Financial Statecraft: The Role of Financial Markets in American Foreign Policy

by Benn Steil, Robert E. Litan

As trade flows expanded and trade agreements proliferated after World War II, governments—most notably the United States—came increasingly to use their power over imports and exports to influence the behavior of other countries. But trade is not the only way in which nations interact economically. Over the past two decades, another form of economic exchange has risen to a level of vastly greater significance and political concern: the purchase and sale of financial assets across borders. Nearly $2 trillion worth of currency now moves cross-border every day, roughly 90 percent of which is accounted for by financial flows unrelated to trade in goods and services—a stunning inversion of the figures in 1970. The time is ripe to ask fundamental questions about what Benn Steil and Robert Litan have coined as “financial statecraft,” or those aspects of economic statecraft directed at influencing international capital flows. How precisely has the American government practiced financial statecraft? How effective have these efforts been? And how can they be made more effective? The authors provide penetrating and incisive answers in this timely and stimulating book.

Genres: Economics

208 pages, Paperback

First published January 1, 2006

About the author

Benn Steil is an American economist and writer.[1] He was educated at Nuffield College, Oxford and at the Wharton School of the University of Pennsylvania. Steil is the senior fellow and director of international economics at the Council on Foreign Relations. He is the founder and editor of the journal International Finance. He has been awarded the Hayek Prize and the Spear's Book Award.

Reviews

[Chantel · Rating 2 out of 5]

“Financial Statecraft” is written by two authors and it is oblivious from the outset as the book is very disjointed. The book is also of the persuasion that the world needs more globalization so one needs to weigh the objectivity of the authors in their quest to explain the future of financial statecraft and its role in our foreign policy. While this book does offer some wonderful insight into the recent history of financial statecraft many of the ideas are in need of recalibration due to the current global financial climate.

[Ben Sweezy · Rating 3 out of 5]

I am quite enjoying this book. Written by the finance lead on the Council of Foreign Relations in 2006, this book's discussion of global "credit crises," "liquidity gaps," "fear of booking losses on unretrievable loans," and the dangers of heavily leveraged banks investing in consumer credit and real estate is relevant and believable. I'm glad it was published in 2006 and not this year because I would not trust this language if it were more recent.

[Mike · Rating 4 out of 5]

Some "bias" But a great novel!