Political Institutions, Globalization, and Conflict

The consequences of globalization for the development of a more peaceful world remain highly controversial. This article seeks to clarify the impact that the globalization of the economy may have on civil war and political instability. Liberals argue that countries heavily dependent on the global economy (whether measured by trade or investment) are likely to experience higher economic growth, greater affluence, more democracy, and increasingly peaceful conditions at home and abroad. In stark contrast, most dependency theorists argue that high levels of trade and investment tend to generate greater economic inequality. Relative deprivation theory suggests that such inequality will increase the risk of political instability. From these two broad perspectives, a set of hypotheses is developed and tested on a global dataset for the period 1970–97. The consequences of an open economy are more complex than captured by either model in the form we have formulated it, but we generally find more support for the liberal model than for the structural model in the effect of economic openness on growth, political change, and civil war.