Apr 6, 2013

Commercial Imperialism?

We provide evidence that increased political influence, arising from CIA interventions during the Cold War, was used to create a larger foreign market for American products. Following CIA interventions, imports from the US increased dramatically, while total exports to the US were unaffected. The surge in imports was concentrated in industries in which the US had a comparative disadvantage, not a comparative advantage. Our analysis is able to rule out decreased trade costs, changing political ideology, and an increase in US loans and grants as alternative explanations. We provide evidence that the increased imports arose through direct purchases of American products by foreign governments.
That is from a new published paper by Berger, Easterly, Nunn, & Satyanath (American Economic Review, April 2013). A draft (May 2010) is here

From the final paragraph:
We provided evidence that most, and possibly all, of the effect arose through government purchases. Following CIA interventions, the government was influenced to directly purchase US products, and this influence was greatest for products in which US producers were uncompetitive in producing.
The title of the paper is "Commercial Imperialism? Political Influence and Trade during the Cold War," and the authors are well known stars in economics. 

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