INTRODUCTION

We begin our analytical journey with an analysis of the causal flow from economic openness to democracy, which stands at the center of the conceptual layout of the book in Figure 1.1. The issue we seek to investigate in this chapter is in fact much broader than the components of openness itself; it falls under the umbrella of economic globalization. A popular interpretation of this phenomenon is the gradual turning of separate national economies, each operating in its own domain, into a set of national economies heavily entangled with one another, affecting and being affected by the economic forces operating in other countries in the world much in the same way that the economy of the state of Texas is affected by and affects, for example, the economies of the states of California or Florida in the United States. As noted, the causal relationship of interest falls under the umbrella of the globalization discourse; therefore, we use the terms “economic globalization” and “economic openness” interchangeably.

Two questions stand at the core of our investigation in this chapter. Does economic globalization affect the level of democracy? Is deepening integration into the world economy associated with a decline or rise of democratic governance? These questions have captured the imagination of policymakers and academic scholars alike. Various answers have been provided, and policy recommendations have been made. Anecdotal evidence is typically invoked in debates, but systematic evidence is scarce. This chapter seeks to fill this empirical lacuna.

INTRODUCTION

In the previous chapter, we saw that the different aspects of national economic openness affect the level of democracy in a country. In that analysis, the level of national income inequality acted as a control variable in the statistical model of the sensitivity analysis. We found that a rise in the level of income inequality could reduce the level of democracy in a country. This chapter changes the causal arrow between income inequality and democracy, and we now focus on identifying the causes of national income inequality. We seek to study two interrelated important questions pertaining to this phenomenon: How does the level of economic openness of a country affect its distribution of income? How does the level of democracy influence a country's distribution of income? These two questions are very important for social scientists because a country with a highly skewed income distribution tends to be politically unstable. Political instability often may lead to intrastate conflict and ultimately civil war.

So far, these two questions of interest have been addressed in two separate bodies of literature. The effect of economic openness on the distribution of income has been debated in the literature on economic globalization (e.g., Rodrik, 1997; Held et al., 1999). The issue has also been debated in policy and popular circles (e.g., Soros, 1997; Wolf, 2000; World Bank Poverty Net, 2000).

INTRODUCTION

In Chapter 7, we studied the effect of democracy in a country on various types of environmental degradation, controlling for international trade merely as a secondary force. This chapter studies how international trade and its interaction with democratic governance influence the terrestrial environment. Specifically we examine land degradation and deforestation, two indicators that reflect the health of the terrestrial environment of a country. These two dimensions of the terrestrial environment have an important impact on food production and climate change – two issues that have posed serious challenges to the contemporary world.

Land degradation significantly constrains a country's ability to provide food for its people and animals, including animals to be consumed. A rise in land degradation often reduces the land's productivity and, therefore, food yields. Because of growing populations and land degradation, many less developed countries (LDCs) find that their people have to confront declining food security. The problem is intensifying as rising oil prices have induced food crises in many poor countries.

Deforestation has important environmental implications, including global warming: it speeds up land erosion, causes fresh water supplies to decline, reduces the level of biodiversity, raises the levels of sedimentation in rivers and lakes, intensifies sand and dust storms, increases the occurrence of mudslides, and deteriorates air quality. In fact, the Intergovernmental Panel on Climate Change has listed deforestation as a key driver of climate change.

INTRODUCTION

Interstate military conflict as an extreme form of political exchange is a central feature of the international system and has received the enormous attention it deserves from scholars and policymakers. Currently state sovereignty and anarchy make world peace seem elusive. Chapters 2–4 in Part I modeled the effects of economic openness on democracy, the effects of democracy and economic openness on income inequality, and the reciprocal effects of economic development and democracy, respectively. These analyses ignored the possible impact of democracy and economic openness on interstate political relations. In reality, democracy and economic openness develop in and around nation-states such that they inevitably influence political relations. In fact, scholars have argued and sought to demonstrate that both democracy and economic openness affect interstate military conflict, even though they debate the nature of their effects.

Part II of our book explicitly tackles the relevance of democracy (Chapter 5) and economic openness (Chapter 6) to interstate military conflict. In Chapter 5, we are particularly interested in the relationship between democracy and military conflict. This chapter speaks to two separate bodies of literature: one on democratic peace and the other on the causes of democracy. Both topics have been the subjects of voluminous research, generating two large bodies of literature. Our contribution is not to overthrow but to build on and connect these two separate bodies of literature, highlighting and analyzing the previously overlooked reciprocal causal link between democracy and conflict.

INTRODUCTION

In this chapter, we shift our attention to the interaction between military conflict and the other focus of our book – economic openness – which played a crucial part in Chapters 2 and 3. Economic openness is measured in various ways, but in this chapter we emphasize the trade dimension of economic openness, which connects the analytical framework of our book to an important debate in the related fields of international relations and international political economy: the trade and conflict controversy.

The idea that trade promotes peace dates from at least the late eighteenth century, and has two contemporary explanations: the liberal argument and the bargaining argument. The antithesis that trade generates conflict also has a long intellectual history, which is often explained from a neo-Marxist view or a neomercantilist derivative of realism. So far, scholars have mathematically demonstrated the logical consistency of the liberal and bargaining arguments. These formal models consider aggregated or total trade, ignoring variations of trade across economic sectors and flow directions (export and import). With a few exceptions, statistical studies have also used total bilateral trade. Most of these studies find that a rise in trade reduces the likelihood of conflict. It is a fair statement that most theoretical and empirical works on the effect of trade on conflict ignore both the composition of trade across economic sectors and the trade flow directions in terms of export and import.

We are approaching the end of the intellectual journey we mapped out at the beginning of our book. Looking back, we have addressed a number of important questions, crossed various disciplinary boundaries, engaged numerous academic and policymaking controversies, and uncovered theoretical and empirical linkages among various literatures and topics, some of which have previously received little attention. The preceding eight chapters have delved into a wide range of issues that pertain to the causes or effects of democratic governance, economic openness, income inequality, economic development, military violence, and environmental degradation. In each chapter, we have focused on specific parts of the big picture, holding other things in the system constant, and have generated new knowledge, which we believe should be very useful to both academics and policy makers.

In this chapter, our goal is to bring together our key findings and draw an elaborate big picture of some of the complex transformations faced in our world today. This approach forces us to ask broader questions and cross chapter boundaries. The insights we thus generate go beyond our findings from the individual chapters. As we relax the ceteris paribus assumption underlying each chapter's analysis and connect the dots across the different chapters, we see that more processes interact and more disciplinary boundaries break down, producing new policy trade-offs and solutions.

In this chapter, we seek to accomplish three tasks. Our first task is to take stock of key findings from the various analyses we have conducted.