Economic Statecraft

He writes that "mutually beneficial exchange relationships . . . should be viewed in terms of power" (xi). For Baldwin, we should see economics not as a voluntary market structure that freely distributes goods, but should instead see the market as "an instrument of politics" (3). Any time that economics is used as an instrument of international politics, he calls it "economic statecraft," which Baldwin defines as "governmental influence attempts relying primarily on resources that have a reasonable semblance of a market price in terms of money" (30).

Although he sees economic statecraft as relying upon economic resources, the desired results should not necessarily be viewed in economic terms. He instead conceptualizes the results of economic statecraft quite broadly, as being "influence attempts," which means that they try to influence the behavior of other states in any way, economic or otherwise. It is this contention around which the importance of Baldwin's entire argument hinges, for it is this broadening of the intended results of economic statecraft to include all "influence attempts" that leads him to conclude that "the utility of economic techniques of statecraft has been systematically underestimated because of inadequacies in the analytical frameworks used to make such estimates" (58).

What does Baldwin have in mind when he emphasizes non-economic types of influence? When we think of economic sanctions, one key tool of economic statecraft, he reminds us that "the particular state with which trade is embargoed may or may not be the primary target of the influence attempt" (17). Here he draws our attention to the broader strategic context of international relations, by reminding us of the importance of onlookers in strategic interaction between two states. Analysts commonly use the concept of "signaling" to describe the mutual perceptions among participants and onlookers in a particular strategic interaction. "Economic sanctions may be effective not because of their economic impact, which may be nil, but rather because of the signal they send about the intentions of the state imposing the sanctions" (24). These signals can have a variety of effects, both positive and negative, that will structure future strategic calculations and interactions. Economic sanctions "may trigger a sense of shame, impose a sense of isolation from the world community, signal a willingness to use more radical measures, or simply provoke reexamination of policy stances in the target country" (63). The strength of Baldwin's argument here is that it breaks ground into areas that liberal accounts cannot tread by virtue of their reliance upon the imperatives of voluntary exchange implicit in the market. By going past this limitation, Baldwin shows how state agents can structure world power by manipulating the choices, capabilities and payoffs that other actors possess, and thereby shape the matrix of incentives.


A thorough analysis of the correlates of successful santions   May 7, 1998
 3 out of 4 found this review helpful

Baldwin manages to capture much of the dynamics of sanctions policies in modern international relations. He extracts the theory of statecraft and most clearly defines the role of economics. Finally he considers cases of sanctions and provides a compelling explanation of success or failure. A must read for all students of economics and international relations.