Does economic globalization promote civil peace in developing countries?

Abstract

This study questions the widely supported claim that economic globalization benefits developing countries by enhancing their prospects for civil peace. Drawing on ideas from across the social sciences, this study questions the nature of causation between economic globalization and civil peace and how it should be conceptualized and modeled. Instead of assuming a straightforward and static relationship whereby economic globalization directly increases the likelihood of civil peace, a range of alternative hypotheses are considered, including those about reverse and reciprocal causation and about dynamic and path-dependent effects. Using dynamic panel regression and vector autoregression, the study empirically examines how trade openness and foreign direct investment affect civil violence in a sample of all countries classified by the United Nations as developing. The results find positive links between economic globalization and civil peace, as much of the literature predicts, but show that this relationship mainly arises from complex patterns of causation rather than from the pacifying effects of economic globalization. These results are robust to various model specifications and sampling strategies. The study ends by considering whether economic globalization may indirectly promote civil peace by fostering long-term economic development.