Why ‘De-Risking’ May Not Deliver a Large Peace Dividend

Why It Matters

The study quantifies how deeper trade integration lowers war risk, challenging the notion that openness is purely a security liability and urging policymakers to weigh both economic and peace dividends when crafting de‑risking strategies.

Key Takeaways

• Doubling bilateral trade cuts militarized conflict probability by ~30%
• Aviation‑driven trade boost yields biggest peace gains in East Asia
• Effect strongest for continental pairs with high sea‑to‑air distance ratios
• Trade lowers likelihood of strategic rivalry, especially positional competition
• Post‑1980 period shows significant peace dividend from increased air transport

Pulse Analysis

The surge of ‘de‑risking’ policies since 2018 reflects growing anxiety that economic interdependence can be weaponised. While diversification, screening and export controls aim to insulate national economies, a long‑standing hypothesis in political economy argues that trade itself makes war costlier and thus less likely. Scholars have struggled to prove this because trade and conflict influence each other, creating a classic reverse‑causality problem that leaves the true magnitude of any peace dividend uncertain.

A breakthrough comes from leveraging the aviation revolution of the late 20th century as a natural experiment. Faster, cheaper air freight created asymmetric trade booms: country pairs with long sea‑to‑air detours saw sharp increases in bilateral commerce, while those already well‑served by maritime routes did not. Using this exogenous shock as an instrumental variable, the authors estimate that a 100 % rise in trade cuts the probability of militarised conflict by about 30 %, also dampening the severity of disputes and the perception of strategic rivalry. The effect clusters in East and Southeast Asia and is strongest for continental nations where air routes dramatically shortened distances.

These results carry weighty policy implications. If trade delivers a measurable peace dividend, blanket de‑risking that curtails economic integration could unintentionally raise the risk of conflict, especially in regions where aviation‑enabled trade has been most transformative. Decision‑makers should therefore adopt a nuanced calculus that balances the security costs of dependence against the stabilising benefits of interdependence. Future research may extend this approach to digital trade and supply‑chain resilience, helping to design strategies that preserve both economic vitality and geopolitical stability.