Measuring economic interdependence: A geopolitical perspective

Political scientists employ the concept of economic interdependence for three theoretical purposes: to evaluate whether expanding international economic ties diminish the autonomy of states; to study the relationship between international trade and international conflict; and to assess the efficacy of economic sanctions. To date, they have almost exclusively measured interdependence with crude indices which gauge the volume of international trade and factor price linkages. Consequently, they overlook the most strategically important aspect of trade: its material composition. We introduce a new method for measuring economic interdependence that considers the goods that are traded and the availability of substitutes or alternative supplies. Our Strategic Goods Test assesses a state's dependence on its potential adversaries for continued access to the resources that are essential for national survival. Applied to Anglo‐German economic relations before the First World War, our test reveals that earlier studies claiming that all states were considerably interdependent during this period are incomplete; although Germany was vulnerable to a cut‐off of its strategic goods, the United Kingdom was not.