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Argument: Trade reduces conflict between countries

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  • Donald J. Boudreaux ,“Want world peace? Support free trade” Fairfax,VA "Back in 1748, Baron de Montesquieu observed that "Peace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities."If Mr. Montesquieu is correct that trade promotes peace, then protectionism - a retreat from open trade - raises the chances of war.Plenty of empirical evidence confirms the wisdom of Montesquieu's insight: Trade does indeed promote peace.During the past 30 years, Solomon Polachek, an economist at the State University of New York at Binghamton, has researched the relationship between trade and peace. In his most recent paper on the topic, he and co-author Carlos Seiglie of Rutgers University review the massive amount of research on trade, war, and peace.They find that "the overwhelming evidence indicates that trade reduces conflict." Likewise for foreign investment. The greater the amounts that foreigners invest in the United States, or the more that Americans invest abroad, the lower is the likelihood of war between America and those countries with which it has investment relationships.Professors Polachek and Seiglie conclude that, "The policy implication of our finding is that further international cooperation in reducing barriers to both trade and capital flows can promote a more peaceful world."

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