Defense Economy Section 3

liberal view that trade promotes peace

trade creates mutual benefits, economic interdependence discourages conflict

realist view of economic interdependence

interdependence creates vulnerability, dependence, power asymmetries, states exploit dependence

asymmetry problems

stronger state can coerce economically while weaker state can’t compete economically and may turn to military tools

new mechanism to conflict

1) high economic interdependence 2) great power competition for influence 3) some states lack economic leverage and have increased tensions

revisionist argument for U.S. entrance into WWI

U.S. intervened to protect trade with Allies, trade created economic dependence, protecting trade required stronger stance with Germany

liberal theory for U.S. entrance into WWI

trade increased cooperation, war becomes too costly, states avoid conflict with trading partners but may fight to defend trade flows

oil war hypothesis

oil is extremely valuable and states want more of it therefore states will fight to sieze oil rich territory

4 major obstacles to oil wars

1) invasion costs make short term profits minimal or negative

2) occupation costs cause production disruption and instability

3) international costs

4) investment costs (extraction needs capital and expertise)

core logic of the oil hypothesis

if oil is worth so much, then countries should be expected to fight for control of oil

when are oil wars more likely

when oil prices are high, when the aggresor knows how to produce oil in conquered territory, when oil is already being produced, where oil production is close to the boundary, when the aggressor has substantial power advantage

gartzke and lupe argument

highly interdependent countries had a history of settling disputes diplomatically, low interdependence countries had a history of settlng disputes by fighting, some alliances linked interdependent and autarkic countries

brooks globalization thesis

the economic benefits of conquest have significantly declined especially for advanced industrial states due to major changes in the global economy, particularly the globalization of production

key factors reducing the benefits of conquest

1) rise of knowledge based economies

2) globalization of production

3) geographic distribution

4) interdependence and global trade

5) rise of multinational corporations

6) increased costs of oppression