China’s Post-COVID Adjustment in BRI Investment Policies: Analysis of Domestic and International Incentives
Pivot or Prosperity? The Trans-Pacific Partnership and U.S. Interests in East Asia
The Promised Land? The Structures of Israeli Society as a Threat to Democracy
Une Histoire de Deux Pays: Foriegn Capital Contributions to Agricultural Improvements in Senegal and Côte d’Ivoire, 19601980
Maggie Meares
Yikai Ma
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About the Virginia Journal
The Virginia Journal of International Affairs is the University of Virginia’s preeminent publication for undergraduate research in international relations. The Virginia Journal is developed an distributed by the student-run International Relations Organization of the University of Virginia. The Virginia Journal is one of the only undergraduate research journals for international relations in the country, and aims both to showcase the impressive research conducted by the students at U.Va. and to spark productive conversation within the University community. The Virginia Journal seeks to foster interest in international issues and promote high quality undergraduate research in foreign affairs. The Journal is available online at vajournal.org.
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From the Editor
Dear Reader,
As we welcome the Fall of 2024, we find ourselves navigating a world filled with complexity and uncertainty. The challenges we face—be it political, social, or environmental—are more pressing than ever. The global landscape is shifting in ways that demand our attention, and now more than ever, the importance of engaging with international issues and examining their impact on our shared future cannot be overstated. Therefore, it is with deep gratitude that we present this edition of the Virginia Journal of International Affairs.
In this edition, the authors unpack some of the most critical and timely topics in global affairs. From the changing landscape of the Belt and Road Initiative post pandemic to the failures of Israeli governance, each paper represents the dedicated work of UVA students as they grapple with some of the most significant challenges of our time. These papers are not just academic exercises; they serve as both a snapshot of our current world and a call to action. The stakes are high, and it is crucial that we—especially as students and future leaders—grapple with these issues, understand their broader implications, and work toward solutions. The authors presented here do not just aim to inform; they seek to provoke thoughtful discussion and inspire action.
I am deeply grateful to everyone who for their hard work and dedication to these projects. These students have poured their time and expertise into researching, writing, and refining their ideas. Their work is a testament to the power of academic inquiry and the passion that drives the next generation of global leaders. I am equally grateful to our editorial team and executive board, whose tireless efforts, collaboration, and creativity have brought this journal to life. I am privileged to work alongside such a talented and committed group. Special thanks is additionally owed to the International Relations Organization at UVA, whose continued support and vision make this publication possible.
Most importantly, I want to thank our readers. Your willingness
to engage with these topics—often uncomfortable, often complex, but always necessary—is what makes this journal so meaningful. By taking the time to engage with the ideas contained here, you contribute to a larger conversation that shapes how we understand and interact with the world around us. In a time when global interconnectivity is both a challenge and a responsibility, your engagement matters more than ever.
It is my honor to present this edition of the Virginia Journal of International Affairs to you. May the ideas and insights contained within inspire you to look more closely at the world, to ask difficult questions, and to act with the knowledge that our connections to one another shape the future we all share.
Sincerely,
Maggie Meares Editor in Chief of the Virginia Journal of International Affairs, Fall ‘24
China’s Post-COVID Adjustment in BRI Investment Policies: Analysis of Domestic and
International Incentives
By: Yikai Ma
About the Author:
Yikai Ma is a fourth-year student double majoring in History and Foreign Affairs with a specialization through the Distinguished Major Program in History. As a native Chinese from Changzhou, Jiangsu, Yikai’s research interests include Chinese international relations history during the Cold War, the cross-strait relationship, and China’s economic presence in Third-World countries. After graduation, he seeks an internship in a think tank or non-government organization, and to pursue a master’s degree in international relations afterward
Abstract:
As one of China’s most influential contemporary economic outreaches, the Belt and Road Initiatives (BRI) since 2013 signifi-
cantly boosted global infrastructure investment, especially among the Third World countries. However, since 2020 the COVID-19 pandemic severely disrupted the BRI projects, with around 50-60% of them facing delays or suspension. This paper analyzes China’s incentives to post-COVID adjustments to its BRI investment policies, focusing on both domestic economic downturns and international resistance, particularly regarding the “debt-trap diplomacy” accusations. Domestically, China’s zero-COVID policies reduced its foreign direct investment and undermined investor confidence, prompting a shift toward stimulating local consumption and meeting the goals of its 14th Five-Year Plan. Internationally, China faced increased pressure as many BRI-participating countries struggled with debt distress, exacerbating concerns about China’s rigid debt management policies. In response, China has begun adjusting its approach, including downsizing projects and promoting sustainable, environmentally friendly investments. This paper concludes that China’s future BRI strategy will emphasize smaller, more sustainable projects, focusing on smart investments with lower budgets and enhanced debt flexibility.
1. Introduction
In 2013, China proposed the Belt and Road Initiative (BRI), a Chinese investment program that aimed at implementing bilater-
al-agreed loans to participant states in infrastructure construction and regional commercial cooperation. During the following decade, the BRI project was effective in helping 147 states among the developing nations in Latin America, Africa, and Asia as well as in Europe. According to a 2017 World Bank report, 71 participating states had received 35% of global foreign direct investments and accounted for 40% of global merchandise exports (World Bank group, 2022).
In its first decade, BRI successfully invested in projects in the developing world, but the initiative received a sharp blow as the COVID-19 pandemic struck. In January 2020, China applied strict lockdown policies in response to the pandemic, significantly restricting international cooperation, commerce, and its BRI projects. According to China’s Minister of Foreign Affairs, in June 2020, around 30-40% of the BRI projects were moderately affected by the pandemic, while another 20% were seriously affected (Reuters, 2020).
The suspension or postponement of the BRI projects negatively impacted both China and its BRI participants. While it would take longer to expect a return for previous Chinese investments, the economic difficulties seen during the pandemic made it less likely for participant countries to repay the debts to China before the previously negotiated deadlines. COVID magnified
domestic and international critiques regarding the BRI debt policies in the pre-COVID period. While being committed to resuming the previous projects after the pandemic, China also adjusted its investment policies in the BRI participants in response to these issues. This paper will investigate the domestic and international incentives for China to adjust BRI investment policies in the post-COVID era, along with a provision into the country’s future policy implication based on several adjustments China already applied. Through investigating these incentives, it can be observed that China’s investment policy adjustment was primarily driven by its declining domestic economy, shrinking investment confidence during the pandemic period, and international critiques of China’s ‘debt-trap’ diplomacy on developing countries. In response, China has primarily focused on “small and smart” BRI projects by cutting project budgets, initiating structural readjustments of debts, and proposing green development.
“China’s investment policy adjustment was primarily driven by its declining domestic economy, shrinking investment confidence during the pandemic period”
2. Literature Review
Several papers have provided significant insights regarding the discussion of China’s post-pandemic adjustments in its BRI investment. In her 2022 article, Alicia García Herrero investigates China’s foreign investment reduction while providing a pessimistic provision of BRI’s future during the pandemic. In consideration of domestic factors, Herrero argues that the negative impact of the domestic economy and the negative sentiment towards the Western world led to the reduction of investment willingness among Chinese investors; in terms of international factors, the Western mistrust and reduction of priority in participating countries led to the cancellation or suspension of BRI projects in the states (Herrero, 2022).
Herrero explicitly mentioned that China’s reduction in foreign investment through BRI may continue if China still encountered the restrictions of its zero-COVID policy and tighter Western regulations. Considering that Western regulations may remain under the increasing tension between China and the West, (most notably, the United States), Herrero argues that changing China’s COVID policy may be more significant in reviving the BRI projects. While China officially put its zero-COVID policy in January 2023, Herrero’s article provides a significant context for China’s adjustment in its BRI investment policies.
A second article by CK Tan in November 2023 investigates the debt issue that emerged in the BRI projects. Tan argues that while more participant states have entered the period of principal repayment of debts to China, states such as the Maldives and Sri Lanka have encountered debt distress or economic crisis, which has made China the biggest creditor to these states in the bilateral loans, and the debt pressure also led to less domestic support of the investment in China (Tan, 2023). Yet Tan admits that the comparison between participants’ high alignment of foreign policies with China and the West and China’s preliminary intentions to mediate the economic pressure on these states, provided significant insight into China’s international incentives in adjusting the post-COVID period policies.
Another article written by Plamen Tonchev focuses on the domestic incentives for adjusting BRI investments. Written in the early COVID period, this article anticipates a potential difficulty the Chinese government would find in balancing the BRI investment with the domestic subsidies to the companies during the economic shock of the pandemic. Tonchev indicates that China’s unique excessive dependence on Chinese companies to give out loans through Chinese banks in BRI projects may hinder China’s further BRI investment in the future (Tonchev, 2020). Though Tonchev’s article is highly predictive, his indication of the need
for diversification in Chinese investment may provide insight into China’s domestic incentives in adjusting the BRI policies.
All of the articles above provided informative and significant insight into China’s potential domestic and international incentives to adjust its BRI projects. This paper will further discuss China’s incentives in post-pandemic adjustment in BRI policies based on this discussion but from a more China-centered perspective focusing more on China’s investment data.
3. Analysis
3.1 Domestic Incentives
During the pandemic, China significantly declined its outward foreign investment. In Herrero’s study, she indicates that China’s outward foreign direct investment (FDI) dropped by 72% globally and 62% among the BRI countries from 2020 to 2021 (Herrero, 2022). The major reason contributing to this decline could be the limitation of China’s zero-COVID policy which restricted both physical investment capabilities and China’s domestic investment confidence.
A more apparent impact of the zero-COVID policy is that it constrained China’s capabilities to conduct foreign investment. China’s strict zero-COVID policy and its rigid travel restrictions with a quarantine system made it very unlikely to conduct foreign
investment in person: the possibility of both Chinese and BRI investors going for an in-person negotiation was almost 0 during the pandemic. Herrero mentioned in her article that from early 2020 to February 2022, the number of China’s International Air passengers nearly remained 0 due to the travel restrictions and quarantine rules (Herrero, 2022). Considering the need of emerging economies to rely on external capital to build infrastructure and industries, sharp reductions in China’s physical exchange and negotiation may explain a stagnated Chinese outward Foreign Direct Investment.
Besides the investors, the zero-COVID lockdown in China also restricted Chinese firms’ capability in sending workers and materials to resume the ongoing projects. Joint-venture cases like the Jakarta-Bandung high-speed railway in Indonesia were delayed as Chinese workers remained in China (Rahman, 2020).
Besides extremely low investment capabilities, the zero-COVID policy also lowered Chinese firms’ investment confidence in BRI projects. A recent study indicates a noticeable decline in investment sentiment since the intervention of the zero-COVID policy as the regression line of the China Investor Sentiment Composite Index dropped significantly after 2020 (Gao et al., 2023).
In this study, the researchers attributed this decline in investment sentiment to China’s strict COVID policy.
