Trade Promotes Peace

If you want peace, work for free trade — so I argue in today’s Christian Science Monitor.  Here’s the gist:

Back in 1748, Baron de Montesquieu observed that "Peace
is the natural effect of trade. Two nations who differ with each other
become reciprocally dependent; for if one has an interest in buying,
the other has an interest in selling; and thus their union is founded
on their mutual necessities."

If Mr. Montesquieu is correct that trade promotes
peace, then protectionism – a retreat from open trade – raises the
chances of war.

Plenty of empirical evidence confirms the wisdom of Montesquieu’s insight: Trade does indeed promote peace.

During the past 30 years, Solomon Polachek, an
economist at the State University of New York at Binghamton, has
researched the relationship between trade and peace. In his most recent
paper on the topic, he and co-author Carlos Seiglie of Rutgers
University review the massive amount of research on trade, war, and
peace.

They find that "the overwhelming evidence indicates
that trade reduces conflict." Likewise for foreign investment. The
greater the amounts that foreigners invest in the United States, or the
more that Americans invest abroad, the lower is the likelihood of war
between America and those countries with which it has investment
relationships.

Professors Polachek and Seiglie conclude that, "The
policy implication of our finding is that further international
cooperation in reducing barriers to both trade and capital flows can
promote a more peaceful world."

Here’s a link to the paper by Polachek and Seiglie.

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