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An economic theory of foreign interventions and regime change

Bonfatti, Roberto



I construct a theory of foreign interventions in which a home country's main trade partner may influence the course of regime change. The foreign country intervenes in support of the group that draws the largest gains from trade, since such a group is willing to concede most in trade agreements. But interventions are more than offset by the domestic political system, which supports in power the group who concedes least (economic nationalism). I allow for geopolitical competition between the main trade partner and a second foreign country, as well as for domestic ideological preferences over the two, and look at how geopolitical competition interacts with the economic mechanism described above. My results help interpret some of the patterns of Western interventions in the 20th century, and the role of economic nationalism in regime change. Furthermore, they help explain why the Cold War strengthened the West's preference for incumbent elites, even when the oppositions did not have a strong communist ideology. I provide detailed historical evidence in favor of my arguments.


Bonfatti, R. (2017). An economic theory of foreign interventions and regime change. Canadian Journal of Economics / Revue Canadienne d'Économique, 50(1), 306-339.

Journal Article Type Article
Acceptance Date Dec 21, 2015
Online Publication Date Feb 20, 2017
Publication Date 2017-02
Deposit Date Jan 12, 2016
Publicly Available Date Feb 20, 2017
Journal Canadian Journal of Economics
Print ISSN 0008-4085
Electronic ISSN 1540-5982
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 50
Issue 1
Pages 306-339
Public URL
Publisher URL
Additional Information This is the peer reviewed version of the following article: Bonfatti, R. (2017), An economic theory of foreign interventions and regime change. Canadian Journal of Economics/Revue canadienne d'économique, 50: 306-339. doi:10.1111/caje.12258 which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.


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