One possible explanation for the association between the
strict zero-COVID policy and the decline in China’s investment confidence is a shift in the focus from encouraging outward investment to stimulating domestic consumption. Because of the zero-COVID policy, China’s economy was significantly impacted and presented a sharp decline in consumption and GDP growth. According to research in March 2023, a massive fluctuation in China’s economic growth rate corresponded to China’s zero-COVID policies. When two waves of COVID variants hit China, the GDP growth rate in 2020 and 2022 presented as relatively lower due to the emphasis on the strictest zero-COVID restrictions (Li et al., 2023). The zero-COVID policy discouraged the Chinese from conducting regular consumption and investment outward, as a declining domestic economy and a restricted public health policy would raise the priority for stimulating domestic demand compared to international investment. In their 2023 study, Haizheng and Xiangyuan indicate that the contribution of Chinese investment in the GDP growth in 2020 and 2022, during which the zero-COVID policy became the strictest, was less balanced with 81.5% in 2020 and 50% in 2022 in comparison to the consumption (Li et al., 2023). They suggest that stimulating consumption, instead of investment, could meet the public needs as over-investment hurts consumption-driven growth. A similar suggestion was offered by Zongyuan Liu, who indicates in his article that the government
should stimulate consumption to make the economy rebound in 2023 as consumption completely collapsed during the lockdown of the zero-COVID period (Liu et al., 2023).
Another factor possibly attributed to China’s distraction from an expansionary investment policy to a more domestic-oriented development is the impending deadline for the 14th Five-Year Plan by 2025. The Plan proposes to prioritize building China’s autonomous technologies in domestic production and digitalized industries and aim for an annual GDP growth rate of 4.7% (Asian Development Bank, 2021). Considering the significant impact of zero-COVID by 2022 in limiting China’s domestic economic growth, the Plan pressured Chinese firms to invest in the domestic market. Chinese companies that frequently engage in BRI construction or direct investment shared a more significant proportion of their domestic investment after the Plan was publicized. China Communications Construction Company (CCCC), which used to bid on infrastructure projects such as the East Coast Rail Link in Malaysia as a part of BRI investment, encountered a significant increase in domestic investment. From 2020 to 2022, it is notable that while overseas investment in construction projects remains stagnated, only the total value increased from RMB 201.67 billion in 2020 to RMB 208.64 billion in 2022, the percentage of the company’s overseas investment shrunk as more focus was shifted
to domestic projects:
Percentage of Domestic Project Value to Year Net Value
2020 2022
Completed and Accepted Projects during the Reporting Period 0.8587 0.9137
Projects under Construction during the Reporting Period 0.7800 0.7956
Outstanding Projects during the Reporting Period Contracted but not yet commenced 0.7110 0.7273 Under construction and not yet completed 0.7314 0.8132
Table 1, Source: CCCC Annual Report 2020 and 2022
An additional possible explanation could be that the worsened domestic economy drove the firms and investment banks to be less satisfied with the cooperation with the states that have trouble repaying the debts and therefore they became more picky to invest in the states with more robust economies during the pandemic.
Considering Chinese investment banks — China Development Bank and the Export and Import Bank of China — monopolized China’s loan to BRI projects, an inability to repay the debt on time would only result in more reserve deficit in these Chinese banks. It was considered that Chinese policy banks “are paying themselves overdue principal and interest by unilaterally sweeping foreign currency out of the escrow accounts of their borrowers” when the
borrowers could not repay their loans (Tan, 2023). While it was reported that coronavirus-hit Chinese companies executing BRI contracts could rely on support from the China Development Bank in the form of low-cost financing and special foreign exchange liquidity loans, it was considered that these Chinese policy banks might be increasingly picky and cautious about choosing new projects with little expectation (Tonchev, 2020). The data revealed that in 2022, China’s investment witnessed a significant increase in the percentage in regions like East Asia, Europe, and the Arab Middle East where the economy was more advanced and debt payback could be highly assured; while the investment plunged in Sub Saharan Africa and West Asia, as the states in these regions encountered significant economic crises during the pandemic which also includes a debt issue with China (Wang, 2023).
3.2 International Incentives
China’s post-COVID readjustment in its investment policies in BRI also raised international concerns, as COVID brings economic as well as political shifts worldwide. While aiming to encourage the BRI participants to become more engaged in collaborative projects, China has to consider the factors that severely influence the participating countries’ economies as well as international criticism.
As COVID struck the global economy, both in the aspect of production and service industries like tourism, the part of the Third World that engaged with the BRI projects encountered a sharp drop in the GDP growth rate (Herrero, 2022). In addition, some of the BRI participants witnessed a significant domestic economic decline and severe economic crises. Countries in Southeast and South Asia, where China has a lot of projects in transportation infrastructures like harbors, encountered the most dangerous situations. Pakistan, due to its domestic COVID lockdown policy, had a negative GDP growth rate, which marked the second time in the country’s history that it has experienced such economic contraction (Saad Zaidi, 2023). In 2022, Sri Lanka announced a complete domestic economic collapse and nationwide power shortage due to skyrocketing fuel prices.
While encountering economic difficulties, China’s debt in the BRI projects also threatened the participating countries during the pandemic. Although China always refuses to admit that BRI involves debt-trap diplomacy to these participating states, its heavy debt in the projects undoubtedly negatively impacted these countries. The effect of debt distress was further amplified during COVID, as the participants found themselves lacking sufficient economic growth to overcome the pandemic depression while they had to encounter debt repayment by the BRI. Considering the
scale, China has become the most significant bilateral debt creditor with around $1.5 trillion to the developing countries, as well as the biggest debt creditor for BRI countries like Sri Lanka (35%), Djibouti, and Pakistan, etc (Hawkins, 2023). Yet it is also notable that China’s debt policy is relatively inflexible and suppressive to most of the participating countries as China hardly cancel or renegotiate the debt before and during the COVID era, which is considered as a Chinese norm as from 2001 to 2020 China only canceled less than $10 billion of its foreign loans, compared to trillions of net debt it was credited (Lew et al., 2021). China was often accused of lacking the sufficiency to help the BRI participants relieve debt distress that encountered economic crises.
Considering the BRI funding system which is heavily dependent on the debt that China lends, participating countries face challenges in repaying these debts as they run into domestic economic issues. Accordingly, many of these states even dropped out the BRI projects during the pandemic. In 2022, 14 states saw a 100% drop in BRI engagement, including Russia, Angola, Sri Lanka, Nepal, and Peru; in 2023, another 19 countries dropped completely out of BRI projects, including Kenya, Myanmar, and Turkey; Pakistan, though remained its participation with China, witnessed a continuous decline in engagement as well, with a drop by 74% in 2023 (Wang, 2023)(Wang, 2024).
Besides the low response from BRI states due to debt distress, China’s adjustment of its BRI investment policies should also consider major Western criticism of BRI and its zero-COVID policy. The statistics revealed that international society’s negative sentiment towards China has increased during the peak of the pandemic in 2020 (Herrero. 2022). Western criticism of the Chinese debt management system within the BRI projects emerged and was amplified during the pandemic. In 2017, when Sri Lanka leased its Hambantota Port to China for 99 years, scholars led by Chellaney Brahma first proposed China’s debt-trap diplomacy to doubt the legitimacy and plausibility of China’s outward foreign loans (Brahma, 2017). Sri Lanka’s economic failure in 2022 eventually led to a burst out of Western skepticism towards China’s BRI policies. Western states accused China of using a heavy debt trap as leverage to coerce developing countries to reach a negotiation that favors China the most. Criticism towards China also focused on its coercive lockdown through the rigid zero-COVID policy, as it mirrored a more negative image of China in the Western world with both irresponsible treatment of the public for food and medicine shortages as well as the expression of China’s unwillingness in embracing a liberal free trade during the pandemic. This further exacerbated China’s existing tension with the West. The deteriorated global image of China discouraged most BRI nations, especially
the more advanced participants in Europe and the Arabic Middle East, from reconsidering their cooperation relationship with China.
Meanwhile, China’s investment presence in the developing world also encountered increased pressure from foreign investment as other strong regional powers actively engaged in investment in the developing world throughout the COVID period. The U.S., as the most significant competitor of contemporary China, engaged in active balance against BRI hegemony among the developing nations. In November 2019, the U.S. aligned with Australia and Japan made an effort to cofinance the Asia-Pacific region known as the Blue Dot Network (BDN) in which they certify infrastructure projects to increase the investment confidence of the U.S. private firms; the U.S. also proposed its alternative initiative as Growth in the Americas in which promote private-sector investment in infrastructure in the Americas (Lew et al., 2021). Besides the U.S., other regional big powers like India have also increased their investment in the developing world. In February 2024, India invested an additional $4 billion in Sri Lanka after the International Monetary Fund (IMF) also provided assistance of $3 billion in Sri Lanka (Kundu, 2024). China, in the post-COVID period, faces a significant challenge in maintaining its global dominance through BRI debts as other countries start to consolidate their presence in the region.
4. Current Resolutions and Prospects
As the zero-COVID restriction was lifted in 2023, China, in the post-pandemic period, faced a more complex international situation as it not only needed to address the domestic economic stagnation after the COVID but also issues of disengagement among depressed BRI participants, rising Western criticism, and competition. Therefore, China’s goals could be to find an outward investment policy that balances domestic recovery and outward investment and maximizes the BRI loan payment within the scale of minimizing Western challenges.
“China’s goals could be to find an outward investment policy that balances domestic recovery and outward investment and maximizes the BRI loan payment within the scale of minimizing Western challenges”
Currently, China’s resolutions mainly focus on reducing the debt pressure on the BRI participating states by increasing the flexibility in its BRI debt policies and gradually allowing for
more opportunities for BRI participants to renegotiate. Participating states with a more sustainable and robust economy that could ensure repayment of Chinese debts, China would be more willing to negotiate for a cut of the original budget of a BRI project. For instance, Malaysia after showing a relatively resilient response to the pandemic and maintaining a stable economy, received a budget cut from China in its BRI projects. In 2023, the CCCC signed the sixth Supplementary Agreement with Malaysia over the East Coast Rail Line (ECRL) project in which they renegotiated Project C to change the original south line into a new north line and reduced the project budget by 11 billion Malaysian ringgit.
For the participant states that experienced economic crises after COVID, China also became more flexible in negotiating rescheduling or structural readjustment for debt payment. In October 2023, Sri Lanka reached a preliminary debt restructuring agreement with the Export-Import Bank of China to cover about $4.2 billion of Sri Lanka’s foreign debt, which was crucial for Sri Lanka to receive the following loan from the IMF (Benhassine et al, 2024).
However, China’s contemporary efforts are insufficient enough in making the BRI projects more sustainable, considering the amount of money China has already invested in previous projects. Instead of engaging holistically in construction projects in the
developing world, China should be more selective and balanced in its policy-making to favor China’s both domestic and international incentives. Therefore, PRC President Xi Jinping in October 2023 mentioned a shift in BRI projects from ‘project of the century’ to ‘small and beautiful’ or ‘small and smart’ indicating the ongoing BRI projects will serve more sustainable purposes by requiring the projects to ideally fund themselves through exploring more profitable and scalable sectors (China’s State Council, 2023).
