Globalization mitigates the risk of conflict caused by strategic territory

Abstract

Globalization is routinely blamed for various ills, including fueling conflict in strategic locations. To investigate whether these accusations are well founded, we have built a database to assess any given location’s strategic importance. Consistent with our game-theoretic model of strategic interaction, we find that overall fighting is more frequent in strategic locations close to maritime choke points (e.g., straits or capes), but that booming world trade openness considerably reduces the risks of conflict erupting in such strategic locations. The impact is quantitatively sizable, as moving one SD (1,100 km) closer to a choke point increases the conflict likelihood by 25% of the baseline risk in periods of low globalization, while reducing it during world trade booms. Our results have important policy implications for supranational coordination.