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Economic Coercion in World Politics: With a Focus on North-South Relations

Published online by Cambridge University Press:  13 June 2011

Richard Stuart Olson
Richard Stuart Olson
Affiliation:
University of Redlands
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Abstract

Earlier studies of economic sanctions underestimated the role and importance of more subtle forms of coercion because they concentrated attention on highly public, formally legislated attempts at economic coercion in world politics, such as the cases of Italy in the 1930s and Rhodesia since 1965. The author agrees with Galtung, Knorr, and others that in highly public cases, sanctions will often fail in their avowed political purpose because they actually stimulate nationalism and thus resistance in the target-state; he argues that in an increasingly (but unequally) interdependent world, relatively subtle sanctions can be politically effective—with only moderately purely economic effects—by exploiting the LDC's typically fragmented interest-group and class structure. In order to describe and explain how such economic coercion works, it is necessary to bridge several “islands” of literature: on economic sanctions, on the structure of dependency, and on the causes of political instability.

Type
Research Article
Information
World Politics , Volume 31 , Issue 4 , July 1979 , pp. 471 - 494
Copyright
Copyright © Trustees of Princeton University 1979

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References

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2 See Olson, R. S., “Economic Coercion in International Disputes: The United States and Peru in the IPC Expropriation Dispute of 1968–71,” Journal of Developing Areas, IX (April 1975), 395–414Google Scholar; “Expropriation and International Economic Coercion: Ceylon and the ‘West’ 1961–65,” Journal of Developing Areas, XI (January 1977), 205–26Google Scholar; and “Expropriation, Economic Coercion, and Revolution: A Retrospective Look at Brazil in the 1960's,” Journal of Developing Areas, XIII (April 1979)Google Scholar. Also interested in compliance, but approaching it in a different manner, are Richardson, Neil R., “Political Compliance and U.S. Trade Dominance,” American Political Science Review, Vol. 70 (December 1976), 1089–1109CrossRefGoogle Scholar, and Wittkopf, Eugene R., “Foreign Aid and United Nations Votes: A Comparative Study,” American Political Science Review, Vol. 67 (September 1973), 868–88CrossRefGoogle Scholar.

3 See Galtung, Johan, “On The Effects of International Economic Sanctions, With Examples from the Case of Rhodesia,” World Politics, XIX (April 1967), 378–416CrossRefGoogle Scholar. The best pieces by Doxey are Economic Sanctions and International Enforcement (London: Oxford University Press 1971)Google Scholar; “The Rhodesian Sanctions Experiment,” Year Book of World Affairs, XXV (1971), 140–59Google Scholar; and “International Sanctions: A Framework for Analysis with Special Reference to the UN and Southern Africa,” International Organization, XXVI (Summer 1972), 527–50Google Scholar. See also MacDonald, R. St. J., “Economic Sanctions in the International System,” Canadian Yearbook, of International Law, VII (1969), 61–91Google Scholar; Hoffman, Frederick, “The Function of Economic Sanctions: A Comparative Analysis,” Journal of Peace Research, II (1967), 140–59CrossRefGoogle Scholar; Wallensteen, Peter, “Characteristics of Economic Sanctions,” Journal of Peace Research, III (1968), 248–67CrossRefGoogle Scholar; Grieve, Muriel J., “Economic Sanctions, Theory and Practice,” International Relations, III (October 1968), 431–43Google Scholar; Losman, Donald, “International Boycotts: An Appraisal,” Politico, XXXVII (December 1972), 648–71Google Scholar; Baer, George W., “Sanctions and Security: The League of Nations and the Italian-Ethiopian War, 1935–1936,” International Organization, XXVII (Spring 1973), 165–79CrossRefGoogle Scholar.

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5 Galtung (fn. 3), 409.

6 Doxey, “International Sanctions” (fn. 3), 547.

7 Wallensteen (fn. 3), 262.

8 Adler-Karlsson (fn. 4), 9.

9 Doxey, Economic Sanctions (fn. 3), 1.

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14 See Baer (fn. 3), 173.

