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The Art of Economic Persuasion

Positive Incentives and German Economic Diplomacy

Patricia A. Davis

Publication Year: 1999

Much has been written about a state's use of the threat of military force or economic sanctions to change the behavior of another state. Less is known about the use of positive measures such as economic assistance and investment as a means of influence. This study looks at the ways in which government officials use economic instruments for foreign policy gains. More specifically, it examines the means by which a government can enhance its efforts at economic persuasion by inducing domestic business trade and investing in the target nation. The author demonstrates the domestic conditions under which the state can use commercial economic incentives to achieve foreign policy goals, especially where these incentives are meant to induce cooperative behavior from another state. Using the process of German-Polish reconciliation in the 1970s and 1980s as a case study, The Art of Economic Persuasion, argues that complex institutional links between the German government and the German business community enabled the government to encourage commercial relations with Poland, which supported the government's policies. With singular access to archives of business associations in Germany as well as numerous interviews with German and Polish officials, the author carefully retraces German foreign policy towards Poland in the 1970s and 1980s. The Art of Economic Persuasion is a theoretical addition to the literature on international political economy and international relations. It will be of interest to specialists in international relations, foreign policy, and international political economy, as well as economists, political scientists, and historians of Germany, Poland, the United States, and Cold War relations. Patricia Davis is Assistant Professor of Government and International Studies, University of Notre Dame.

Published by: University of Michigan Press


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List of Figures

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p. vii

List of Tables

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p. ix

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p. xi

Day-to-day politics sometimes have a pleasant, at other times, frustrating way of complicating a scholar’s ongoing research. Such was the case with this study. When I began, German unification seemed a remote, if not improbable, possibility. By the time of this publication, German unification had become an accepted reality. In hindsight, many pundits claim they anticipated such a development. While I cannot claim to have ...

List of Abbreviations

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p. xiii

I. The Theory and Tenets of Economic Persuasion

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1. Introduction

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pp. 3-24

In January 1989 Mieczyslaw Rakowski, who was to be the last Communist prime minister of Poland, made a visit to West Germany to celebrate former chancellor Willy Brandt’s seventy-fifth birthday. Using this “private” occasion to disguise his real purpose, the Communist official appealed to both German politicians and business elites for massive financial ...

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2. Institutional Structures and Linkages: Managed Foreign Economic Policy

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pp. 25-45

Periodically during the 1960s and the 1970s the U.S. government chose economic carrots as a means of inducing change in East-West relations. For example, in 1969 the U.S. Export Administration Act (EAA) declared U.S. policy to favor expansion of trade with the Soviet Union. In legislative terms it implicitly treated the ability to export as a right to be limited ...

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3. Extracting Domestic Resources: Reward Power

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pp. 46-64

This chapter analyzes the capacity of the German government to extract resources from the German private sector as a means of amplifying its efforts at increasing economic exchange with Poland. It examines the instruments and levers that were at the disposal of German officials in carrying out its strategy of economic persuasion. To this extent, a crucial component ...

II. German-Polish Reconciliation: A Case Study of Applied Economic Persuasion

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4. Change through Rapprochement: From Isolation to Resolution

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pp. 67-86

The Berlin Wall—symbol of the confrontation between East and West— could not be demolished by either the United States or Germany. Both constrained in their policy options (albeit for different reasons), they ultimately chose vastly different strategies for “defending the national interest.” 1 The Germans chose encouraging peaceful change by means of economic ...

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5. From Stabilization to Damage Limitation

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pp. 87-104

In a 1990 interview former German chancellor Helmut Schmidt indicated that in the 1970s and early 1980s a primary aspiration of his government was to maintain d

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6. From Ambivalent Adaptation to Normalization

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pp. 105-133

This Polish assessment of the state of German-Polish affairs in 1982 at the outset of the new Conservative-Liberal coalition in Bonn reveals the psychological barriers the new government faced. On October 1, 1982, the helm of the Bonn government changed hands after thirteen years of a Social-Liberal coalition, and Helmut Kohl assumed the chancellorship. ...

III. Conclusion

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7. The Utility of Economic Persuasion: A Reappraisal

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pp. 137-161

The utility of economic persuasion, in particular the use of economic incentives, can be a powerful tool for governments seeking peaceful change. Yet it also means retooling for diplomats schooled in old-fashioned ways of bargaining and negotiating: government of‹cials need to also be business-minded. This is understood best within the context of policy ...


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pp. 163-181


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pp. 183-194


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pp. 195-200

E-ISBN-13: 9780472027330
E-ISBN-10: 0472027336
Print-ISBN-13: 9780472109883
Print-ISBN-10: 047210988X

Page Count: 216
Illustrations: 13 drawings, 5 tables
Publication Year: 1999

OCLC Number: 655184548
MUSE Marc Record: Download for The Art of Economic Persuasion

Research Areas


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Subject Headings

  • Poland -- Foreign economic relations -- Germany.
  • Germany -- Foreign economic relations -- Poland.
  • International economic relations.
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