Networks of military alliances, wars, and international trade
Significance The incidence of interstate wars has dropped dramatically over time: The number of wars per pair of countries per year from 1950 to 2000 was roughly a 10th as high as it was from 1820 to 1949. This significant decrease in the frequency of wars correlates with a substantial increase in the number of military alliances per country and the stability of those alliances. We show that one possible explanation of this is an accompanying expansion of international trade. Increased trade decreases countries’ incentives to attack each other and increases their incentives to defend each other, leading to a stable and peaceful network of military and trade alliances that is consistent with observed data. 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 showing that the dramatic drop in interstate wars since 1950 is paralleled by a densification and stabilization of trading relationships and alliances. Based on the model we also examine some specific relationships, finding that countries with high levels of trade with their allies are less likely to be involved in wars with any other countries (including allies and nonallies), and that an increase in trade between two countries correlates with a lower chance that they will go to war with each other.