15 Doxey, Economic Sanctions (fn. 3), 41; emphasis added.

16 See Schreiber (fn. 4), 405–6.

17 The literature on this case is expanding rapidly. For an early introduction to the differing viewpoints, see “Chile: What Was the U.S. Role?”—an exchange between Elizabeth Farnsworth taking the position “More Than Admitted,” and Sigmund, Paul E. saying “Less Than Charged,” in Foreign Policy, XVI (Fall 1974), 126–56Google Scholar. A more recent book that keeps the domestic and international factors in some balance is de Vylder, Stefan, Allende's Chile: The Political Economy of the Rise and Fall of the Unidad Popular (New York: Cambridge University Press 1976)Google Scholar. Actually, more thought should be given to the importance of “merged” goals in getting coordinationf sanctions by many senders. For example, it seems obvious that not all the elements hostile to Allende had the same ultimate goal for Chile, but they did share a common short-term objective, Allende's ouster.

18 See my article on Ceylon (fn. 2), 211–12. This point brings up the very important argument that “sanctions” and “rewards” are perceptual in nature and depend on the target's base line of expectations. On this and related matters, see Baldwin, David S., “The Power of Positive Sanctions,” World Politics, XXIV (October 1971), 19–38CrossRefGoogle Scholar.

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20 In a release by the United States Department of State, “U.S. Initiative for World Development” Special Report #28 (December 1976), the following were listed in order as the principal U.S. instruments for Third-World Development: “AID (official development assistance); CAPITAL (private loans; overseas investments); TECHNOLOGY (transfers of technology); TRADE.”

21 Economic sanctions do not come out of a nation-state's “black boxes.” Adler-Karlsson (fn. 4), 34–36, does an especially good job of recognizing this; see also Stephen D. Krasner, “Domestic Constraints on International Economic Leverage,” in Knorr and Trager (fn. 4), 160–81.

22 Goodwin, , “Letter from Peru,” The New Yorker, May 17, 1969, p. 41Google Scholar.

23 Galtung (fn. 3), 389.

24 Baer (fn. 3), 178–79.

25 Schreiber (fn. 4), 404.

26 See Scott, Andrew M., The Revolution in Statecraft: Informal Penetration (New York: Random House 1965)Google Scholar. Much of the attention given at present to the conceptual importance of an integrating world originated with Keohanc, Robert O. and Nye, Joseph, Transnational Relations and World Politics (Cambridge: Harvard University Press 1972)CrossRefGoogle Scholar, followed by Power and Interdependence (fn. 19). On the role of the multinational corporation, see (among other works), Barnet, Richard and Müller, Ronald, Global Reach: The Power of the Multinational Corporations (New York: Simon and Schuster 1974)Google Scholar. The scholar who has devoted the most time to studying the MNC is Raymond Vernon; see his Sovereignty at Bay: The Multinational Spread of U.S. Enterprises (New York: Basic Books 1971)Google Scholar, and the more recent Storm Over the Multinationals: The Real Issues (Cambridge: Harvard University Press 1977)Google Scholar.

27 For examples of the focus on the First World displayed by much of the early work on unequal interdependence, see Cooper, Richard N., The Economics of Interdependence: Economic Policy in the Atlantic Community (New York: McGraw-Hill 1968)Google Scholar, “Eurodollars, Reserve Dollars, and Asymmetries in the International Monetary System,” Journal of International Economics, 11 (1972), 325–44Google Scholar, and “Trade Policy is Foreign Policy,” Foreign Policy, IX (Winter 1972–1973), 18–36Google Scholar. See also Whitman, Marina v. N., “Leadership Without Hegemony,” Foreign Policy, XX (Fall 1975), 138–60CrossRefGoogle Scholar. On North-South issues, see Hansen, Roger D., “The Political Economy of North-South Relations: How Much Change?” International Organization, XXIX (Autumn 1975), 921–48CrossRefGoogle Scholar; Smith, Tony, “Changing Configurations of Power in North-South Relations Since 1945,” International Organization, XXXI (Winter 1977), 1–29CrossRefGoogle Scholar.

28 Caporaso, , “Introduction: Dependence and Dependency in the Global System,” International Organization, XXXII (Winter 1978), 2Google Scholar; emphases in original. The entire issue of the journal focuses directly on dependence and dependency, and analyzes the usefulness of the concepts. For an earlier bibliographic essay on dependency theory, see Chilcote, Ronald H., “A Critical Synthesis of the Dependency Literature,” Latin American Perspectives, 1 (Spring 1974), 4–29CrossRefGoogle Scholar.

