Commercial Imperialism?

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. ∗We thank J. Atsu Amegashie, Roberto Bonfatti, Richard Chisik, Azim Essaji, Robert Feenstra, Keith Head, Elhanan Helpman, Larry Katz, Tim McKeown, Noel Maurer, Chris Meissner, Edward Miguel, Kris Mitchener, Marc Muendler, Suresh Naidu, Dani Reiter, Bob Staiger and seminar participants at Stanford, Stellenbosch Univ., UC Berkeley, UCDavis, Univ. of Essex, UC San Diego, UC Santa Cruz, UNC Chapel Hill, Univ. of Pennsylvania, NBER DAE and ITI Program Meetings, and the CEA Meetings for valuable comments. We also thank Sayon Deb, Mary Jirmanus, and Eva Ng for excellent research assistance. †Wilf Family Department of Politics, New York University. (e-mail: [email protected]; website: http://homepages. nyu.edu/~db1299/). ‡Department of Economics, New York University. (e-mail: [email protected]; website: http://www.nyu. edu/fas/institute/dri/Easterly/). §Department of Economics, Harvard University. (e-mail: [email protected]; website: http://www. economics.harvard.edu/faculty/nunn). ¶Wilf Family Department of Politics, New York University. (e-mail: [email protected]; website: http: //politics.as.nyu.edu/object/ShankerSatyanath.html).