To achieve this, China will first decrease the size of the projects, especially in the field of construction investment in lower-income countries, to generate less pressure on domestic investment banks and the recipient states’ economies (Wang, 2024). While the direct investment may maintain and could increase in size, China prefers to invest more in middle-income states such as Saudi Arabia and Indonesia for a more significant commercial presence in Asia (Yeung, 2024). Instead of heavily relying on state-owned enterprises and banks for investing, through ‘small and smart’ projects, China expects to encourage less cash-strapped private sector — such as Alibaba and CATL — and domestic local governments in the provincial and particular administration governments to play a more prominent financing role. Finally, China’s future BRI projects will have more emphasis on environmental protection. Considering that a high percentage of China’s BRI
investment occurred in the energy field, promoting more investment in clean energy would help China restore a good international figure in environmental protection and encourage its domestic renewable energy industry to invest abroad.
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Pivot or Prosperity? The Trans-Pacific Partnership and U.S. Interests in East Asia
By: Emmett O’Brien
About the Author:
Emmett O’Brien is a third-year student from Beaufort, South Carolina, studying in the Politics Honors Program with a minor in French. He currently works as an editorial assistant on the Presidential Oral History Program at the Miller Center of Public Affairs and has served as an intern on the Crystal Ball newsletter at the UVA Center for Politics. Outside the classroom, Emmett is a member of the Jefferson Literary and Debating Society, the International Relations Organization, and the Cereal Club at UVA. In his free time, you can find him hiking, reading a Kurt Vonnegut novel, or avidly watching college basketball (Go Hoos!).
Abstract:
This paper analyzes the strategic and economic implications of the
Trans-Pacific Partnership (TPP) for the United States in the context of shifting regional dynamics in East Asia. With over 300 regional trade agreements (RTAs) reported to the World Trade Organization since the Cold War, RTAs have become key instruments of economic policy. The study examines the TPP’s potential to promote U.S. economic interests while reinforcing geopolitical influence in response to China’s growing presence in the region. Through an assessment of trade patterns, strategic alignments, and policy goals, the paper argues that, while the TPP did have projected economic benefits for member states, its true purpose is best assessed in the larger context of U.S. competition with China and the strategic pivot to Asia.
Introduction
Regional trade agreements (RTAs) are becoming an increasingly common feature of the international economic system. The World Trade Organization (WTO) has received over 300 notifications of new RTAs since the end of the Cold War in 1991 (World Trade Organization, n.d.). These agreements have reshaped the Asian trade landscape, establishing both intra- and inter-regional ties (Suominen, 2009). The Trans-Pacific Partnership (TPP) was foremost among these inter-regional RTAs. Comprising 12 Pacific Rim economies, including the United States, the TPP proposal
represented a major step in American integration into the Asian regional economy. However, President Donald Trump withdrew the U.S. from the TPP in 2017, before it went into effect. In the wake of the loss of its largest member, the remaining 11 states negotiated the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) on similar terms. In the aftermath of the disintegration of the original TPP proposal, China finalized the Regional Comprehensive Economic Partnership (RCEP), comprising several CPTPP members—but not the United States—and accounting for 30 percent of global GDP (Aggarwal, 2016). The TPP provides more than just a snapshot of the U.S.-China competition for superiority in the Pacific—it is demonstrative of broader theories of international relations. Did the United States pursue the TPP based on liberal motives of prosperity and institution-building, or based on realist aims of increasing power and security? In this paper, I will argue that the origins of the TPP were more security-oriented than prosperity-oriented. The TPP fits into a broader U.S. strategic pivot towards Asia to counterbalance China, rather than reinforcing trends towards free trade. This analysis has broader implications for the current state of US China relations, as well as for the broader role of trade in terms of international security.
“If liberal thinkers are correct, the 12 states that entered into the original Trans-Pacific Partnership did so primarily to maximize economic prosperity”
Theoretical Background
Liberal and realist thinkers differ on the effects that trade has on the outbreak of armed conflict. Liberals broadly argue that the benefits from trade constrain domestic impulses towards war while realists assert that interdependence among great powers creates dangerous uncertainty in the international system (Gilpin, 1987; Grieco, 1993). If we accept, as both liberals and realists do, that trade has significant consequences in international relations, it is equally important to understand why states trade in the first place and in what manner they do so. Liberals hold that the primary motivators of international trade are basic economic forces of the free market and that states act to maximize social welfare (Gilpin, 1987). International institutions help create stability by providing regular stakes and reliable information (Axelrod & Keohane, 1993). Realists, on the other hand, see states as primarily motivated by security—that is, states act to maximize power. In so doing, they subordinate economic concerns to security concerns
(Copeland, 2015). This theory relates to what Lloyd Gruber refers to as a “power-politics model.” Gruber argues that states do not act in simple Pareto terms of welfare improvements when engaging in international trade, as liberal thinkers argue, but focus on power within the international system (Gruber, 2000). The implications of the theory for my case study, the Trans Pacific Partnership, are clear. If liberal thinkers are correct, the 12 states that entered into the original Trans-Pacific Partnership did so primarily to maximize economic prosperity. If realist thinkers are correct, the states comprising the TPP were motivated by a desire to maximize security.
Regional Context
The beginnings of the Trans-Pacific Partnership should be assessed in the context of two broader trends in international relations in general, and in East Asia specifically: the increasing proliferation of regional trade agreements and the United States’ “pivot” in foreign policy towards East Asia. Entering the 21st century, Asia experienced a major economic boom. Between 1990 and 2010, global investment in the Asia-Pacific region increased by 400 percent, and by 2011, Asia comprised 60 percent of global GDP and hosted almost half of all global trade (Fergusson & Vaughn, 2011). Although the region lagged somewhat behind other regions in the “chess game” of trade agreements, by 2008, 36 East Asian countries were party to an RTA, with 41 more in the nego-
tiation stage (Suominen, 2009, p. 30). This rapid economic integration created a phenomenon referred to as the “noodle bowl”—a wide array of interlocking bilateral trade agreements among states (Damuri, 2018). Amidst this regional integration, Asia-Pacific Economic Cooperation (APEC), an intergovernmental forum founded by several Pacific Rim states including Japan, Australia, and the United States, began to play a larger role, moving from its original diplomatic purpose of dialogue-building towards a more active promotion of trade and investment in the region (McKay, 2002).
Arising from APEC trade talks, the Pacific 4 (P4) Agreement was signed, with minimal fanfare or attention, between Brunei, Chile, New Zealand, and Singapore in 2006. Amidst a renegotiation of the agreement in 2008, the United States announced that it would seek to join the P4, initiating the negotiations that would eventually become the TPP (Elms, 2016).
Around this same time, the United States began a strategic pivot to Asia. This shift is primarily motivated by political and military considerations—according to Rong Chen, “the most significant elements of the U.S. pivot have been in the military realm” (2013, p. 42). In 2012, U.S. Secretary of Defense Leon Panetta announced at the Shangri-La Dialogue that the Navy would re-posture towards a 60/40 percent split of its forces between the Pacific and Atlantic oceans, respectively, from the previous 50/50 percent split (Chen, 2013). Panetta’s announcement reflected a
military-wide commitment to the region—the number of Marines with boots on the ground in Australia was to increase by tenfold, and the presence of U.S troops in Korea was to be further entrenched through a new bilateral security agreement (Shambaugh, 2013). The military facets of the U.S. pivot can be understood in the context of increasing Chinese military power. Chen argues that “the most important impetus explaining the pivot is the growing U.S. perception of a potential military and political challenge from China” (p. 42). The military-oriented nature of the pivot towards Asia lends credence to realist thinking: the United States altered its broader foreign policy strategy in response to a rising international competitor.
“The military-oriented nature of the pivot towards Asia lends credence to realist thinking: the United States altered its broader foreign policy strategy in response to a rising international competitor”
The increase in engagement with Asian trade arrangements and the strategic pivot to Asia are interconnected trends. Although
it was primarily driven by political-military factors, the Obama administration’s pivot to Asia was also strongly motivated by recognition of the rising economic strength of the region and related trends towards free trade. As it was not a party to these new RTAs, the U.S. feared “falling behind” in East Asian economic integration. To avoid being locked out of a new Asian economic architecture, U.S. Trade Representative Ron Kirk cast the TPP as an attempt to “reverse this trend and enhance U.S. competitiveness” (Kirk, 2009).
The question now is whether the TPP is more accurately understood in the realist context of the political-military pivot to Asia or the liberal context of increasing global trends towards free trade. The American fear of being left out reveals a security-oriented motivation—Obama administration officials spoke not in terms of absolute gains in American welfare, but in terms of relative standing in East Asia. In 2015, U.S. Secretary of Defense Ashton Carter emphasized the strategic importance of the TPP in the context of the pivot to Asia, stating that “in terms of our rebalance in the broadest sense, passing TPP is as important to me as another aircraft carrier” (qtd. in Aggarwal, 2016, p. 4). The context of both the proliferation of free trade agreements and the U.S. pivot to Asia serve as differing frameworks within which we can analyze the TPP. For liberals, the TPP is just one step in a larger trend towards
free trade and open markets that states seek for welfare maximization. For realists, the TPP is a key component of the strategic pivot to Asia, firmly integrating the United States in the region in competition with China.
TPP Competition with RCEP
Amidst the U.S.-led TPP negotiations, other proposed agreements similarly sought to shape the East Asian regional trade architecture. A group of states known as ASEAN+6, comprising the 10 member states of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and six major regional economic partners (Australia, China, India, Japan, South Korea, and New Zealand), commenced negotiations for an RTA in 2012. Known as the Regional Comprehensive Economic Partnership (RCEP), this agreement was seen as a key tool for advancing Chinese economic power in East Asia (Aggarwal, 2016). RCEP and the TPP are often cast as rivals, forming part of the broader competition between the United States and China in the region (Aggarwal, 2016; Urata, 2018).
Much of the discourse around the TPP and RCEP emphasizes whether it is the United States or China who will “write the rules” for economic ties in East Asia. A liberal perspective places more importance on the rules themselves than on who writes them—according to neoliberal institutionalists such as Axelrod
and Keohane (1993), these rules provide expectations for international economic activity upon which all states can rely and by which all states benefit. However, the actual structures of these competing agreements have a more realist logic. Both the TPP and RCEP, beyond their reductions in tariffs, contain a number of measures designed to reduce non-tariff barriers to trade. These “behind the border” measures, which are especially prominent in the TPP, seek to facilitate commerce by harmonizing regulations and giving firms consistent expectations across international borders (Fergusson & Vaughn, 2011). These measures vary significantly between the two agreements. RCEP focuses more on market access to goods as well as productive capacity-building—goals that align with generally developing ASEAN economies with comparative advantages in manufacturing (Petri & Plummer, 2012). On the other hand, the TPP’s provisions emphasize the service economy, foreign direct investment, and intellectual property regulations, reflecting the more complex interests of advanced economies (Gordon, 2012). Furthermore, sticking points in negotiations reflect more protectionist or mercantilist thinking. For example, the U.S. refused to consider amending the Jones Act, a federal law prohibiting foreign-built or foreign-flagged vessels from transporting goods or people between U.S. ports (Elms, 2016). These structural aspects of both agreements show that they seek not to create a broadly acceptable set of norms to guide international trade, but
instead to further the economic interests of member states, especially the most powerful ones.
