The Trade-Offs of Fighting and Investing: A Model of the Evolution of War and Peace

International competition occurs in many different forms. Just as a state would be in danger if it allowed its opponent to gain a military advantage, one that falls behind a rival in an economic contest similarly faces risks. States must weigh the trade-offs between economic and military growth, as well as deciding on the best strategy to follow should war erupt. We use a formal, dynamic model to explicitly capture the trade-offs that states face in their search for security and dominance. The deductions from the model demonstrate that by considering the long-run results of a peacetime rivalry, weaker states might conclude that their only hope of winning or surviving a rivalry lies in fighting a counterforce war, explain why and how stalemates evolve during counterforce wars, and indicate that targeting industrial objectives shortens the duration of wars.