Extended Dependence: Trade, Alliances, and Peace

Consequences of russia’s military invasion of Ukraine for Polish-Ukrainian trade relations

“…The impact of trade relations on conflicts, including military ones (Polachek, 1980;Barbieri, 1996;Oneal & Russett, 1999), or international trade as a weapon (Lee, 2022) is widely studied in the scientific literature. Most research focuses on the generally accepted liberal view that commerce reduces the likelihood of military conflict (Lee & Pyun, 2016;Chen, 2021) because "trade is economically beneficial, military conflicts reduce trade, and leaders are rational" (Martin et al, 2008). At the same time, attention is often paid to the conflict sides, which are also trading partners.…”

Can trade and security alliance help reduce interstate war?

“…Chen’s [ 13 ] study is one of the latest challenges, arguing that liberal peace is created not by dyadic dependence (the challenger’s trade dependence on the target state) but by Extended Dependence (the challenger’s trade dependence on the military allies of the target state, measured as the sum of the challenger’s trade volume with the target’s allies, divided by the challenger’s GDP). Chen contends that states shy away from aggression if they fear trade retaliation from the target’s security allies.…”

“…One of the most crucial assessments to incorporate is how to deal with the target’s military allies that would unfavorably react to the challenging state. The rationale is that “among all the defense pacts that are still effective or that terminated after 1950, approximately 73% of the treaties require unconditional obligations , regardless of who the challenger is” [ 13 page 249, emphasis added). The challenger has fewer incentives to attack the target if it wishes to avoid trade retaliation from the target’s security allies.…”

“…South Korea deployed fighter jets several times to warn away Japanese planes approaching the disputed Islands and increased their patrols around the islands in response to the Japanese military presence [ 23 ]. Although Japan provoked numerous militarized disputes, the military allies of South Korea did not attempt to “(1) reduce trade with [Japan] as a consequence of direct military intervention, (2) punish [Japan] by imposing economic sanctions or implementing unfavorable trade policies, or (3) undermine [Japan’s] ability to access alternative markets to its lost trade” [ 13 page 2].…”

“…As captured in the Iraqi invasion of Kuwait, it is reasonable to expect that for the Extended Dependence Theory to be true, empirical evidence must be shown for the pacifying effect of Extended Dependence on war, which is the most severe and intense form of conflict and thus the one that security allies of the target are likely to act on. The causal connection among trade, alliance, and war must be the crux of the policy significance of Chen’s [ 13 ] contribution. Yet, as noted, his empirical analysis neglects to empirically test the pacifying effect of Extended Dependence on interstate war despite its great importance in the liberal peace literature.…”