Political Regimes and Foreign Intervention

35 Pages Posted: 20 Feb 2010

See all articles by Toke Skovsgaard Aidt

Toke Skovsgaard Aidt

University of Cambridge - Faculty of Economics and Politics

Facundo Albornoz

University of Birmingham

Date Written: February 20, 2010

Abstract

We present a theory of endogenous political regimes that emphasizes foreign direct investment as a motive for foreign governments to either induce regime transitions or promote regime consolidations. We characterize diff erent forms of foreign intervention and identify the conditions under which they occur. We highlight new channels through which economic factors e ffect political regime choices. Foreign intervention is most likely to originate from countries where the government has a substantial pro-investor bias and to be directed at destinations where FDI is highly profitable and where income inequality is high. Foreign-sponsored coups d'etat are more likely to be directed at democratic governments of poor countries. In destinations where FDI is highly profi table but the domestic elite is weak, foreign intervention tends to be aimed at stabilizing dictatorships. We relate the analysis to evidence on foreign intervention from around the world.

Keywords: Political Transitions, Democracy, Autocracy, Foreign In vestments, Foreign Government Intervention

JEL Classification: D72, D74, H71, 015, P16

Suggested Citation

Aidt, Toke Skovsgaard and Albornoz, Facundo, Political Regimes and Foreign Intervention (February 20, 2010). Available at SSRN: https://ssrn.com/abstract=1556255 or http://dx.doi.org/10.2139/ssrn.1556255

Toke Skovsgaard Aidt

University of Cambridge - Faculty of Economics and Politics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
+44 1223 33 5231 (Phone)
+44 1223 33 5475 (Fax)

Facundo Albornoz (Contact Author)

University of Birmingham ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

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