Strategic Uses of Economic Interdependence: Engagement Policies on the Korean Peninsula and Across the Taiwan Strait

While the determinants and effectiveness of economic sanctions have been the subject of a substantial and growing literature in international relations, much less attention has been given to economic engagement strategies, where a country deliberately expands economic ties with an adversary to change the target’s behavior. This article develops a theoretical framework that distinguishes between three types of engagement strategies: conditional policies that directly link economic ties to changed behavior in the target state; unconditional policies where economic interdependence is meant to act as a constraint on the behavior of the target state; and unconditional policies where economic interdependence is meant to effect a transformation in the foreign policy goals of the target state. The article presents several hypotheses concerning the conditions facilitating or hindering the successful implementation of these different strategies, and then examines engagement policies adopted by three East Asian states: South Korea, Taiwan, and mainland China. The cases offer preliminary confirmation of at least three of the hypotheses: conditional strategies are less likely to succeed when the initiating state is a democracy; transformative strategies are more likely to succeed when the target state is a democracy; and transformative strategies are more likely to succeed when a broad consensus exists in the initiating state.