Economic Interdependence and International Conflict: The Implications of Membership in International Economic, Financial, and Monetary Organizations and Multilateral Preferential Trade Agreements

Abstract

This paper analyzes the relationship between economic interdependence and international conflict in the post-Cold War period since 1990 through a pooled analysis of time-series cross-sectional data on militarized interstate disputes (MIDs) and joint membership in economic, financial and monetary international organizations. I find evidence that an increase in the number of joint memberships does reduce the probability of a conflict between two states. The statistical results show that the impact of an increased number of joint memberships is not only significant, but also much larger than previously argued. A greater number of joint memberships has larger impact on the probability of interstate conflict than do trade interdependence, joint democracy or major power involvement variables. The main contributions of this paper are twofold. First, it focuses the analysis of economic and trade interdependence on joint memberships in strictly economic, financial and monetary organizations. Second, it provides a much needed contemporary argument in the debate on the relationship between membership in such organizations and international conflict.