Research Highlights Featured Chart
June 30, 2021
Foreign interventions
President of Ukraine Petro Poroshenko and the director of the International Monetary Fund Christine Lagarde meet in New York.
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The COVID-19 pandemic is a stark reminder that countries are highly interconnected. From financial crises to civil wars, the problems within a nation don’t always stop at its border.
This interdependence is at the heart of why nations choose to intervene in their neighbors' affairs, according to a paper in the Journal of Economic Literature.
Authors Toke S. Aidt, Facundo Albornoz, and Esther Hauk take this insight, along with recent literature in political economics, and build a unifying framework for understanding how governments attempt to influence each other.
Figure 1 from their paper shows global trends in four forms of foreign influence for the period after World War II.
Figure 1 from Aidt et al. (2021)
The upper-left panel shows the number of CIA (blue dashed line) and KGB (red solid line) interventions per year from 1947 to 1989, as revealed by declassified files. The upper right panel shows the number of military interventions per year from 1946 to 2005. The lower left panel displays the number of imposed (blue dashed line) and threatened (red solid line) sanctions per year from 1945 to 2005. These three panels show the prevalence of coercive interventions before and after the Cold War.
The lower right panel shows three forms of economic interventions aimed at changing target countries’ policy in noncoercive ways—the number of outstanding IMF loan agreements that are conditional on borrowers adopting policy reforms prescribed by or negotiated with the IMF (blue dashed line), the number of countries that benefit from preferential market access (green dashed line), and the average number of preferential trade agreement partners per country (red solid line).
The coercive interventions tended to move together—sanctions and military interventions both spiked after the Cold War for instance—and were either negatively correlated or not correlated at all with the noncoercive economic interventions. This suggests that the different forms of foreign influence have their own internal logic.
The authors categorize these types of interventions, as well as others for which data isn’t available, and show that cost–benefit analysis is central to countries’ decisions to intervene. The findings suggest that scholars may need to look at the full range of tools of influence to understand governments’ intervention strategies.
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“Foreign Influence and Domestic Policy” appears in the June 2021 issue of the Journal of Economic Literature.