Choosing Sides: Economic Interdependence and Interstate Disputes

Recent work on economic interdependence and conflict has focused largely on explaining whether trading states fight each other while ignoring the possibility that trade has broader political implications on state behavior. In this study, I claim that states’ trade interests affect their decisions to militarily assist their partners in armed conflicts and their choice of sides. The empirical analysis offers evidence that economics shapes the expansion of conflicts to third-party states. When third parties have important trade interests in a conflict participant, they join with their partners to protect their economic stakes against the potential externalities of armed confrontations. Yet, in cases where an outside state has interests in opposing sides of the conflict, it does not support one trade partner against another and abstain from joining on either side.