Does Trade Promote Peace?
Economics evidence has long demonstrated that free trade benefits all nations by increasing their standards of living and wealth. Professor Pavel Yakovlev argues that empirical evidence shows that free trade promotes peace. He provides the following reasons for this outcome:
- Trade makes countries more commercially interdependent and provides strong incentives to avoid war. This is known as the capitalist peace theory.
- Countries that trade a lot with each other have a lot to lose if war breaks out.
- Free trade and bargaining is the most cost effective way of resolving disputes and obtaining resources, while war is a costly way of doing the same things.
- Free trade brings more goods and ideas into a country and also promotes tolerance and understanding.
Professor Yakovlev also discusses a few examples of evidence that supports this argument. Trade not only increases prosperity in countries, but it also has been shown to promote world peace.