How do the distributional consequences of economic sanctions impact future trade policy? Regardless of whether sanctions are effective in achieving concessions, sanctions restrict international trade flows, creating rents for import-competing producers, who are protected from international competition. These rents can then be used to pressure the government to implement protectionist policies. Thus, while the lifting of sanctions directly facilitates some international transactions, sanctions also have an indirect effect. They create powerful domestic interest groups in the sanctioned country who seek market protection. I use multiple estimators to evaluate the effect of trade sanctions on tariff rates. The evidence is consistent with the argument that sanctions increase market protection in both the short and long run.

How do firms protect themselves against infringements of their property rights by their own government? The authors develop a theory based on international law and joint asset ownership with foreign firms. Investment agreements protect the assets of foreign firms but are not available to domestic firms. This segmentation of the property rights environment creates a rationale for international financial relationships between firms. By forming financial relationships with foreign firms, domestic firms gain indirect coverage from the property rights available to foreign firms under investment agreements. If a government is less likely to violate the property rights of covered foreign firms, it is also less likely to violate property rights for assets held jointly by domestic and foreign firms. This article presents systematic evidence from data on the activities of firms in countries that have investment agreements with the United States. International financial relationships between firms, through mergers and acquisitions as well as through bond and equity issues, are more common where property rights are weak. The theory suggests a political logic to the fragmentation of firm-ownership stakes across jurisdictions, offers an institutional explanation of international financial flows, and identifies new distributional consequences of international law.

Why do autocratic rulers liberalize financial markets? This article shows how autocrats use financial liberalization for two distinct purposes. First, autocrats may use liberalization to bolster the economy, making revolution less attractive to the political opposition and stabilizing the autocracy. Second, when stabilization of the autocracy is too costly, autocrats may use liberalization to make assets more mobile. Mobility provides elite asset owners with external investment options, which limit redistribution. When redistribution is the main fear associated with democratization, the mobility associated with liberalization makes direct control of political institutions through dictatorship unnecessary. Thus, autocrats use liberalization to stimulate the economy and stabilize their rule or to reduce redistribution in anticipation of democratization. Suharto’s policies in Indonesia and Pinochet’s policies in Chile illustrate these two objectives of financial liberalization.

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