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Three essays on international trade, foreign influence, and institutions.

Bonfatti, Roberto (2010) Three essays on international trade, foreign influence, and institutions. PhD thesis, London School of Economics and Political Science (United Kingdom).

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Abstract

This thesis is about the link between international trade (and the economic fundamentals that determine it) and a country's economic power. In Chapter 1 and 2, I define economic power as the capacity to impose - at little enough cost - harmful trade sanctions on other countries. I study how a "strong" country can use its economic power to influence policy and institutional change in a "weak" country. This foreign influence interacts heavily with domestic politics in chapter 1. Here, I study how an incumbent elite that has a disproportionate stake in gains from trade may use foreign influence to entrench itself in power. I argue that this can help explain the pattern of democratization in Latin America during the Cold War. In Chapter 2, I focus instead on how changes in economic power may lead to institutional change in international relations. I study how a weak country that is under the de jure domination of a strong country may find it easier to re-establish its sovereignty when the economic power of the strong country decreases. This allows me to explain various decolonization episodes in terms of changes in the economic fundamentals (mainly factor endowments) that determine trade, and thus economic power. A different approach to economic power is adopted in Chapter 3. This chapter is about the allocation of oil contracts to multinational companies in developing countries, and how is this determined by inter-governmental lobbying just as well as by economic factors. In this context, the economic power of an oil-importing country is defined as its capacity to lobby an oil-exporting government into a clientelistic allocation of contracts. I construct a model where this capacity is endogenously determined by the structure of the oil trade, by technology, and by the political myopia of the oil-exporting government.

Item Type: Thesis (PhD)
Uncontrolled Keywords: Economics, Commerce-Business, Political Science, International Relations
Sets: Collections > ProQuest Etheses
Departments > Economics
URI: http://etheses.lse.ac.uk/id/eprint/2365

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