These conflicting policy aspects of the two RTAs demonstrate their mutual incompatibility. Moreover, these differences in architecture serve as deliberate tools of exclusion towards rivals. This undermines welfare-maximizing arguments for the origins of the TPP. Petri et al., among other analysts, see the TPP and RCEP as stepping-stones towards a larger Asian trade framework: the Free Trade Area of the Asia-Pacific (FTAAP), which would include the ASEAN+6 as well as the United States. Advocates of both the TPP and RCEP have made conciliatory public statements arguing that either agreement could form the basis of the eventual FTAAP. At the 2014 APEC summit, both Chinese President Xi Jinping and President Obama made statements in favor of a “roadmap” towards FTAAP, comprising the U.S.-led TPP and the China-led RCEP (Agence France-Presse, 2014). The economic benefits of such an inclusive agreement would be unprecedented. According to 2014 estimates, the most comprehensive form of such an agreement could yield income gains approaching $2 trillion, approximately 2 percent of projected global GDP in 2025 (Petri et al., 2014). According to liberal institutionalist thinking, the clear welfare gains from such an agreement should have motivated China and the United States to pursue a conciliatory RTA policy to realize the FTAAP. However, such an agreement remains
a distant goal at best. Historical precedent does not bode well for a “nesting” idea. Aggarwal cites the example of the European Union and the European Free Trade Association (EFTA)—at the time, competing trading blocs—forming the European Economic Area (EEA) in 1994. Instead of providing a broad framework for European free trade, as was intended, the EEA simply led interested states to seek membership in the EU directly (Aggarwal, 2016).
Moreover, the lack of progress on FTAAP negotiations belies both the United States’ and China’s real priorities: writing the rules for trade in East Asia. If both states truly did intend to use economic engagement as a mechanism to promote welfare and stability, the interdependence fostered by FTAAP would be a key foreign policy goal. Instead, the promotion of two rival (although overlapping) trade agreements ensued. The respective architectures of these agreements are not designed for expansion, but rather are oriented towards the economies of already-participating states. Not only do these provisions promote member state economies, but they also actively exclude strategic rivals. In his 2016 State of the Union address, President Obama stated, “With TPP, China does not set the rules in that region; we do.” The standards of the TPP were not just designed to favor the economies of parties over non-parties—these thresholds were never intended for U.S. rivals, such as China, to ever be able to meet (Ramasamy & Yeung, 2016). China and the U.S. faced a choice between con-
structive welfare-maximizing engagement in the form of FTAAP, or the power of rules-writing in their own blocs in the form of the competing RCEP and TPP. All signs point to the latter.
Economic and Strategic Considerations
According to a liberal conception of international trade, member states joined the TPP to maximize their prosperity. It is true that, according to most analyses, the TPP will lead to real increases in welfare for member states. However, analysts differ significantly on the magnitude of the TPP’s impact on member states’ economies. A widely cited analysis from the Peterson Institute for International Economics claimed that the United States would have seen an income increase of $131 billion, or 0.5 percent of GDP, by 2030. Australia could have expected an 0.6 percent increase in GDP. Japan was forecasted for a $125 billion gain— approximately 2.5 percent of GDP (Petri & Plummer, 2016). The methodology of the Petri & Plummer analysis has been criticized for assuming that the TPP’s reductions in non-tariff measures will be fully implemented and maximally effective—an unrealistic expectation given the complexity of domestic policymaking. An analysis by the World Bank, taking the criticism of the Petri & Plummer analysis into account, produced more negligible results for the United States and Australia, but similar results for Japan (Lakatos et al., 2016). The U.S. International Trade Commission
forecasted a mere 0.15 percent increase in GDP for the U.S. (qtd. in Minghui, 2018). While the benefits of the TPP in absolute terms are fairly clear, the specifics are a mixed bag.
Looking into the domestic decision-making influencing the TPP can also shed light on how states assessed its economic benefits. While realist thinkers are often loath to open the “black box” of internal decision-making within states, doing so here can illuminate their motivations behind entering into TPP negotiations. The Japanese agricultural sector, which holds immense political power within the historically dominant Liberal Democratic Party, was the leading domestic opponent of the original TPP. Japanese agriculture was highly protected due to its longstanding economic significance and the rural-skewed Japanese electoral system (Mulgan, 2016; Terada, 2012). U.S. domestic interests—primarily the auto industry—also opposed Japan’s inclusion in the agreement, despite gains it offered for all states as a whole. The American Automotive Policy Council stated that the standing trade deficit with Japan, of which 70 percent is in the automotive sector, made its inclusion impractical (qtd. in Terada, 2012, p. 4). Despite opposition from powerful domestic interests, the United States and Japan continued to pursue the TPP. This supports state-centric realist thinking on trade—foreign policy took precedence over economic concerns.
However, comparing gains from the TPP and the rival RCEP can provide critical insights into the competition between these two agreements and thus illuminate different states’ motivations. Japan provides a clear example of this competition. Japan was, behind the United States, the most significant player in the TPP negotiations. In terms of population, GDP, exports and imports, Japan was the second-largest member of the agreement (Urata, 2018). That being said, Japan arrived late to the game—it did not join the negotiations until 2013. By this point, the TPP was nearly complete among the original 11 parties, and Japan’s last-minute accession resulted in nearly two more years of negotiation (Elms, 2016). Japan’s inclusion was worth the delay, especially from the perspective of the United States. In absolute terms, Japan’s role was remarkable: according to an analysis by Petri, Plummer, and Zhai (2013), Japan’s addition to the TPP would increase global welfare gains from $75 billion to $223 billion per year. The inclusion of Japan also carried significant implications for inter-state ties. In 2013, the U.S. already had FTAs in force with six of the 10 other parties but notably not with Japan (Urata, 2018). Therefore, the U.S. prioritized including Japan in its broader economic integration with Asia. At the same time, however, RCEP member states, led by China, began courting Japan. It would seem self-evident, especially under a liberal paradigm, that Japan would maximize its own prosperity and choose the bloc that
benefitted it the most. However, the economic differences between the two options were negligible: joining the TPP would yield a short-term increase of 2.0 percent from baseline GDP, while the RCEP would yield a 1.8 percent increase (Petri et al., 2014). Thus, economic factors alone cannot account for Japan’s choice to defect from RCEP negotiations and engage with the TPP in 2013 (Wilson, 2015). As economic realists contend, we must look to strategic security concerns to understand this decision. In announcing Japan’s decision to enter into TPP negotiations, then-Japanese Prime Minister Shinzo Abe stated that:
The significance of the TPP is not limited to the economic impact on our country. Japan is creating a new economic zone with our ally, the United States. […] Furthermore, I have no doubt that deepening economic interdependence with these countries in a common economic order will significantly contribute to the security of our country and also to the stability of the Asia-Pacific region. (Press Conference by Prime Minister Shinzo Abe, 2013).
That same year, the TPP was notably included in Japan’s National Security Strategy, and the Japanese defense minister referred to the agreement as an “important instrument” of the alliance between the United States and Japan (Mulgan, 2016). Not
only did Japan seek to deepen its strategic partnership with the United States, but it also sought to establish its own role in “writing the rules” of East Asian trade. This role became even more clear with the U.S. withdrawal from the TPP and Japan’s subsequent leadership of the agreement among the remaining 11 states: the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
Demise of the TPP
In 2015, the TPP finally came together. After several near-miss conclusions, the 12 parties signed the final agreement on October 5, 2015 (Elms, 2016). However, the ratification process ended having just barely got off the ground. In January 2017, fulfilling a promise made on the campaign trail, newly-elected President Donald Trump withdrew the U.S. from the TPP (Narine, 2018). The loss of its main driving force was a substantial blow to the TPP. The remaining 11 states negotiated the CPTPP in the absence of the United States, removing several controversial provisions that were incorporated into the original agreement at the insistence of the United States. The losses following U.S. departure from the agreement are significant: the economic gains from the CPTPP are expected to be less than half of those of the original TPP (Urata, 2018, p. 37).
Furthermore, U.S. withdrawal has been interpreted as a worry-
ing sign of American disengagement from East Asia, reversing the pivot policy of the Obama administration and leaving the door open for China to fill the gap and assume regional economic hegemony (Narine, 2018).
“…the absence of a strong American interest in competition with China led to a change in the nature of the CPTPP… now that the U.S. was no longer at the table”
These concerns about economic dominance were borne out by the conclusion of RCEP negotiations. In late 2020, 15 Asian states (the entire ASEAN+6 except for India) signed the final version of RCEP. This was a notable comeback for the agreement— according to many observers, RCEP was dead in the water amidst disagreements between China and India and the impending finalization of the TPP (Lee, 2021). The disintegration of the TPP led to the reopening of RCEP negotiations. Despite India’s withdrawal from talks, China continued to push the agreement through. India’s inclusion in RCEP would have greatly benefitted the RTA. It represented a key opportunity to break new ground with the agreement—much like Japan in the context of the TPP, India was not as
linked to other parties as much as they were to each other (Seshadri, 2019). Rather than spend more time negotiating economic concessions to make the agreement more palatable to India, China saw the necessity to swiftly seize the political opportunity that U.S. withdrawal presented.
The approval of RCEP by key TPP signatories such as Australia, New Zealand, and Japan illustrates two aspects of the U.S. withdrawal from the TPP. Firstly, the absence of a strong American interest in competition with China led to a change in the nature of the CPTPP, with over 20 of its most stringent benchmarks removed now that the U.S. was no longer at the table. This meant that, unlike the original TPP, the CPTPP was not designed to be an exclusive and rival trading bloc (Urata, 2018). Second, with the absence of the U.S. in setting the rules of East Asian regional trade, states must choose the “next-best option.” Rather than be left out of the process altogether, Australia, New Zealand, and Japan chose to join the RCEP despite significant strategic opposition to China’s role in Asia (Propper & Catarivas, 2020). This demonstrates that China possesses what Lloyd Gruber refers to as “go it alone power” in his power-politics model of international cooperation (Gruber, 2000). In this case, China had the capacity to act as the rule-setter of the region, offering other states a “my way or the highway” scenario. As Gruber puts it, the former TPP states (the
losers) joined China (the winner) in the RCEP framework because the winners’ actions had the effect of removing the status quo from the losers’ choice sets. The losers were left with what they view as a bad option (co-operating with the winners and joining RCEP) and an even worse alternative (incurring the costs of exclusion) (Gruber, 2000, p. 8). These costs are not necessarily economic in nature: as has been shown previously, Japan saw minimal economic differences between RCEP and the TPP, and Australia actually expected to experience more GDP growth under RCEP (Petri et al., 2014). The real cost was exclusion from writing the rules of the region. TPP signatories joining RCEP demonstrates that even in the aftermath of the TPP, the realist nature of state choices in international trade persisted.
