Building Friendship or Hostility? Examining the Effects of Economic Interdependence on Arms Race

Could economic interdependence really bring about a safer world or does it simply generate more points of conflict? This dissertation aimed to examine this topic by looking into the methodological issue, which centers on the measurement of the dependent variable: conflict risks. Most recent quantitative interdependence studies proceed under the assumption that MID initiation is a better measure of conflict risks. While the actual initiation of MIDs is important for testing the trade-security relationship, long term preparations for conflict -- especially between strategic rivals - should also be taken into account. By only focusing on MIDs, scholars may reach a false conclusion that trade promotes peace by inhibiting the occurrence of MIDs even though the trading dyads are building arms in preparation for a future conflict. In this study, I use arms races as an alternative measure of security. I compare the effects of trade interdependence on two types of conflict: MID initiation and arms race initiation. I find that although trade dependence lowers the risk of MID initiation, it actually increases the likelihood of arms race occurrence.