Atlantic Trade and the Decline of Conflict in Europe: Evidence from 250 Years of Data

Abstract:

We use over 250 years of conflict and trade integration data to examine whether the rise of Atlantic trade had a pacifying effect in Europe. The decline in intra-European conflict from the late Middle Ages to World War One has been widely acknowledged. Explanations for this decline range from the pacifying effect of the Congress of Vienna, technologies developed during the Industrial Revolution, and the positive effects of the Enlightenment. We examine another important, but so far unexplored, channel that plausibly affected intra-European conflict: access to Atlantic trade. To identify our results, we rely on exogenous variation in wind patterns and cyclone activity over the Atlantic to instrument trade integration with the New World. We find that if two European countries in our sample were to jointly increase their integration with the New World by one standard deviation, then their probability of being at war with each other would decrease by 12.33 percent from the baseline. This confirms that greater integration between Europe and the New World did indeed have a pacifying effect on intra-European conflict.