So, given how much ground in Asia it lost to China, why did the United States withdraw from the Trans-Pacific Partnership? The evidence is unclear. Shaun Narine (2018) argues that the same domestic social, political, and economic strife that led to the election of Donald Trump in the first place drove him to leave the TPP to satisfy the anti-free trade constituencies that had carried him to victory. Others cast the decision to withdraw as part of a broader strategic shift by the Trump administration away from the Obama administration’s policy of multilateralism and alliance building to counter China. This argument corresponds to
a shift away from a defensive realist strategy—which emphasizes avoiding security spirals through balancing and maintenance of the status quo through alliances towards a more offensive realism that seeks regional hegemony and fundamentally distrusts cooperation as a tool (Chen, 2013; Schweller, 2021). The plausibility of these theories behind U.S. withdrawal demonstrates that it is insufficient to characterize realism—or any theory—as simply a descriptive ideal of the international system, as any theory also presents a prescriptive set of foreign policy measures that states ought to take. Understanding where the U.S. withdrawal from the TPP fits into international relations theory is a major gap. We will not be able to fully assess this decision until we can see how U.S. foreign policy evolves over time in terms of engagement with East Asian economies, competition with China, and active involvement in the broader international order.
Conclusion
Based on the larger context of the U.S. pivot to Asia, competition with the China-led RCEP, and the interests of other key players, it is clear that realist security motivations drove both the initiation and the structure of the Trans-Pacific Partnership. Although the pact did lead to absolute welfare gains for all parties, pursuit of prosperity cannot fully explain the TPP, especially in
the context of its competition with RCEP. Given that it was structured to exclude China, or at the very least force China to enter on American terms, the TPP was, at its core, an element of American security strategy in East Asia. This proposal has significant implications for the broader contemporary state of the international system and serves as another crucial case study in support of the realist thesis that states are fundamentally motivated by security. In the context of current events, the TPP’s security-based origins demonstrate that U.S. withdrawal did not just sacrifice economic gains, but also compromised our strategic objectives in East Asia and our national security as a whole.
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The Promised Land? The Structures of Israeli Society
as a Threat to Democracy
By: Thomas Davies
About the Author:
Thomas Davies is a third-year student studying PPL & History. He is from Frisco, Texas, and was born to British parents, keeping a bit of a British accent. On Grounds, he is involved in UJC, Moot Court, and the Jefferson Literary and Debating Society. For fun, Thomas enjoys cooking, watching football, reading, and boxing.
Abstract:
Israel was formally established in 1948 by the UN partition plan creating two separate states, Israel and Palestine. Originally established as a liberal democracy, Israel’s democratic structures have broken down over time, with damaging consequences for Israel, Palestine, and the broader Middle East. By analyzing the present Israeli government under Benjamin Netanyahu through frameworks established by Levitsky & Ziblatt, Srdja Popovic, and the
musings of Antonio Gramsci’s prison notebooks, it is clear that Israel has strayed from its liberal democratic foundations and instead takes the shape of a failing democracy at best and an authoritarian regime at worst. If the present situation in the Middle East is to improve, it must start with returning Israel to a liberal democracy.
The land of Israel and Palestine, claimed by two nations as fundamental to their heritage, is the focus of a contentious conflict in the Middle East. Under the 1948 UN Partition Plan, the land was divided between a Jewish state, Israel, and an Arabic state, Palestine. However, the original boundaries have long since broken down, and now much of the land is disputed and the scene of constant struggle in the forefront of international news.
In the modern age, one of the best ways to prevent conflict revolves around democracy and mutual interdependence between the two conflicting parties, as defined by Immanual Kant in his liberal theory of international relations. Following this liberal theory, the first step in the direction of peace is establishing democracy for both peoples. Whilst originally designed as a democracy, present-day Israel utilizes many structures of an authoritarian government, best exemplified during the tenure of Benjamin Netanyahu. With the restructuring of these authoritarian-style structures, the people of Israel and Palestine will have the opportunity to create
lasting peace in the region.
“Whilst originally designed as a democracy, present-day Israel utilizes many structures of an authoritarian government, best exemplified during the tenure of Benjamin Netanyahu”
The Structures of Israel
The Jewish people have long dreamt of Israel, or at least a land to call their own. In current age, the nationalist dream of a Jewish land was reignited under the name Zionism when Theodore Herzl published his bombshell pamphlet in 1896. To garner popular support for his ideas, Herzl selected the target land based off of the Biblical promised land, Palestine. Daniel Sokatch chronicles this history in Can We Talk about Israel?: A Guide for the Curious, Confused, and Conflicted. Following the Holocaust, after years of increasing Zionist settlement in the land of Palestine, the newly-formed United Nations created a partition plan recognizing the independent state of Israel in 1948. Immediately after, Israel created the Israeli Defense force, the first of their fundamental struc-
tures, in order to defend the fledgling state from the hostile Arab Coalition. This fighting force assimilated and superseded the Jewish defense militias of Haganah, Irgun, and Lihu (Sokatch 23-24).
Founded in 1920, Haganah was a left-leaning, defensively minded group, and acted according to these principles for its relatively short history. Conversely, Irgun and Lihu were right leaning and violent militias, incredibly aggressive in their tactics. Responsible for the massacre at Deir Yassin, an infamous war crime during the 1948 Arab-Israeli war, these groups faced international condemnation before their incorporation into the IDF (Sokatch 21). Whilst the IDF rapidly developed into a strong fighting force, worthy of international respect, the aggressive mindset of the Irgun and Lihu militias permeated into the force and established many of the foundations of its actions today. Furthermore, Irgun created the political party Likud to continue to advocate for their beliefs of expansion and Jewish dominance over the traditional “Promised Land”. The combination of the legacy of Irgun and their political arm Likud affect modern Israeli military actions, including the 1982 invasion of Lebanon, especially considering the invasion was masterminded by Ariel Sharon, a Likud party defense minister.
After successfully fighting off the Arab coalition, Israel faced the challenge of creating a united state, despite its composition as a land of refugees from not only Europe, but also the Mid-
dle East and North Africa. After the Knesset, the Israeli parliament, passed the Law of Return in 1950, Israel’s population grew by 2.5 million as Jewish people from around the world sought out the promise of citizenship and a land to call their own (Sokatch 30).
Seeds of division began to take root, as Jewish people from different regions ran into ideological and cultural differences with each other. In order to combat this division, Israel’s first prime minister, David Ben-Gurion, created a policy known as mamlachtiut. This policy prioritized societal cohesion over individual expression, with “loyalty to the state and to the Zionist enterprise” presented as “the primary societal value” (Sokatch 29).
“Israel claims that the people of Palestine are descended directly from the Canaanites, a people with whom the Israelis have been in conflict with for thousands of years, thus tying the state of Israel back to the idea of a promised land, and strengthening their claim”
Loyalty to the state includes prioritizing its survival and
success over one’s own individual freedoms, and this is reflected in the persisting military conscription policy, in part inspired by the need for a strong national defense. Men are required to serve 32 months in the IDF, and women 24 months, ensuring that every citizen is fully prepared to defend their homeland, but due to the nature of military training and service, each citizen loses some of their individual freedom and their individual beliefs.
Furthermore, Israel’s foundation relies on the Jewish faith, tying together the people and their claim to the land. Organized religion presents a powerful structure within Israeli society, influencing beliefs not just from synagogues but also through education.
Oftentimes, the education system consists of religious schools, many teaching mamlachtiut to the students. Furthermore, according to their religion, Israel claims that the people of Palestine are descended directly from the Canaanites, a people with whom the Israelis have been in conflict with for thousands of years, thus tying the state of Israel back to the idea of a promised land, and strengthening their claim. On other hand, Palestinians and most scholars reject this idea in favor of the theory that Palestinians comprise a swathe of peoples from the history of Palestine, including Canaanites, but also Arabs, Christians, Jews, and many more who have claimed a stake in the region (Sokatch 18). The Israeli education system, as influenced by Israel’s religious foundation,
teaches that the people of Israel have long had a claim to the land and conflict with the Palestinians is justified. Organized religion in Jewish society, and its resulting effect on education, influences and dictates individual beliefs. When utilized in this way, organized religion and education join with the military structures to operate in an authoritarian style, threatening the state of democracy.
The Structures Under Netanyahu
In modern Israel, Benjamin Netanyahu’s tenures as Prime Minister serve as a study of the consequences of the authoritarian-style structures of Israel. In 1996, Benjamin Netanyahu became Prime Minister as a part of the Likud party, who dominated Israeli politics after 1977, and served as the political arm of the Irgun militia (Sokatch 25). This party unsurprisingly pushed the aggressive and expansionist Zionism of the Irgun militia, seeking to protect the Jewish homeland, create a nation to stand the test of time, and defend a haven for the Jewish people. As a special forces veteran within the IDF, this political philosophy appealed to Netanyahu, and he has served as the leader of the party for decades, successfully utilizing a polarizing style. Unfortunately, this style leads citizens to the extremes, breaking down some democratic norms. Whilst this helps Netanyahu and his supporters, in the long term, it
creates concerns for Israel and the state of democracy. Netanyahu’s strategies of publicly questioning the validity of his opponents, doubting democratic norms, willingness to use violence, and undermining independent institutions creates an environment where he is more likely to win. Netanyahu highlights Israel’s enemies, questions whether any other candidate can resolve the issues facing Israel, and presents himself as the solution. Through his attacks on institutions, fellow candidates, and on opposing parties, while effective in delivering results for his supporters, Netanyahu’s style is dangerous for the state of democracy in the region, furthering the division between Israel’s existing educational and religious institutions.
Under Netanyahu’s tenure, Israeli citizens expanded rapidly into Palestinian land, trusting their expansionist government to keep them safe. Housing initiatives began, leading to the construction of tens of thousands of houses on Palestinian land in the West Bank, including the 4,000-home boom town of Eli mentioned in the 2015 New York Times article; the 20,000 mentioned in the 2018 The Times of Israel article; and the 800 in the 2021 Washington Post article. These settlements are only a few out of the many, but the consequences which accompany this expansion present a significant threat to democracy: it serves to bolster the conscription policy of the IDF, and the reporting of the resulting conflict pro-
vokes harsh curtailing of the media.
In order to defend the Israeli citizens, the IDF encroaches onto Palestinian land, which in turn increases conflict. Palestinians, desperate to defend their land, fight back against Israeli settlers. Groups such as Hamas, or any of the other brigades, regularly attack Israelis and the IDF. The IDF escalates in turn, attacking Palestinians on their territory in military incursions in the Gaza Strip and West Bank. The governments of both people feel pressured to protect their citizens and the land they claim, embroiling both sides in an increasingly complicated conflict. Hamas, the extremist organization elected to control Gaza, often launches terrorist attacks against Israel, meaning that the IDF launches incursions into Gaza to strike back against Hamas. Because of how often defense is needed, the IDF is empowered through this conflict, as the conflict justifies the perpetuation of its conscription policy.
