do not examine the “strategic” uses of force as a separate dependent variable. None of the 617 cases coded as “strategic” fails to have another type of motivation cited.

¹⁴ Classifying the motivations to use force into broader categories has a precedent in the work of Kisangani and Pickering (2007), who divide interventions into politico-strategic and socioeconomic conflicts.

¹⁵ One motivation that we do not include in either of the two groupings is interventions for pursuing rebels. Our argument is unclear about the predictions one should make regarding trade interdependence and uses of force for these types of interventions.

¹⁶ We also estimate a set of models where we drop any observation where no intervention is observed for the type we are analyzing, but there are interventions of another type. The results remain substantively the same. See Table 2 in the online appendix for these results.

¹⁷ We conduct a robustness test with total trade for the initiating state as the denominator and find similar results. These results can be found in the online appendix, Table 3.

¹⁸ All the independent variables are lagged one year.

¹⁹ The “margins” command in Stata is used to generate the predicted probabilities and confidence intervals.

Additional information

Funding

The Office of Research of Kansas State University supplied financial support.