In a forthcoming article titled "International Trade, Cooperation, and Conflict: The Role of Institutions and Capabilities" in Foreign Policy Analysis, Shaoshuang Wen and Timothy M. Peterson, formerly at South Carolina, argue that variation in domestic political institutions and state capabilities can condition how international trade affects conflictual or cooperative political relationships. They find that when institutions result in a more nationally representative constituency, trade has a relatively more negative association with conflict, whereas deviation from this institutional arrangement reduces the pacifying impact of trade. Additionally, they find that greater military capabilities incentivize leaders to use trade as a lever to advance other state interests. As such, for more powerful states, trade is associated with relatively more conflict and cooperation.
The article can be found at the following link: