The Role of Trade Imbalance and Asymmetry in Interstate Wars

Abstract

While liberal international relations theory often emphasizes that trade interdependence fosters peace, recent patterns of violent interstate conflicts challenge this assumption. According to the Global Peace Index 2024, there are currently 56 active conflicts globally, most of which are ongoing since the end of WWII, and with fewer conflicts being resolved (The Institute for Economics & Peace, 2024). This thesis investigates the complex relationship between trade interdependence and interstate conflict, with particular attention to how imbalances and asymmetries in bilateral trade (dyads) can exacerbate rather than reduce conflict risks. Drawing on the Hague Centre for Strategic Studies’ (HCSS) dangerous dyads model and the Heidelberg Institute for International Conflict Research’s (HIIK) Conflict Barometer 2023, the study examines six high-risk dyads: Russia - Ukraine, Russia - Georgia, Afghanistan - Pakistan, China - India, Rwanda - Uganda, and Syria - Türkiye. The findings of this thesis challenge the liberal assumption that economic interdependence universally fosters peace and demonstrate that trade interdependence is not inherently pacifying. A hypothesis is proposed to explain the various political, economic, and social conditions under which trade interdependence transitions from peace to conflict. This thesis also contributes to the broader debate on trade and peace by suggesting that trade positions and outlooks are critical in understanding whether economic ties stabilize or destabilize interstate relations.