Extended trade dependence, alliance network centrality, and conflict initiation

Abstract According to the idea of extended dependence (Chen, 2021), in a directed dyad setting, a challenger’s trade dependence on a target’s defensive allies decreases the likelihood that the challenger initiates military conflict. The deterrence works because the target’s allies are both willing and able to impose severe economic punishment on the challenger. We refine this argument by introducing conditional extended dependence. We argue that for extended dependence to deter a potential challenger ex ante, the target’s allies must overcome two challenges. First, the potential challenger must believe those allies would credibly follow through with the threat of sufficiently harmful economic punishment. Second, the target’s allies successfully coordinate collective action to prevent the challenger from finding substitute markets. Extended dependence is more likely to fulfill these conditions when a “significant” state is centrally positioned within the target’s alliance network and exerts substantial leverage over other allies. Our empirical analysis demonstrates that extended dependence deters Militarized Interstate Dispute (MID) initiations conditionally between 1951 and 2012, but unconditionally from 1870 to 1950. We trace this distinction to changes in the alliance system over time and to the declining reliability of defensive alliances, necessitating collective action among allies for deterrence to work in the post-1950 period.