Networks of Military Alliances, Wars, and International Trade

TL;DR

This paper models how international trade influences alliance networks, showing trade promotes stability and peace by increasing alliance density and reducing incentives for conflict, supported by historical data.

Contribution

It demonstrates that international trade is crucial for creating peaceful and stable alliance networks, a novel insight supported by empirical historical analysis.

Findings

Trade increases alliance density and stability

Densification correlates with reduced interstate wars

Historical data supports the model's predictions

Abstract

We investigate the role of networks of alliances in preventing (multilateral) interstate wars. We first show that, in the absence of international trade, no network of alliances is peaceful and stable. We then show that international trade induces peaceful and stable networks: trade increases the density of alliances so that countries are less vulnerable to attack and also reduces countries' incentives to attack an ally. We present historical data on wars and trade, noting that the dramatic drop in interstate wars since 1950, and accompanying densification and stabilization of alliances, are consistent with the model but not other prominent theories.