Economic interdependence

Economic interdependence is the mutual dependence of the participants in an economic system who trade in order to obtain the products they cannot produce efficiently for themselves. Such trading relationships require that the behavior of a participant affects its trading partners and it would be costly to rupture their relationship.[1] The subject was addressed by A. A. Cournot who wrote: "...but in reality the economic system is a whole in which all of the parts are connected and react on one another. An increase in the income of the producers of commodity A will affect the demands for commodities B, C, etc. and the incomes of their producers, and by its reaction will affect the demand for commodity A."[2] Economic Interdependence is evidently a consequence of the division of labour.

David Baldwin conceptualizes international economic interdependence as the opportunity costs incurred from potential exit costs that incur as a result of breaking existing economic ties between nations. Others argue that it entails the degree of sensitivity of a country's economic behavior to policies and development of countries outside its border.[3] Global economic interdependence has grown in the post-World War II period as a result of technological progress (e.g. computerization, containerization, low-cost travel, low-cost communications) and associated policies that were aimed at opening national economies internally and externally to global competition.[4][5][6]

Some international relations scholars posit that economic interdependence contributes to peaceful relations between states.[7][8][9][10][11][12] Other scholars argue that the relationship is more nuanced or emphasize the ways in which interdependence can contribute to conflict between states.[13][14][15][16][17] For example, through their work on "weaponized interdependence", Abraham Newman and Henry Farrell have outlined how states that possess effective jurisdiction over central economic nodes can use these nodes for coercive economic leverage against adversaries.[13] Viktor Cha has argued that economic interdependence in East Asia can both be a tool of coercion by China but can also be exploited by China's neighbors to deter China if they all work together against China.[18]

  1. ^ Mansfield, Edward Deering; Pollins, Brian M. (2003). Economic Interdependence and International Conflict: New Perspectives on an Enduring Debate. University of Michigan Press. ISBN 978-0-472-09827-9.
  2. ^ Cournot, Antoine (1838). Researches into the Mathematical Theory of Wealth. Translated by Nathaniel Bacon. p. 127.
  3. ^ Baldwin, David A. (1980). "Interdependence and power: a conceptual analysis". International Organization. 34 (4): 471–506. doi:10.1017/S0020818300018828. ISSN 1531-5088. S2CID 10757441.
  4. ^ "UN DESA | Office for Economic and Social Council Support and Coordination". www.un.org.
  5. ^ Paehlke, Robert (2009). Globalization, Interdependence and Sustainability. In Introduction to Sustainable Development – Volume 1. Encyclopedia of Life Support Systems (EOLSS).
  6. ^ World Trade Organization (2008). "World Trade Report 2008 (Trade in a Globalizing World)" (PDF). Retrieved 26 October 2015.
  7. ^ Cite error: The named reference :4 was invoked but never defined (see the help page).
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  11. ^ Gent, Stephen E.; Crescenzi, Mark J. C. (2021). Market Power Politics: War, Institutions, and Strategic Delay in World Politics. Oxford University Press. ISBN 978-0-19-752982-9.
  12. ^ Lupu, Yonatan; Traag, Vincent A. (2012). "Trading Communities, the Networked Structure of International Relations, and the Kantian Peace". Journal of Conflict Resolution. 57 (6): 1011–1042. doi:10.1177/0022002712453708. ISSN 0022-0027. S2CID 220643183.
  13. ^ a b Cite error: The named reference :8 was invoked but never defined (see the help page).
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  17. ^ Copeland, Dale C. (2024). A World Safe for Commerce: American Foreign Policy from the Revolution to the Rise of China. Princeton University Press. ISBN 978-0-691-17255-2.
  18. ^ Cha, Victor D. (2023). "Collective Resilience: Deterring China's Weaponization of Economic Interdependence". International Security. 48 (1): 91–124. doi:10.1162/isec_a_00465. ISSN 0162-2889.