This conflict brings in media coverage that often comes across as unfavorable to the Israeli operations, describing violent operations executed by the IDF and sharing them to the world. As this coverage led to international criticism, the IDF and Israeli government began violently attacking the media. On May 11th, 2022, an Israeli sniper assassinating Shireen Abu Akleh, a Palestinian and American journalist, made international news, and it is only the most recent in a series of increasingly distressing attacks on
the media. According to an article written by Haya Abushkhaidem, the Israeli military has executed a series of attacks on journalists for over two decades. She notes 30 journalists killed by the Israeli military since 2000, and 368 attacks on journalists in 2021 alone. These are not one-off incidents, but a continuous behavior of the IDF. Multiple journalists, including Moath Amarneh, have been shot in the face, deliberately between protection from helmets and bulletproof vests clearly labeled “press”.
“The governments of both people feel pressured to protect their citizens and the land they claim, embroiling both sides in an increasingly complicated conflict”
The conflict between Israel and Palestine continues to escalate, and the state of democracy continues to diminish. Whilst not directly the fault of Netanayhu, his tendency to polarize politics leads to the increasingly authoritarian tendencies of the Israeli government. Under such a politician, the systems in place behind the politician, the structures of support, will lean to extremes. Israel’s structures have led from security to expansionism: from maintaining positive press to restricting and violently attacking the press to using religion as a foundation as a justification for the ex-
pansion and conflict, each structure is bolstered by a politician like Netanyahu and encouraged to greater authoritarian extremes. As a result of this polarization and growing authoritarian tendencies, Netayahu’s tenure has created a hostile environment for democracy to thrive in.
The Structures as a Threat to Democracy
The structures of Israel, authoritarian in tendency, create an environment hostile to democracy when misused or polarized. These structures have long had the potential to become problematic, especially the IDF, the notion of mamlachiut, the influence of organized religion, education, and the curtailing of the media. These structures are the pillars of support, essential for regimes to control the people, best defined by Srdja Popovic, Andrej Milivojevic, and Slobodan Djinovic in their work Nonviolent Struggle: 50
Crucial Points. The military, organized religion, education, and the media often serve as pillars (Popovic et al. 33), which by themselves do not present a threat to democracy, but under a certain style of ruler they certainly can.
These pillars, when combined with Netanyahu and his political style, present a threat to democracy, as established by examining Netanyahu through a framework created by Steven
Levitsky and Daniel Ziblatt. In their book How Democracy Dies, Levitsky and Ziblatt define a four step framework to identify authoritarianism, and this framework applies to Netanyahu’s political style. Leaders with authoritarian potential first begin to question democratic norms, doubting electoral processes or the Constitution of the country; next, they deny the legitimacy of their opponents, possibly denouncing them as a threat to the country; thirdly, they openly express a willingness to use violence through their supporters or the structures around them; finally, they curtail civil liberties of the country’s citizens (Livistky and Ziblatt 18-19).
An Politico article written by Yardena Shwartz states that Netanyahu’s actions fit all these identifiers. Netanyahu regularly questioned the Israeli democratic norms, notably during the 20192021 political crisis, threatening democracy during an already contentious time. Furthermore, Netanyahu questions his opponents based on their more liberal political stances as well, suggesting that they are possible threats to national security. Additionally, Netanyahu encourages violence with alarming regularity. According to Britannica, he has reversed multiple peace agreements with the Palestinian leadership, and according to Schwartz, important opposition party members face nightly protests, constant threats, and exhibitions of violence encouraged by Netanyahu. Lastly, under Netayahu’s tenure, violations of civil rights were rampant. Accord-
ing to Schwartz, Netayahu cut certain newspapers from circulation in order to secure positive coverage from Yedioth Ahronoth, restricting the people’s right to free press as well as using the media to question the legitimacy of the opposition.
The pillars of support in Israel serve to contribute to these authoritarian tendencies, with Netanyahu operating within the structures around him. The IDF, supported by mandatory conscription, perpetuates violence through its operations in Gaza and the West Bank; the policy of mamlachtiut, as taught in schools, somewhat justifies the curtailing of civil liberties; the prioritization of national security justifies the attacks on unfavorable media or rival politicians depicted as threats to the well-being of Israel. As a result, Netanyahu’s already authoritarian tendencies exposed the authoritarian nature of the Israeli pillars of support. These structures of Israel must change to secure democratic rights for the people of Israel.
In order to keep pillars in place, governments and societies rely on a group known as traditional intellectuals, best defined in the prison notebooks of Antonio Gramsci. Traditional intellectuals fill the roles in charge of the pillars of government: lawyers, judges, soldiers, bureaucrats, teachers, even priests (Gramsci 131). For the Israeli foundational pillars to remain strong, traditional intellectuals must maintain their hold. The structures of Israel are designed
to feed the ranks of traditional intellectuals: organized religion central to the state, mandatory conscription, the loyalty to the state prescribed under mamlachtiut. Whilst the pillars in Israel present a threat to democracy, traditional intellectuals will not change the structures that give them power.
To change a system, society relies upon the second kind of intellectualism defined by Gramsci: organic intellectuals. These intellectuals do not claim a position in the traditional pillars holding up a government, but rather they represent and advocate for the social class they come from. Organic intellectuals from the ranks of farmers, the poor, the students, the Palestinians possess the capabilities to rework the structures presenting a threat to democracy in Israel, because society has not yet changed their perspectives to the views of traditional intellectuals. However, the systems feeding the ranks of traditional intellectuals remove organic intellectuals from their respective social class, through conscription, organized religion, and education, thereby incorporating them into the traditional pillars of support.
Therein lies the problem with Israel. In order to permit the rise of organic intellectuals, the existing structures must end, including mandatory conscription and the influence of organized religion. However, for those pillars to fall, organic intellectuals must rise. However, as witnessed during the tenure of Benjamin
Netanyahu, that simply is not possible in modern Israel, as the leader effectively utilizes these pillars to execute their agenda.
Change in Israel will require a group of organic intellectuals who have never been assimilated into the ranks of traditional intellectuals, likely Israeli students or Palestinian organic intellectuals. Whilst unable to create legal change through the Knesset, they can protest and create change through nonviolent activism. If these groups are successful in their protests, then the structures repressing organic intellectuals should begin to collapse, allowing a more open form of democracy and preventing the degree of authoritarianism witnessed during Netanyahu’s tenure. These organic intellectuals should create a heightened degree of democracy, and according to liberal international relations theory, conflict should drastically decrease. Organic intellectuals must rise and remove the pillars allowing authoritarian-style governments to operate if the region wants a lasting peace.
Bibliography
Gramsci, Antonio. Antonio Gramsci. ElecBook, the Electric Book Co., 1999.
Hendrix, Steve, and Shira Rubin. “Netanyahu Approves Hundreds of New Homes for West Bank Settlers on Eve of Biden Presidency.” The Washington Post, WP Company, 11 Jan. 2021, https://www.washingtonpost.com/world/middle_east/netanyahu-approves-settlement-building/2021/01/ 11/0e009b08-541c-11eb-acc5-92d2819a1ccb_story.html.
Levitsky, Steven, and Daniel Ziblatt. How Democracies Die. Crown, 2018.
Magid, Jacob, and Agencies. “Construction of 20,000 Settler Homes Started in Netanyahu’s Decade as PM.” Construction of 20,000 Settler Homes Started in Netanyahu’s Decade as PM | The Times of Israel, The Times of Israel, 14 May 2019, https://www.timesofisrael .com/construction-of20000-settler-homes-started-in-netanyahus-first-decade-aspm/amp.
Popović Srđa, et al. Nonviolent Struggle: 50 Crucial Points: A Strategic Approach to Everyday Tactics. Centre for Applied Nonviolent Action and Strategies, 2007. Rudoren, Jodi, and Jeremy Ashkenas. “Netanyahu and the
Settlements.” The New York Times, The New York Times, 12 Mar. 2015, https://www.nytimes.com/ interactive/2015/03/12/ world/middleeast/netanyahu-west-bank-settlements-israel-election.html.
Schwartz, Yardena. “Israelis Wonder: After 12 Years of Netanyahu, Can Politics Go Back to Normal?” POLITICO, 6 June 2021, https://www.politico.com/news/magazine/2021/06 /06/post-netanyahu-israel-politics-491920.
SOKATCH, DANIEL. Can We Talk about Israel?: A Guide for the Curious, Confused, and Conflicted. BLOOMSBURY, 2022. The Editors of Encyclopaedia Britannica. “Benjamin Netanyahu.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 2022, https://www.britannica.com/biography/Benjamin-Netanyahu.
Une Histoire de Deux Pays: Foreign Capital Contributions to Agricultural Improvements in Senegal and Côte d’Ivoire, 1960-1980
By: Calvin Pan
About the Author:
Calvin Pan is a current Jefferson Scholar at UVA from McLean, Virginia, planning to graduate with a bachelor’s in foreign Affairs with minors in French and Data Science in Spring 2026 before pursuing an Accelerated Masters of Public Policy at the Batten School. Calvin is very interested in exploring in the international development space with a focus on West Africa, and is particularly intrigued by how states’ constructions of national identities (or lack thereof) aid or hinder them economically. Calvin lives at the French House at UVA and is planning on studying abroad in a Francophone country in Summer 2025. Outside of writing, Calvin is the Treasurer of UVA’s International Relations Organization, and competes with the UVA Model UN team regularly. Calvin also is Senior Data Manager for the University Judiciary Committee.
Calvin loves to run/hike/bike/do anything outdoorsy, and is also an avid jazz pianist, playing in a small jazz group at UVA in addition to a funk rock band (favorite pianist: Bill Evans).
Abstract:
How impactful is foreign investment in elevating agricultural productivity in developing nations? And why do some states encourage international capital, while others reject it? When modeling this crucial developmental transition, many political economists, such as Alexander Gerschenkron, Anthony Thirlwall, and Arthur Lewis, dismiss the importance of global actors, instead focusing on local actors as the main funding source for capital improvements. However, an examination of the diverging agricultural outcomes of two initially similar states, Côte d’Ivoire and Senegal, between 1960-1980 reveals this crucial gap. Through an examination of the difference in foreign capital inflows between the two West African states and its ties to discrepancies in agricultural equipment and cereal yields, this paper will highlight the unmistakable impact of external investment. I argue that the two states’ diverging tolerances for the power of international investment came down to differences in their politics: that Côte d’Ivoire’s openness was due to the Francophile ideology of its strong leader, the weakness of pro-state interest groups and the need for external support, and, confound-
ingly, the lack of democratic competition. Those factors—leadership, social structure, and democracy—still determine how open a nation’s market is today. With the increasing accessibility of novel forms of foreign capital to developing nations, understanding how and why nations harness this key tool for development is more essential than ever.
1. Introduction
Imagine a rural Ivorian field in the late 1970s: a fleet of newly imported tractors hums as they prepare the soil for planting, while just across the border in Senegal, farmers rely on ox-drawn plows to tend their land. This paper explores the contrast between those two nations to answer the following questions: How impactful is foreign investment in elevating agricultural productivity in developing nations? And why do some states encourage international capital, while others reject it?
