Commercial Imperialism? Political Influence and Trade During the Cold War

49 Pages Posted: 17 May 2010 Last revised: 5 Sep 2010

See all articles by Daniel Berger

Daniel Berger

New York University

William Easterly

New York University - Department of Economics

Nathan Nunn

Harvard University - Department of Economics

Shanker Satyanath

New York University (NYU) - Wilf Family Department of Politics

Date Written: May 2010

Abstract

We exploit the recent declassification of CIA documents and examine whether there is evidence of US power being used to influence countries' decisions regarding international trade. We measure US influence using a newly constructed annual panel of CIA interventions aimed at installing and supporting leaders during the Cold War. Our presumption is that the US had greater influence over foreign leaders that were installed and backed by the CIA. We show that following CIA interventions there was an increase in foreign-country imports from the US, but there was no similar increase in foreign-country exports to the US. Further, the increase in US exports was concentrated in industries in which the US had a comparative disadvantage in producing, not a comparative advantage. This is consistent with US influence being used to create a larger foreign market for American products. Our analysis is able to rule out decreased bilateral trade costs, changing political ideology, and an increased supply of US loans and grants as explanations for the increase in US exports to the intervened country. We provide evidence that the increase in US exports arose through direct purchases of US products by foreign governments.

Suggested Citation

Berger, Daniel and Easterly, William and Nunn, Nathan and Satyanath, Shanker, Commercial Imperialism? Political Influence and Trade During the Cold War (May 2010). NBER Working Paper No. w15981. Available at SSRN: https://ssrn.com/abstract=1607471

Daniel Berger (Contact Author)

New York University ( email )

715 Broadway
New York, NY 10003
United States

William Easterly

New York University - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

Nathan Nunn

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

Shanker Satyanath

New York University (NYU) - Wilf Family Department of Politics ( email )

715 Broadway
New York, NY 10003
United States

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