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Foreign influence and domestic policy

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  • Toke S Aidt
  • Facundo Albornoz
  • Esther Hauk

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 infl uencing policy actions in other sovereign countries to their advantage. Foreign influence is a strategic choice aimed at internalizing these externalities and takes three principal forms: (i) voluntary agreements, (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 political institutions in the target country. We propose a unifying theoretical framework to study when foreign influence is chosen and in which form, and use it to organize and evaluate the new political economics literature on foreign influence along with work in cognate disciplines.

Suggested Citation

  • Toke S Aidt & Facundo Albornoz & Esther Hauk, 2020. "Foreign influence and domestic policy," Discussion Papers 2020-01, Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP).
  • Handle: RePEc:not:notnic:2020-01
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    More about this item

    Keywords

    Foreign influence; international agreements; institutions; foreign lobbying; aid; sanctions; conflict;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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