Powell, Jonathan, and Mwita Chacha. Forthcoming. "Investing in Stability: Economic Interdependence, the Capitalist Peace, and Coups d'etat." Journal of Peace Research.
The capitalist peace thesis argues transnational economic ties have a pacifying effect on interstate relations. An extension of this literature reports that economic ties can prompt belligerents in civil conflicts to peacefully resolve their disputes, and can attract third party intervention from states with strong economic ties. This pacifying effect of economic ties, we argue, is applicable in the context of coups d’état: as a state becomes more economically interdependent with the rest of the world, the opportunity costs of domestic political disturbances are raised for both the targeted state and its financial partners. As a consequence, coups become less likely as would-be belligerents prefer to resolve their disputes without resorting to actions that could damage the economic reputation of the state, and foreign partners have stronger incentives to make efforts to mediate political crises prior to the execution of a coup. We test this argument quantitatively by investigating the influence of trade dependence and contract-intensive money, a measure of investment profile, on cases of coups from 1952 to 2009. Our findings lend credence to the suggestion that economic globalization has contributed to a decline in coups.