'Commercial Imperialism: Political Influence and Trade During the Cold War' Study – How the CIA Helped Boost US Exports

TCA Srinivasa-Raghavan

Business Line, New Delhi, June 17

Dr William Easterly, a highly respected American economist, has shown that during the Cold War the Central Intelligence Agency was used by the US Government to increase exports of goods in which the US was not competitive.

Dr Easterly's paper is posted on the Web site of the National Bureau of Economic Research, a premier research institution in the US ( http://www.nber.org/papers/w15981).

The paper, called ‘Commercial Imperialism: Political Influence and Trade during the Cold War' has three co-authors.

It says, “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.”

Dr Easterly has used recently de-classified information to arrive at this conclusion.

“We provide evidence that the increase in US exports arose through direct purchases of US products by foreign governments. Our analysis has provided evidence that increased political influence, arising from CIA interventions during the Cold War, was used by the US to create a larger foreign market for its products. We show that following CIA interventions, foreign-country imports from the US increased dramatically.”

First analysis

This is the first time any such analysis has been done and it confirms what has so far been a widely-held suspicion, especially regarding the vulnerability of politicians in many countries.

The paper also refers to another research work (by Daniel Berger, Alejandro Corvalan, William Easterly, and Shankar Satyanath) which found that CIA and the Russian intelligence agency KGB interventions had “a negative and long-lasting effect on subsequent democracy, a result that dovetails nicely with our finding that US influence was strongest in autocratic regimes.”

CIA intervention was the most in Latin America. But the agency also did its bit in Italy and Greece as well as Africa, Asia, and the Middle East.

As the chart shows, “interventions” by the CIA increased from 10 in 1950 to around 32 in the mid-1970s before gradually coming down to less than 20 in 1990.

The methodology of the paper is technically robust, say the authors. It contains a large amount of detailed information in the form of tables, charts and maps.

Related Stories: India to raise US protectionism at coming bilateral meet

http://www.thehindubusinessline.com/2010/06/18/stories/2010061854580100.htm