We investigate the effect of trade integration on interstate military conflict. Our empirical analysis, based on a large panel data set of 243,225 country-pair observations from 1950 to 2000, confirms that an increase in bilateral trade interdependence significantly promotes peace. It also suggests that the peace-promotion effect of bilateral trade integration is significantly higher for contiguous countries that are likely to experience more conflict. More importantly, we find that not only bilateral trade but global trade openness also significantly promotes peace. It shows, however, that an increase in global trade openness reduces the probability of interstate conflict more for countries far apart from each other than it does for countries sharing borders. The main finding of the peace-promotion effect of bilateral and global trade integration holds robust when controlling for the simultaneous determination of trade and peace.From the conclusions
Our findings also suggest that trade integration not merely results in economic gains, but can bring about significant political gains as well—such as a peace dividend between trading partners. It also explains why economic integration, whether regional or global, is often initiated to satisfy political and security motives. For example, the raison d’etre behind the formation of the European Union following World War II was the desire for peace—particularly between France and Germany. Further research on quantitative assessments of peace dividends resulting from economic integration would be of great interest. (p. 23).
A stronger version of that argument is the movement of people. Besides some studies that look at migration and peace within countries, I have not seen studies linking migration flows and peace among countries and regions - a nice research topic.