There is perhaps no better example of economic statecraft, and its dual mandate to promote growth and security, than US economic policy in the aftermath of WWII. The United States invested billions of dollars through the Marshall Plan to rebuild war-ravaged European countries to not only contain the threat of Soviet communism, but to build a global economic order based on the belief that liberal economic policy and multilateral institutions would be the tide that lifted all boats. The historical record is equally littered with coercive economic measures — as early as the American Civil War, President Lincoln forced the United Kingdom to sever ties with the South by threatening to block trade and seize British assets. During the Cold War, the United States experimented with various embargos to deter the Soviet Union while using aid and trade to compete with the Soviets throughout the post-colonial world.
The idea of economic policy as an instrument for achieving strategic objectives is thus not new. What is new, and evolving, is the number of nations with the capacity to wield economic power, and the interconnectedness and complexity of global economies that enable a more diverse and potent arsenal of economic tools. China, which barely had a GDP of $1 trillion twenty years ago, today envisions investing $1 trillion in its Belt and Road Initiative. The level of technological sophistication and reach of the global financial system now allows the United States to surgically target the assets of 11 Russian oligarchs in response to the invasion of Crimea, rather than enforce blunt sanctions impacting the average Russian citizen.
In the face of these structural changes, policymakers require a new vision for how to effectively deploy economic tools in the foreign policy arena. With more state actors wielding economic power in meaningful ways, how do we resolve competing visions of the future of the global economy, the costs and benefits of open markets, and the role of multilateral institutions? How can nations use economic tools to respond to today’s pressing challenges, like mass migration, terrorism, and climate change? Given globalized networks for trade and investment and the multinational structure of corporations, how can national policy achieve growth and security? What are the disruptive forces that could fundamentally reconfigure the economic system and render current policy tools ineffective? These are just some of the questions that motivate our work on this initiative.
