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Peace is a Natural Effect of Trade: Some Points on Closer Economic Ties in the Horn

In his article, “The Evolution of Peace Continues in East Africa,” featured in the last issue of Eritrea Profile(19 January), Simon Weldemichael discusses the process of how peace has unfolded in the Horn of Africa.

Near the end of his insightful article, he also mentions the need to strengthen or deepen economic integration in the Horn of Africa in order to consolidate the peace and make it sustainable. In this article, I build upon his important discussion to briefly touch upon several of the often overlooked benefits and aspects associated with closer economic ties and regional integration among nation-states.

Using a broad, general definition, regional integration may be defined as the process of overcoming barriers that divide neighboring countries, by common accord, and of jointly managing shared resources and assets. Essentially, it is a process by which groups of countries liberalize trade, creating a common market for goods, people, capital, and services.Since mid-2018, the countries of the Horn of Africa have been engaged in efforts to establish peace and cooperation amongst themselves. An important part of the process for securing peace and normalizing ties has been the countries’ commitment to establishing closer economic ties and integration.

One of the greatest potential benefits of closer economic ties and economic integration is that it can contribute to peace and reduce the likelihood of war or conflict. This is because closer economic ties and integration make conflict more costly and limit the incentive to use military force in interstate relations. Notably, the idea that closer ties, trade, and integration among countries can help to ensure peace between them is not new.For example, after the Second World War, one of the principal reasons for establishing the European Union was to ensure long lasting peace, especially between France and Germany. Prior to that, Baron de Montesquieu stated that, “peace is the natural effect of trade. Two nations who traffic with each other become reciprocally dependent: for if one has the interest in buying, the other has the interest in selling and thus their union is founded on the mutual necessities” (1748), while Kant (1795/1957) suggested that commercial interests are naturally inimical to the goals of warfare.Similarly, John Stuart Mill stated, “The great extent and rapid increase of international trade, in being the principal guarantee of the peace of the world, are the great permanent security for the uninterrupted progress of the ideas, the institutions, and the character of the human race” (1909: 582).

Another particular mechanism through which closer economic ties and integration are thought to contribute to peace is through increased familiarity and understanding. Specifically, as trade, cooperation, and integration increase, the familiarity between people can also increase,while misconceptions or stereotypes are reduced. Moreover, regular and frequent political (and other) contact among members can build trust and facilitate cooperation.

In many ways, this seems quite intuitive and hardly surprising. Regarding the Horn of Africa, although our people and communities have been neighbors for a long time, many harmful misconceptions, stereotypes, and tension slinger and still exist. Thus, greater interaction and closer economic ties and integration can help to dispel these misperceptions, humanize the “other”, de-escalate tensions, and encourage a relationship underpinned by mutual respect, tolerance, trust, and understanding.

Importantly, there is a large body of research that offers considerable support for the general idea that greater economic interaction, trade, and integration can support peace. For example, work by Barbieri and Peters (2003) demonstrates how “trade openness” has a significantly negative impact on the probability of military conflict, while Lee and Pyun (2008) demonstrate that greater bilateral trade interdependence appears to bring about a considerably larger peace-promotion effect for neighboring countries. Furthermore, in “Peace through Trade or Free Trade?”, McDonald finds that the more freely a country trades, the fewer wars it engages in, while increased trade can also promote an “expansion of bureaucratic structure,” which reduces the likelihood of military actions since economic interests receive greater concern (Domke 1988).

Of course, it cannot be overlooked that there is also a lot of work that contrasts with these findings and suggests that the relationship between greater economic interaction, trade, integration and peace is more complex and not quite so straightforward. Trade does not necessarily always promote peace; in fact, partners may engage in conflict, often over trade-related issues. In 1914, for instance, Europe was highly connected through trade, yet this did not stop the out break of a devastating war. However, it is quite persuasive that closer economic ties and integration can help ensure peace between nation-states. 

In addition to the important benefits outlined above, closer economic cooperation and integration can also prove highly beneficial for the countries of the region by strengthening the voice of members internationally. Specifically, through coming together and deepening linkages, the countries of the region can strengthen their market and negotiating powers. Developments in the region over the past several years offer a useful example. Increasingly, the Horn of Africa has become a central area of struggle among various international powers and growing regional players vying for resources and geostrategic influence: the United States, Russia, China, Turkey, and several countries from the Gulf. Rather than engaging in a “race to the bottom” or antagonistically competing amongst themselves, the countries of the Horn, through standing together, recognizing their shared interests, and presenting a united front, can maximize their collective benefits and help set the foundation for long-term peace, development, and security.

Last, it is important to note several of the other significant benefits associated with closer economic ties and integration. These include, inter alia,increased market size and exploitation of economies of scale;improved transportation and communications infrastructure (so as to facilitate more trade and interaction);greater competition, reduced costs, and increased efficiency (since competition motivates producers to become more efficient in order to be able to compete with other producers);more opportunity for technology sharing and positive spillovers; a larger number of product varieties; and potentially increased investment flows.

History weighs heavily on the Horn of Africa. For too long, our countries have been synonymous with conflict and war. We have often acted like crabs in a bucket, pulling each other down and ensuring our collective demise, rather than working cooperatively to raise ourselves up collectively.We must seize this opportunity to come together, reconcile, and move forward. Closer economic cooperation and integration can help promote economic, political, and social development and support the restoration of lasting peace and stability in our long troubled region.


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