Power And Profits

Power And Profits: U.S. Policy in Central America

Ronald W. Cox
Copyright Date: 1994
Pages: 200
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  • Book Info
    Power And Profits
    Book Description:

    The cold war between the United States and the Soviet Union provided the context for U.S. policies toward Central America from the 1950s to the 1980s. Nonetheless, attitudes developed during the Cold War cannot explain the specific content of U.S. foreign policies toward the region.

    Ronald W. Cox argues that U.S. business interests have worked with policymakers to develop trade, aid and investment policies toward Central America. He reveals how the relationship between business groups and the state has been shaped by business competition, national security considerations, institutional structures, and instability in the Central American countries.

    Many see the state as autonomous and not influenced by business, but Cox argues that business groups have been able to take advantage of specific international circumstances to promote economic policies, thus increasing foreign investment. At the same time, division among business groups has affected foreign economic policies. This book is a provocative analysis of interest to scholars of international political economy, American foreign policy, comparative politics, and business-government relations.

    eISBN: 978-0-8131-5685-9
    Subjects: Economics, History

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Acknowledgments
    (pp. ix-x)
  4. 1 Explaining U.S. Foreign Economic Policy: Toward a Business Conflict Model
    (pp. 1-19)

    This study examines the relationship between business groups and the state in the formulation of U.S. foreign economic policy. Within the last twenty years, scholars from various perspectives have modified and refined their theoretical frameworks regarding the relationship between business and the state. Qualifying their earlier approaches, some pluralists have developed models of U.S. foreign economic policy that emphasize the political advantages derived by business groups that are economically powerful.¹ Others have cautioned against the notion that economic power can be translated so easily into political influence.²

    From a different perspective, marxists have rejected the proposition that the state is...

  5. 2 The “Trade Not Aid” Strategy for Third World Industrialization
    (pp. 20-47)

    This chapter examines the role of business groups and U.S. policy makers in developing foreign economic policies for Latin America and the less-developed world during the 1940s and the 1950s. Business internationalists prominent within the Council on Foreign Relations, the National Planning Association, the Committee for Economic Development, and the National Foreign Trade Council drafted proposals during World War II that emphasized the importance of Third World industrialization for U.S. manufacturers. These business groups worked with government planning commissions in the 1940s and the 1950s to devise lending programs to promote the infrastructure necessary for industrial development of Latin America....

  6. 3 U.S. Intervention in Guatemala: Prelude to a Common Market
    (pp. 48-65)

    The move by the Eisenhower administration from “trade not aid” to “trade and aid” was a gradual shift as policy makers recognized the limitations of the “trade not aid” strategy. As early as July 23, 1953, when the administration was still pursuing a “trade not aid” approach, the National Security Council issued a policy statement (NSC 144/1) warning of the difficulties of raising foreign direct investment in Latin America absent higher levels of government assistance.¹

    The NSC report discussed the potentially negative effects of a reduction in EXIM lending for private investment in the region. In addition, the report urged...

  7. 4 Business Welcomes Creation of Central American Common Market
    (pp. 66-89)

    Internationalists expressed support for regional common markets in the 1958 Rockefeller Panel Reports, written and endorsed by corporate internationalists of the Council on Foreign Relations and the National Planning Association.¹ The panel reports were made available to the Eisenhower administration prior to a March 1958 meeting between President Eisenhower and Salvadoran President Jose Maria Lemus. In a memo from administration official C. Edward Galbreath to Clarence Randall, a close adviser on Latin American affairs, Galbreath refers favorably to the main recommendations of the Rockefeller Reports, which include “support for regional common markets and international commmodity price stabilization schemes.”²

    In the...

  8. 5 Support for Export Promotion in Central America and the Caribbean
    (pp. 90-109)

    Following the decline of the Central American Common Market in the late 1960s, business internationalists interested in diversifying their investments in the region pressured U.S. policy makers under the Johnson and Nixon administrations to lend support to export promotion.¹

    The chapter will highlight the relative influence of business sectors in explaining the shift in U.S. foreign economic policy from support for the CACM to support for export promotion strategies. First, I will examine the historical context of the shift—that is, the breakdown of the CACM. Second, I will examine the variety of business groups involved in export industries in...

  9. 6 The Shift toward Economic Stabilization and More Military Aid
    (pp. 110-132)

    In the late 1970s and early 1980s, a split emerged among business internationalists over U.S. policy toward Central America, reflecting a divergence of interest between capital-intensive and labor-intensive investors in the region.¹ Capital-intensive investors advocated economic incentives and disincentives to promote U.S. strategic and economic goals in the region. Labor-intensive investors advocated dramatic increases in military aid to the contras and to governments loyal to U.S. business interests in El Salvador and Guatemala.

    Business groups differed in their relative sensitivity to wage constraints in the region. Capital-intensive investors led by commercial bankers and petroleum firms were less dependent on low...

  10. 7 The Business Conflict Model: The Relationship of Business to the State
    (pp. 133-146)

    This final chapter attempts to evaluate the usefulness of the business conflict model in light of the empirical findings of the previous chapters. The model is useful to the extent that it helps us explain the various shifts in U.S. foreign economic policy toward Central America and elsewhere in the less-developed world. The model represents an advance over other theoretical approaches to the extent that it can account for the adoption of particular foreign economic policies that cannot be explained by other approaches.

    The first part of this chapter will compare and contrast the propositions of the business conflict model...

  11. Notes
    (pp. 147-168)
  12. Bibliography
    (pp. 169-176)
  13. Index
    (pp. 177-190)