Trade, Power, and Peace: Revisiting the Liberal and Structural Determinants of Militarized Conflict, 1946–2014

Purpose: This study investigates how economic interdependence, political institutions, and power asymmetry jointly influence the likelihood of militarized interstate disputes (MIDs). Methodology: Using cross-national quantitative analysis, the study employs both country–year (1960–2014) and dyad–year (1946–2014) research designs based on data from the Correlates of War and World Development Indicators. Logistic regression models with lagged predictors test four hypotheses: (1) trade openness reduces the likelihood of conflict; (2) this pacifying effect strengthens with higher economic growth; (3) trade asymmetry increases the probability of dyadic disputes; and (4) democracy moderates the trade–peace relationship. Findings: The country–year analysis partially supports the liberal peace hypothesis: greater trade openness modestly reduces the risk of conflict onset. However, its pacifying influence does not significantly depend on short-term economic growth and weakens in more democratic regimes. It suggests that political accountability and nationalist pressures can offset the stabilizing effects of trade. The dyad–year analysis confirms that power asymmetry and trade interdependence substantially decrease conflict probability, implying that peace is most sustainable under stable power hierarchies. Unique Contribution to Theory, Practice, and Policy: The study advances theoretical understanding by bridging liberal and structural realist frameworks. It shows that economic openness promotes peace only when grounded in asymmetric but stable power structures. It also contributes by integrating country- and dyad-level analyses to capture both domestic and systemic dimensions of the trade–peace relationship. From the policy perspective, the findings suggest that fostering trade interdependence alone is insufficient to ensure stability without addressing political and structural contexts that condition its effects.