“With the increasing accessibility of novel forms of foreign capital to developing nations, understanding how and why nations harness this key tool for development is more essential than ever”
When modeling this crucial developmental transition, many political economists, such as Alexander Gerschenkron, Anthony Thirlwall, and Arthur Lewis, dismiss the importance of global actors, instead focusing on local actors as the main funding source for capital improvements. However, an examination of the diverging agricultural outcomes of two initially similar states, Côte d’Ivoire and Senegal, between 1960-1980 reveals a crucial gap in their theory. Through an examination of the difference in foreign capital inflows between the two West African states and its ties to discrepancies in agricultural equipment and cereal yields, this paper will highlight the unmistakably positive impact of external investment. I argue that the two states’ diverging tolerances for the power of international investment came down to differences in their politics: that Côte d’Ivoire’s openness was due to the Francophile ideology of its strong leader, the weakness of pro-state interest groups, the need for external support, and, confoundingly, the lack of democratic competition. These factors—leadership, social structure, and democracy—still determine how open a nation’s market is today. With the increasing accessibility of novel forms of foreign capital to developing nations, understanding how and why nations harness this key tool for development is more essential than ever.
2. Literature Review
The role of international capital in helping states develop towards the crucial stage of agricultural revolution is a much discussed question. In his field-defining 1954 article, “Economic Development with Unlimited Supplies of Labor,” Arthur Lewis considers how improvements in agricultural productivity can accelerate development with his ‘dual-sector model.’ Lewis argues that nations that transition away from subsistence agriculture to a more industrialized, capitalist model would eventually exhaust their labor surpluses and have higher wages, assuming immigration is controlled properly (Lewis 1954). Perhaps out of need to create an easily comprehensible model, Lewis spends most of his paper discussing a closed system where all capital creation is internal. When he eventually does consider international interactions, Lewis’ observations about capital inflows focus on its effects on labor and wages rather than on industrial growth, concluding that “capital-importing countries with surplus labor do not gain an increase in real wages from having foreign labor capital in them, unless this capital results in increased productivity in the commodities they produce for their own consumption” (Lewis 1954). Additionally, though Lewis provides critical insights about how capital imports by domestic firms can translate into increased living standards, he does not do as much work into investment by foreign firms—
which is especially important in the post-WWII modern world.
Meanwhile, in his 1962 book, Economic Backwardness in Historical Perspective, Alexander Gerschenkron builds off Lewis’ ideas, emphasizing that a greater agricultural surplus leads to more specialization, and more agricultural exports lead to greater funds for purchase of industrial capital (Gerschenkron 1979). Gerschenkron, writing retrospectively about European development in the 1800s—a time where international investment was incredibly limited—exclusively focuses on domestic funding sources, arguing that the later a state industrialized, the more it would have to rely on banks and the state for capital, rather than privately wealthy individuals (Gerschenkron 1979). A product of the early epoch he was writing about, Gerschenkron’s purely domestic model, though providing valuable information about how ‘backward’ states can industrialize, is not entirely applicable to later periods that had more globalization of credit.
Other more contemporary writers, such as Joseph Studwell, inevitably have to discuss international interactions, but continue Lewis’ trend of ignoring foreign firms’ investment. Building off Lewis and Gerschenkron in his 2014 book, How Asia Works, Studwell acknowledges that one of the keys to success in Asian countries is maximizing agricultural productivity, which “creates initial productive surplus that primes demand for goods and services.”
However, Studwell further posits that interventions by states such as land reform and the formation of large tariff-protected corporations to domestically encourage capital creation are more important than foreign capital (Studwell 2014). Studwell’s non-foreign-investment-based recipe for agricultural success is perhaps not the best fit for a world with increasingly large capital flows.
3. Theory
The extant literature on the role of international connections in elevating agricultural productivity either ignores the prospect entirely, like with Gerschenkron, focuses on domestic firms’ importation of capital instead of foreign investment, like with Lewis, or treats it as peripheral to state-centric efforts, like with Studwell. However, most of the post-World War II examples Lewis and Studwell describe—less-industrialized states with largely subsistence populations and valuable agricultural goods to export—are post-colonial. Therefore, they often have a history of economic domination by corporations from their colonizers, and it is unlikely that post-independence they are able to industrialize without interacting with those (now-foreign) firms. Even without considering recent trends of globalization, the oversight of foreign investment in the findings of those authors is glaring.
This paper aims to fill this gap through comparing the dif-
fering trajectories of Senegal and Côte d’Ivoire, two former French West African colonies, from 1960, the date they both declared independence, to 1980, when an economic crisis shook both nations and ended their initial periods of growth. The two nations started with incredibly similar economic foundations, but Côte d’Ivoire grew much faster during this period than Senegal, and ended much better off economically. I argue that Côte d’Ivoire’s relative economic success compared to Senegal during this period can be directly linked to the country’s stronger embrace of foreign investment, which led to a dramatic increase in agricultural productivity and a food surplus, enabling Côte d’Ivoire to have a larger and more internationally wage-competitive urban labor force.
Moreover, I posit that this gap in investment was due to politics, with Côte d’Ivoire’s Francophile authoritarian, Felix Houphouët-Boigny, strategically retaining friendly French corporations as a bulwark against a rural opposition that could not electorally overthrow him. Senegal’s socialist visionary Leopold Senghor, on the other hand, decided to take a more state interventionist turn, responding to strong rural groups that could vote him out. When a real-life example of the conditions described by authors like Lewis and Studwell is examined, it becomes evident that external capital can be a powerful driver of agricultural development, with states’ decision to wield it depending on their internal politics.
4. Data and Methods
I will analyze the importance of foreign investment to Côte d’Ivoire and Senegal’s agricultural sectors through six metrics, spanning the time period of 1960 to 1980. All data were sourced from the World Bank’s World Development Indicators (WDI), which itself sources from a number of databases that will be detailed as each metric is introduced. It is important to note that data from both Côte d’Ivoire and Senegal during this time period may be unreliable due to national authorities not having capacity to accurately survey all indicators. In particular, Côte d’Ivoire did not have a true nation-wide concurrent census between its last colonial census in 1956 and its first post-independence census in 1975. Its data for the 1960s, during this gap in censuses, mainly comes from a regional survey conducted across several years (Binet and Paulet 1979). Some data may therefore be estimations by the World Bank or the organizations they source data from.
The first two indicators employed will be absolute and relative capital inflows (in 2024 USD). This data is a composite of the WDI’s foreign direct investment net inflows, technical cooperation grants (balance of payments), net official development aid, and foreign loans and credit categories—remittance data were not available and are omitted, though remittances were a substantial
portion of both economies. These indicators source from the IMF’s International Financial Statistics and Balance of Payments databases, as well as International Debt Statistics. Foreign capital inflow is both measured in absolute terms, enabling the direct comparison of how much inflow the nations received, and in relative terms in percentage of GDP (World Bank, n.d.).
The next two indicators employed will be fertilizer and tractor counts. This data comes from the Food and Agriculture Organization’s annual surveys via the WDI. Fertilizers in this instance refers to fertilizer consumption per hectare of agricultural land. This may overcount fertilizer consumption due to all sales of chemicals commonly used for fertilizers (nitrous phosphate, etc.) being counted. Tractors in this instance refers to tractors per 100 square km. of arable land, the WDI’s measure for tractor density. This measure includes only intensive agricultural tractors and excludes garden tractors, which may slightly undercount both nations’ tractors due to less developed nations’ tendency to have smaller average farm sizes and to purchase smaller tractors. These metrics are significant in demonstrating how the difference in foreign direct investment affected the agricultural capital goods it was used to purchase (World Bank, n.d.).
Another indicator that will be utilized is cereal production in metric tons. This data was also sourced from the Food and Agri-
culture Organization, and includes all grasses grown for dry grain, but excludes any crops used for feed. This will be used to highlight how disparities in capital equipment manifest in food production, and therefore in development outcomes (World Bank, n.d.).
The final indicator used will be gross domestic product (GDP) per capita, which is recorded in 2024 USD divided by midyear population. This data draws from the World Bank National Accounts and OECD National Accounts files. This information is significant in demonstrating the effects of all other data points, and demonstrating the growth consequences of differences in FDI, agricultural capital, and cereal production (World Bank, n.d.).
All data was processed using Microsoft Excel and has been cleaned and formatted for consistency, with outliers identified and addressed to ensure data integrity. All visualizations are line charts created using Excel’s charting tools, chosen as they provide a clear visual representation of trends and patterns over time. It is important to note that no advanced statistical techniques were applied beyond Excel’s built in charting tools, as the objective was to clearly visualize the trends in the data related to foreign investment and agricultural productivity.
5. Analysis and Results
Immediately after independence, both Côte d’Ivoire and
Senegal began with very ethnically and religiously diverse populations that were roughly the same size: 3.7 million for Côte d’Ivoire and 3.2 million for Senegal (World Bank, n.d.). The countries also shared a mostly tropical savanna climate, access to the ocean and suitable ports, and workable infrastructure. They were primarily cash-crop economies with plantations that had been operated by large French corporations, with Côte d’Ivoire specializing in peanuts and Senegal specializing in coffee and cocoa. The two nations essentially possessed the same starting conditions, save for their output per capita: Côte d’Ivoire began with a much lower GDP per capita in 1960 than Senegal (World Bank, n.d.). However, due to three political reasons — leadership, interest groups, and democracy — the nations would soon take very different economic paths.
From 1960-1980, Côte d’Ivoire took on a strategy of economic liberalism, and enjoyed much closer ties with its former French masters and the global community than Senegal. Pre-independence, the Ivorian economy had been propped up by French public and private capital, which “financed most major commercial enterprises, and supported the country’s banking and credit structure” (Library of Congress, n.d.). Post-independence, contrary to most of French African peers, the country kept incredibly tight cooperation with France. Instead of pursuing ‘Ivorianization,’ the replacement of the country’s largely French management force
with locals, the 1960s and 70s saw the “total French population in Côte d’Ivoire nearly [double], from about 30,000 to close to 60,000… [who] filled technical and advisory positions”—a stance that generated much dissent (Library of Congress, n.d.).
The first reason for this was Côte d’Ivoire’s fiercely Francophile and charismatic leader. From 1960-1993, Côte d’Ivoire was led by Félix Houphouët-Boigny, a former member of the French Parliament who had, throughout the 1950s, promoted a loose confederation of French African nations led by the French president instead of independence (Mortimer 1969). Houphouët-Boigny and his Rassemblement Démocratique Africain (RDA) party’s Francophile attitude carried into the post-independence period. Houphouët-Boigny’s decision to retain French companies was also due to the second major factor of needing a counterbalance to his powerful political opposition. Pre-independence, very little (17% by gross receipts) of Côte d’Ivoire’s commerce was controlled by the coastal Akan, the country’s largest and Houphouët-Boigny’s ethnic group, with the rest in the hands of Mandé-speaking ‘Dioula’ from the country’s north, groups that became citizens of another nation post-independence (like Burkinabés), as well as Lebanese immigrants (Boone, 1993). After 1960, many of those groups actively supported the RDA’s political opponents, and so Houphouët-Boigny saw French corporations as a way to
keep his own power. Cracking down in 1963’s ‘bogus purges,’
Houphouët-Bogny imprisoned many of the Dioula commercial elite, and pardoned them as long as they would work for his new Sociaci import-export operation, which was created and propped up through majority ownership by a consortium of French companies (Boone, 1993). Finally, Côte d’Ivoire’s lack of competitive elections (as it was constitutionally a one party state) meant that those now-purged opposition interest groups could not mobilize the overwhelmingly rural population (89% in 1960) to oppose the regime and its favoring of foreign companies (Boone, 1993).
