An Economic Theory of Foreign Interventions and Regime Change

Roberto Bonfatti

No 3475, CESifo Working Paper Series from CESifo

Abstract: I construct a theory of foreign interventions in which the preferences of the foreign country over alternative local groups are determined by each group's international economic ties. In equilibrium, the foreign country supports the group with which it has the strongest ties, since this is most influenceable from the outside. However this is counterweighted by the tendency of the domestic political system to favour the least influenceable group. I allow for a non-economic dimension of policy (geopolitics), and study how the saliency of this dimension may play in favor of the incumbent group. My results help interpret the economic rationale for many Western interventions in developing countries in the 20th century, and the role of economic nationalism in motivating the struggle for regime change. Furthermore, they help explain why the Cold War strengthened the West's preference for specific local groups. I provide detailed historical evidence in favor of my arguments.

Keywords: regime change; foreign interventions; economic power; economic nationalism; Cold War; Latin America (search for similar items in EconPapers)
JEL-codes: D70 F10 F50 N40 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: An economic theory of foreign interventions and regime change (2017)
Journal Article: An economic theory of foreign interventions and regime change (2017)
Working Paper: An Economic Theory of Foreign Interventions and Regime Change (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3475

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