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The Hidden Hand of Economic Coercion

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  • Drezner, Daniel W.

Abstract

Why do policymakers consistently employ economic sanctions even though scholars consider them an ineffective tool of statecraft? Game-theoretic models of economic coercion suggest the success rate may be understated because of selection effects. When the targeted country prefers conceding to incurring the cost of sanctions, it has an incentive to acquiesce before the imposition of sanctions. The bulk of successful coercion episodes should therefore end with sanctions threatened but not imposed. This contradicts the recent literature on sanctions, which assumes that sanctions rarely, if ever, work at generating significant concessions from the targeted country and are imposed for domestic or symbolic political reasons. If the game-theoretic argument is correct, the crucial cases to study are those in which coercion is threatened but not implemented. A statistical analysis of data on sanctions in pursuit of economic or regulatory goals strongly supports the gametheoretic argument. These results suggest that the significance of economic coercion has been undervalued in the study of statecraft and international relations more generally.

Suggested Citation

  • Drezner, Daniel W., 2003. "The Hidden Hand of Economic Coercion," International Organization, Cambridge University Press, vol. 57(03), pages 643-659, June.
  • Handle: RePEc:cup:intorg:v:57:y:2003:i:03:p:643-659_57
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    Cited by:

    1. Rana Arslan Tariq, 2015. "Trade and Conflicts: Do Preferential Trade Agreements Matter?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 21(4), pages 561-574, December.
    2. Langlois Catherine C & Langlois Jean-Pierre P., 2010. "Costly Interference: A Game Theoretic Analysis of Sanctions," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 16(1), pages 1-34, June.
    3. Daniel Verdier, 2009. "Sanctions as revelation regimes," Review of Economic Design, Springer;Society for Economic Design, vol. 13(3), pages 251-278, September.
    4. Seitz, William & Presbitero, Andrea & Zazzaro, Alberto, 2017. "Sanctions and public opinion : the case of the Russia-Ukraine gas disputes," IDE Discussion Papers 652, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Lilliestam, Johan, 2014. "Vulnerability to terrorist attacks in European electricity decarbonisation scenarios: Comparing renewable electricity imports to gas imports," Energy Policy, Elsevier, vol. 66(C), pages 234-248.
    6. Colgan, Jeff, 2011. "Oil and resource-backed aggression," Energy Policy, Elsevier, vol. 39(3), pages 1669-1676, March.
    7. Madhu Sudan Ravindran, 2012. "China’s Potential for Economic Coercion in the South China Sea Disputes: A Comparative Study of the Philippines and Vietnam," Journal of Current Southeast Asian Affairs, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 31(3), pages 105-132.
    8. Guanyi Leu, 2011. "ASEAN’s Preferential Trade Agreements (PTA) Strategy," Journal of Current Southeast Asian Affairs, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 30(2), pages 31-64.
    9. Golikova Victoria & Kuznetsov Boris, 2015. "Perception of Risks Associated with Economic Sanctions: The Case of Russian Manufacturing," HSE Working papers WP BRP 115/EC/2015, National Research University Higher School of Economics.
    10. Gabriel Felbermayr & Erdal Yalcin & Philipp Grübener, 2014. "Ökonomische Aspekte des Russlandkonfliktes: Ursachen, Kosten, Optionen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(14), pages 35-43, July.
    11. Buntaine, Mark T., 2011. "Does the Asian Development Bank Respond to Past Environmental Performance when Allocating Environmentally Risky Financing?," World Development, Elsevier, vol. 39(3), pages 336-350, March.

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