Carrots and Sticks: Exploring the US Response to Latin American Engagement with China

ZELICOVICH, JULIETA; YAMIN, PATRICIO

Congreso; 2023 International Political Studies Association World Congress of Poltiical Science; 2023

Geopolitical competition between the United States and China has led to an increased reliance on economic statecraft. In this context, understanding the conditions that trigger the weaponization of trade, aid, or investment becomes crucial. This paper examines how the US has employed economic statecraft in response to Latin American countries' engagement with China since 2017. The study revisits the theoretical debate on positive and negative economic statecraft and proposes a mechanism that identifies the conditions under which "carrots" or "sticks" are more likely to be employed. We argue that when dealing with non-revisionist democratic states, economic engagement tends to prevail over economic coercion. To test our argument, we adopt a mixed-methods approach. First, we conduct a case study analysis on the US-Panama relation. Second, we perform a statistical analysis to assess the impact of economic engagement with China on the allocation of American foreign assistance in the region.