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Foreign Influence and Domestic Policy: A Survey

Toke Aidt (), Facundo Albornoz () and Esther Hauk ()

No 1072, Working Papers from Barcelona Graduate School of Economics

Abstract: In an interconnected world, economic and political interests inevitably reach beyond national borders. Since policy choices generate external economic and political costs, foreign state and non-state actors have an interest in influencing policy actions in other sovereign countries to their advantage. Foreign influence is a strategic choice aimed at internalizing these externalities and takes many forms. We distinguish three broad types of intervention strategies, (i) voluntary agreement interventions between the intervening foreign power and the target country, (ii) policy interventions based on rewarding or sanctioning the target country to obtain a specific change in policy and (iii) institution interventions aimed at influencing the policy choice by changing the political institutions in the target country (with or without a civil war). We propose a unifying theoretical framework to understand when and which form of foreign influence is chosen and use it to organize and evaluate the new political economics literature on foreign influence along with work in cognate disciplines. Foreign intervention plays a more important role for a proper understanding of domestic policy choices, for institutional dynamics and for internal conflict than is commonly acknowledged in both empirical and theoretical research.

Keywords: foreign influence; international agreements; institutions; aid; sanctions; conflict (search for similar items in EconPapers)
JEL-codes: D7 D72 D74 F13 F23 F51 F53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pol
Date: 2019-02
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Working Paper: Foreign in influence and domestic policy: A survey (2019) Downloads
Working Paper: Foreign influence and domestic policy: a survey (2019) Downloads
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