29 Dos Santos's thesis ordeinally appeared in Spanish; for the English version, see “The Structure of Dependence,” American Economic Review, Vol. 60 (May 1970), 231–36Google Scholar.

30 Quoted in Barnet and Miiller (fn. 26), 21.

31 Sunkel, , “The Crisis of the Nation-State in Latin America,” in Ferguson, Yale and Weiker, Walter, eds., Continuing Issues in International Politics (Pacific Palisades, Calif.: Goodyear 1973), 356Google Scholar. Sunkel has also dealt with the problem of elite “denationalization” in his “Big Business and ‘Dependencia,’” Foreign Affairs, Vol. 50 (April 1972), 517–31Google Scholar. For another excellent case study, see Evans, Peter B., “The Military, the Multinationals, and the ‘Miracle’: The Political Economy of the ‘Brazilian Model’ of Development,” Studies in Comparative International Development, IX (1974), 26–45CrossRefGoogle Scholar.

32 Strict “class analysis” is therefore becoming somewhat irrelevant; it seems to make more sense to focus on the orientation of various interest-groups in those LDCs that are among the more penetrated and fragmented.

33 See Adelman, and Morris, , Economic Growth and Social Equity in Developing Countries (Stanford: Stanford University Press 1973), esp. 141–46 and 186–92Google Scholar.

34 See Knorr and Trager (fn. 4), 109. Knorr's critique of dependency theory can be found in Power of Nations (fn. 4), 239–309, but esp. 279–82.

35 I have dealt with this legislation in my own work (fn. 2); the best study of the amendment itself is Lipson, Charles H., “Corporate Preferences and Public Policies: Foreign Aid Sanctions and Investment Protection,” World Politics, XXVIII (April 1976), 396–421CrossRefGoogle Scholar. See also Lillich, Richard B., The Protection of Foreign Investment (Syracuse, N.Y.: Syracuse University Press 1965), esp. 117–46Google Scholar.

36 Adler-Karlsson (fn. 4), 31.

37 Davies, , “Toward a Theory of Revolution,” American Sociological Review, XXVI (February 1962), 6Google Scholar.

38 Gurr, , “A Causal Model of Civil Strife: A Comparative Analysis Using New Indices,” American Political Science Review, Vol. 62 (December 1968), 1104CrossRefGoogle Scholar. Also see Gurr, , Why Men Rebel (Princeton: Princeton University Press 1970)Google Scholar.

39 Gurr, “A Causal Model …” (fn. 38), 1123.

40 Both are included in Feierabend, Feierabend, , and Gurr, eds., Anger, Violence, and Politics: Theories and Research (Englewood Cliffs, N.J.: Prentice-Hall 1972)Google Scholar.

41 The relationship between changing economic conditions and political instability is increasingly understood to be a complex one. See Hibbs, Douglas A. Jr., Mass Political Violence: A Cross-National Causal Analysis (New York: Wiley 1973)Google Scholar; Grofman, Bernard N. and Muller, Edward N., “The Strange Case of Relative Gratification and Potential for Political Violence: The V-Curve Hypothesis,” American Political Science Review, Vol. 67 (June 1973), 514–39CrossRefGoogle Scholar; Miller, Abraham H., Bolce, Louis H., and Halligan, Mark, “The J-Curve Theory and the Black Urban Riots: An Empirical Test of Progressive Relative Deprivation,” American Political Science Review, Vol. 71 (September 1977), 964–82CrossRefGoogle Scholar.

42 Knorr, The Power of Nations (fn. 4), 154; emphasis added. Knorr also discusses the measures that “small trading countries” could adopt to reduce their vulnerability to economic coercion; most are the exact opposite of the current situation of the majority of LDCs. Ibid., 158.

43 Libby, , “External Co-optation of a Less Developed Country's Policy Making: The Case of Ghana, 1969–1972,” World Politics, XXIX (October 1976), 67–89, at 67CrossRefGoogle Scholar.

44 The potentially opposing interests and perceptions within the First World are illustrated by Moran, Theodore, “Transnational Strategies of Protection and Defense by Multinational Corporations: Spreading the Risk and Raising the Cost of Nationalization in Natural Resources,” International Organization, XXVII (Spring 1973), 273–87CrossRefGoogle Scholar. In the end, however, this article shows how a conscious strategy by Kennecott forged a united front within the First World.

45 Caporaso (fn. 28), 12.