Opening the black box of finance: north-south investment, political risk, and U.S. military intervention

Lee, M. J., Florea, A. and Blarel, N. (2019) Opening the black box of finance: north-south investment, political risk, and U.S. military intervention. Political Studies, 67(4), pp. 872-894. (doi: 10.1177/0032321718813570)

Abstract

In this article, we examine the foreign policy implications of different types of investment flows. North–South investment is more sensitive to political risks (expropriation, default, civil war) than North–North investment. We argue that North–South investment flows create a constituency within the US financial sector that is likely to support stabilising intervention – military intervention aimed at reducing political risk abroad. Examining political action committee donations from Fortune 500 financial firms with a cross-sectional Tobit model, we find that US financial firms with greater exposure to the Global South are likely to favour congressional candidates with a record of voting for intervention in developing countries. This study contributes to the literature on economic interdependence and peace, proposes an original method for capturing the revealed preferences of political actors, and enhances our understanding of the sectoral underpinnings of foreign policy-making.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Florea, Dr Adrian
• Authors: Lee, M. J., Florea, A., and Blarel, N.
• College/School: College of Social Sciences > School of Social and Political Sciences > Central and East European Studies
• Journal Name: Political Studies
• Publisher: SAGE Publications
• ISSN: 0032-3217
• ISSN (Online): 1467-9248
• Published Online: 20 February 2019
• Copyright Holders: Copyright © 2019 The Authors
• First Published: First published in Political Studies 67(4): 872-8994
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher