3. Economic Interdependence and Global Trade

Economic interdependence is one of the most visible and influential forms of interdependence among nations. International trade, foreign direct investment, global supply chains, and financial integration have tightly linked national economies. States rely on imports for essential goods, access to foreign markets for exports, and international capital for development.

Global production networks illustrate this interdependence clearly. A single product may involve raw materials from one country, manufacturing in another, and consumption in multiple markets. Disruptions in one part of the chain—such as financial crises, pandemics, or geopolitical conflicts—can have far-reaching global consequences.

Economic interdependence can promote cooperation by increasing the costs of conflict. Liberal theorists argue that states deeply embedded in trade relationships are less likely to engage in war because economic disruption would harm all parties. However, economic interdependence can also create vulnerabilities, as states may use trade, sanctions, or control over resources as political tools.