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Empirical research generally supports the dyadic-level trade-promotes-peace hypothesis, while demonstrating that the relationship is weaker, more complex, and more conditional than liberal theory suggests. We shift to the system level and examine a neglected path to conflict in economically interdependent systems. In the great power competition for support among smaller states, a great power at a competitive disadvantage in economic instruments of influence may be incentivised to adopt more militarised strategies. We illustrate our argument with case studies of Austro-Hungarian and Russian influence strategies before the First World War and of Prussian strategies among German states before the Franco-Prussian War.

Systemic effects of economic interdependence and the militarisation of diplomacy: 1914 and beyond