ABSTRACT
This chapter reviews theory of economic coercion in foreign policy. As a matter of analytic convenience, theory has been divided into four parts: objectives of coercion; instruments used; their application; and their effects. The objectives of economic coercion are rarely limited to matters of foreign policy. Objectives born out of domestic pressure in the sending state often have a significant symbolic content. Economic coercion lies between two other major tools of foreign policy, diplomacy and force. Trade as an instrument of economic coercion must involve non-routine uses of trade for the purpose of applying economic pressure on a target nation. Regardless of the type of aid instrument, the size of the aid program in relation to the economy of the target state is a significant determinant of coercive leverage. The most dramatic trade instruments are those of economic warfare and of collective international economic sanctions.