Conversely, Senegal during 1960-1980 took a much more state interventionist and anti-foreign corporation turn. Unlike in Côte d’Ivoire, Senegal replaced the French plantation system, where European firms would market the peanut crop and import capital equipment, with a “state agency responsible for virtually all aspects of the peanut trade”—a National Organization of the Rural Sector that “bought and sold peanuts, rice, and millet and also sold fertilizer, seed, tools, and equipment” (Clark and Camara 2024).
Foreign corporations were also heavily taxed. The combination of these conditions led to many withdrawing from the country or halting expansion of their operations.
Leadership again played a significant role in Senegal’s policy. Senegal was led by Leopold Senghor, who implemented
a “moderate (pro-Western) form of African socialism” and “replaced Senegal’s multiparty democracy in the early 1960s with a one-party authoritarian state” under his Socialist Party of Senegal (PS) (Gates and Appiah 2010). Though Senghor was also a Francophile—even receiving a state visit from French President Georges Pompidou, his once-classmate, in 1971—his nation’s economic policies were much less amenable to French interests (Bobin 2018; Cisse, Choi, and Maurel 2016). Senegal’s rural interventionism was also influenced by its strong interest groups. The nation’s turn towards favoring strong state intervention was rooted in the nation’s strong rural interests, galvanized by the country’s strong Muslim religious leaders (Marabouts) (Oya, 2006). When the nation’s preferential price agreement on ground nuts, its largest export, ended in 1966, being replaced by a government-set price that was 25% lower, the rural population revolted in the malaise paysan, organized by the Marabouts. Consequently, the state established rural collectives whereby farmers were able to lend credit to purchase small-scale agricultural equipment, such as ox-drawn tracts—which would eventually be doomed by lax fiscal management and high default rates) (Oya, 2006). Finally, the somewhat competitive political environment of Senegal, with two opposition parties allowed and often-tense local elections, presented a real threat to the Senghor regime and forced it to act to protect rural in-
terests against foreign corporations (Oya, 2006). Due to differences in leaders’ ideologies, the strength and management of interest groups, and democratic incentives, the Ivorian regime was much more business-friendly and non-interventionist than Senegal from 1960-1980.
Fig. 1 & 2: Absolute/relative foreign capital inflows of Côte d’Ivoire and Senegal, 1960-80 Original category data from WDI has been summed by the author, then measured against GDP (World Bank, n.d.)
A primary effect of this was that Côte d’Ivoire received much more foreign capital inflow than Senegal. As evidenced by the above data, though both nations started with little foreign capital inflow, Senegal quickly fell behind Côte d’Ivoire in both absolute and relative terms, with 1964-1971 in particular being a period of large disparities: in 1964, Ivorian capital inflow was 33% of GDP, while Senegalese capital inflow was 4% of GDP. This was consistent with the nation’s quick replacement of foreign corporations with local ownership with initiatives like the National Organization of the Rural Sector. Eventually, nearer to the end of the 1970s, Senegal would see a spike in capital inflow coincidental with Côte d’Ivoire’s, possibly a product of a larger regional surge in investment but also of Senegal’s late 1970s shift towards government non-intervention with efforts like the 1978 opening of the Dakar Free Trade Zone (Cisse, Choi, and Maurel 2016).
“The capital inflow advantage Côte d’Ivoire enjoyed from 1960 to 1980 correlates to its concurrent advantage in agricultural capital equipment, namely tractors and fertilizers, over Senegal”
The capital inflow advantage Côte d’Ivoire enjoyed from 1960 to 1980 correlates to its concurrent advantage in agricultural capital equipment, namely tractors and fertilizers, over Senegal. Both nations had an equal incentive to pursue tractors and fertilizers: they suffered from regular food insecurity and had official state policies of pursuing import substitution for cereals, and those tools could generate the increased agricultural efficiency necessary to create those outcomes. They were also heavy exporters of cash crops. Côte d’Ivoire’s primary exports during this time were coffee and cocoa, making up a collective 43.9% of all its exports in 1965 (Handloff and Roberts 1991). Senegal’s main exports, meanwhile, were peanuts and peanut oil, making up 50-80% of all its exports in 1960 (N’Doye 1979). All those crops benefit dramatically from fertilizers, and to a varying extent from tractors. Though coffee and cocoa do not intensively use tractors in the production process, they still benefit dramatically from complex processing equipment. It is a reasonable assumption that the increase of tractor use was accompanied by other mechanized agricultural processing equipment, so this paper uses tractors as a proxy for said equipment.
Fig. 3 & 4: Fertilizer consumption and tractor usage in Côte d’Ivoire/Senegal. WDI Data (World Bank, n.d.).
As evidenced by the above data, from 1960-1980, Senegal fell significantly behind Cote d’Ivoire in both fertilizer consumption and tractor frequency, though the gap was more severe in the latter category (with Senegal seeing almost no increase in that figure). This gap is explainable by the gap in capital inflow. Since both states had an equally large incentive to pursue fertilizers and
tractors to maximize their cereal and cash crop output, it stands to reason that Senegal’s falling behind was because of its lack of capital inflow, stopping it from accessing said equipment. As is substantiated by earlier analysis, domestic interests did not possess enough funds, and French and other corporations, due to not being able to outcompete Senghor’s state monopolies, had lesser incentive to invest agriculturally in the nation and purchase fertilizers and tractors compared to the free-market-oriented Côte d’Ivoire (Gates and Appiah 2010).
The effect of this capital outflow-driven discrepancy in agricultural capital equipment was that cereal production in Côte d’Ivoire increased dramatically from 1960-1980, while it remained largely stagnant in Senegal over the same period.
5: Cereal production in metric tons in Côte d’Ivoire/Senegal,
Fig.
1960-1980. WDI Data (World Bank, n.d.).
During this period, Senegalese cereal production grew minimally, going from 528 thousand tons in 1960 to 675 thousand tons in 1980, with peaks of up to a million tons but hovering consistently around the 600-thousand-ton range—consistent with the minimal growth found in the tractor and fertilizer use graphs. Ivorian cereal production, meanwhile, grew substantially from 294 thousand tons in 1960 to 859 thousand tons in 1980 (World Bank, n.d.). Ivorian production growth was rather linear and had a similar upward trajectory with both tractor and fertilizer use, suggesting a correlation between the metrics. Meanwhile, Senegalese production was extremely volatile. Part of this is attributable to the various droughts, floods, and other disasters that affected the nation’s agriculture in this period. However, the lack of stability can also be correlated to the similarly volatile nature of the fertilizer use data. It is clear that Côte d’Ivoire’s much greater and less volatile increase in cereal production than Senegal was driven by its increase in farm equipment, derived from large foreign capital inflows.
The cereal surplus created in Côte d’Ivoire as a result of its foreign-investment-produced agricultural capital created a food surplus that, in turn, contributed to a massive increase in Ivorian GDP per capita relative to Senegal.
Fig. 6: Côte D’Ivoire and Senegal’s GDP per capita, 19601980, from WDI data (World Bank, n.d.)
Starting out in 1960, Ivorian GDP per capita was much lower than Senegal’s ($147.3 to $306.6 USD, 2024). However, this trend completely reversed itself by 1980 ($1,225.4 to $790.7 $USD, 2024), with Côte d’Ivoire increasing its GDP per capita by over 800% to Senegal’s around 250% increase. This trend can be explained by Ken Opalo’s 2024 article in The Africanist, “On the Cocoa Boom”. Opalo argues that increases in agricultural productivity would “push down the cost of urban labor—through the channels of reduced wage levels demanded as food gets cheaper… and reduced demand for agricultural labor (and increased supply of urban labor) as more people are able to permanently leave agricul-
ture,” invaluable for any industrializing economy (Opalo, 2024). It is clear that Côte d’Ivoire’s influx of foreign capital was what enabled it to attain a large agricultural surplus, in turn manifesting in a much more rapidly growing economy from 1960-1980.
6. Conclusion
The divergent paths taken by Senegal and Côte d’Ivoire from 1960-1980 underscore the importance of the political factors of leadership, societal organization, and systems of governance in shaping a nation’s approach to foreign capital. Côte d’Ivoire’s embrace of economic liberalism and strategic alliances with foreign corporations led to substantial foreign capital inflows, which translated into increased agricultural capital, notably in tractors, fertilizers, and other agricultural equipment. This investment resulted in a significant boost in cereal production and agricultural productivity, contributing to a remarkable rise in GDP per capita.
In contrast, Senegal’s more interventionist policies, coupled with a less favorable environment for foreign investment, limited its access to crucial agricultural capital goods. The comparatively stagnant growth in agricultural equipment and cereal production in Senegal highlights the consequences of reduced foreign capital inflows on agricultural development and overall economic performance.
Unlike the conventional assumption that democracy and capitalism go hand in hand, Senegal’s electoral system actually resulted in strong state intervention in the economy, while Côte d’Ivoire’s autocratic one-party government produced a laissez-faire capitalist system. This conclusion lends credence to the idea that political and economic liberalism may not be co-causal. However, more research is needed to analyze how closely developing nations’ embrace of democracy correlates with their embrace of capitalism, as well as whether any correlation constitutes a causal relationship. This may be possible through running statistical correlation tests on metrics like Freedom House’s democracy indices and market freedom data.
The findings of this paper challenge simplistic narratives that either dismiss the importance of foreign investment or advocate for purely state-driven development strategies. It is clear that, contrary to Lewis’ claim, foreign capital flows are not irrelevant, and that, unlike Studwell’s claim, it may provide a supplement, rather than a hindrance, to state-sponsored industrialization. Instead, they emphasize the need for a nuanced approach that considers the complex interactions between domestic policies, international capital, and socio-political dynamics. In our modern era of increasing globalization of credit and expansion of investment in lesser developed regions, as evidenced by the recent rapid growth
in countries with bond ratings in sub-Saharan Africa, the lesson of Côte d’Ivoire and Senegal—that foreign credit is a powerful tool— is more important than ever (Goldin 2018). Contrary to traditional narratives, international capital may also not necessitate relinquishing control: Côte d’Ivoire under Houphouët-Boigny blended interventionism with large foreign inflows. However, as evidenced by Côte d’Ivoire’s economic downturn in the 1980s following a decrease in cocoa and coffee prices, foreign investment also means potentially dangerous susceptibility to world market influences and may not be sustainable on its own. Though it has been established that foreign investment is important for agricultural states to develop, how to harness said investment may be a tougher question.
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