The deterrent effects of economic integration

Abstract

Economic interdependence and international conflict studies have traditionally focused on the role of bilateral trade on direct deterrence, mostly omitting its indirect effects on third-party states. While scholars in the extended deterrence literature have examined the role of defender—target trade in deterring aggressors, most empirical research has remained limited to immediate deterrence and neglected general deterrence. This article synthesizes these literatures and goes beyond the dyad-level analysis in trade—conflict studies by focusing on the deterrent effects of trade. I claim that trade ties between the defender and target are not sufficient for extended general deterrence. This is mainly because international trade by itself is a poor indicator of the extent to which the target is an economically important friend of the defender, worth defending against aggressors. Empirical analysis of militarized disputes between rival states in the post-1945 period supports this point and shows that extended deterrence success is most likely in cases where the defender and target are economically integrated through regional trade institutions as well as conducting heavy trade. Economically minded defenders can successfully generate credible signals of resolve if they have institutional ties with their important trade partners.