The Value of Economic Incentives in International Politics

This essay presents a preliminary model of the factors that influence the value of positive and negative economic incentives in international politics. The first part of the article is a review of prior research findings on incentive value. It integrates several lines of research and organizes the findings into five categories that form the frame of a model of incentive value; target market characteristics, target political structure, characteristics of goods, world market conditions and sender state political structure. Since the studies used to create this frame focus primarily on negative incentives, the second part of the study tries to balance this bias with insights from cases of positive incentives. This analysis suggests some original points; it finds that capital goods are less useful as repeated rewards and that relational norms may affect the value of an incentive. The inductive portion of the analysis also highlights a major difference between negative and positive incentives. For while market forces work against limiting access to substitutes in negative incentives and thus decrease their value, limited alternatives were found to contribute to the value of positive incentives.