> In this paper, we empirically examine the impact of bilateral trade on the likelihood and intensity of militarized interstate conflict from 1962 to 2014. To address the inherent endogeneity problem between trade and conflict, we construct an instrumental variable that exploits global improvements in aviation technology relative to sea transport, interacted with fixed geographic asymmetries across country pairs. This strategy allows us to isolate plausibly exogenous variation in bilateral trade and to credibly estimate its causal effect on interstate conflict.
> Our results indicate that higher bilateral trade causally reduces both the likelihood and intensity of militarized disputes. This finding is robust across specifications, withstands a wide range of potential confounders, and is confirmed with an alternative identification strategy. We also show that trade lowers the probability that countries perceive one another as strategic rivals, suggesting that economic integration may dampen antagonism before it escalates into open confrontation.
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> In this paper, we empirically examine the impact of bilateral trade on the likelihood and intensity of militarized interstate conflict from 1962 to 2014. To address the inherent endogeneity problem between trade and conflict, we construct an instrumental variable that exploits global improvements in aviation technology relative to sea transport, interacted with fixed geographic asymmetries across country pairs. This strategy allows us to isolate plausibly exogenous variation in bilateral trade and to credibly estimate its causal effect on interstate conflict.
> Our results indicate that higher bilateral trade causally reduces both the likelihood and intensity of militarized disputes. This finding is robust across specifications, withstands a wide range of potential confounders, and is confirmed with an alternative identification strategy. We also show that trade lowers the probability that countries perceive one another as strategic rivals, suggesting that economic integration may dampen antagonism before it escalates into open confrontation.