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Title:An economic theory of foreign interventions and regime change PDF Logo
Authors:Bonfatti, Roberto
Issue Date:2011
Series/Report no.:CESifo working paper: Public Choice 3475
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 noneconomic 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.
Subjects:regime change
foreign interventions
economic power
economic nationalism
Cold War
Latin America
JEL:D70
F10
F50
N40
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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