Economic freedom and peace under globalization: Temporal dynamics and the security implications of liberalization

This study examines the relationship between economic liberalisation and national peacefulness in the contemporary global economy. Liberal political economy suggests that market openness should promote peace by increasing economic interdependence and raising the opportunity costs of conflict. Yet empirical evidence remains mixed, partly because existing studies often conflate institutional reforms occurring within countries with structural differences in economic openness across countries.Using a panel dataset covering 139 countries, 2008–2024, this study analyzes the relationship between the Economic Freedom Index and the Global Peace Index using panel regression techniques that distinguish between within-country reform dynamics and cross-national structural differences. Fixed-effects, between-effects, and first-difference models are estimated while controlling for economic development through logged GDP per capita.The results reveal a clear divergence between these analytical levels. Within countries, increases in economic freedom are consistently associated with improvements in peacefulness, suggesting that institutional reforms expanding market-oriented governance can contribute to domestic stability. By contrast, cross-national comparisons indicate that countries with persistently higher levels of economic freedom do not systematically exhibit greater peacefulness once income differences are taken into account.These findings highlight the importance of distinguishing dynamic reform effects from structural cross-national relationships when evaluating the political economy of peace under globalisation.