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Legal reforms matter for economic growth and democratic consolidation. As part of the 'second-generation reforms', international financial institutions have sought to build the rule of law by funding a vast array of legal and judicial reform projects throughout the developing world. Yet aside from scattered anecdotal evidence, the general effects of international assistance on legal reform and the rule of law remain poorly understood. This article addresses this gap by developing a theoretical framework that explores the strategic interaction among international financial institutions, national governments and non-governmental actors. Using original data on World Bank legal and judicial reform projects, we show that World Bank assistance can in fact encourage some types of incumbent governments to promote reforms that increase judicial independence. [Reprinted by permission; copyright Sage Publications Ltd.]

The literature on economic sanctions has long studied sender countries' policymaking as a simple choice between imposing sanctions to extract concessions from the targeted country and doing nothing. We depart from this simplifying assumption and analyze sanctions as a multifaceted foreign policy instrument. We argue that senders design sanction policies in response to policy preferences of two domestic constituencies. Voters expect a response to an international dispute in the form of some policy, such as economic sanctions; hence, the sender's policymakers seek to demonstrate their competence in foreign affairs by imposing sanctions. Once the policymakers announce the use of sanctions, special interest groups that stand to experience economic losses when this foreign policy is implemented pressure the policymakers to choose sanction measures limiting such losses. As a result, the policymakers design sanction policies to include measures that will be less detrimental to special interest groups. We test our theoretical argument using the Threat and Imposition of Sanctions data and show that, while pressures from public opinion increase the likelihood of sanctions, special interest groups that benefit from the relationship with the target country are associated with a lower probability of the use of sanction measures that would impose substantial costs on domestic interest groups.

Legal reforms matter for economic growth and democratic consolidation. As part of the "second-generation reforms", international financial institutions have sought to build the rule of law by funding a vast array of legal and judicial reform projects throughout the developing world. Yet aside from scattered anecdotal evidence, the general effects of international assistance on legal reform and the rule of law remain poorly understood. This article addresses this gap by developing a theoretical framework that explores the strategic interaction among international financial institutions, national governments and non-governmental actors. Using original data on World Bank legal and judicial reform projects, we show that World Bank assistance can in fact encourage some types of incumbent governments to promote reforms that increase judicial independence.

Existing research on the relationship between economic coercion and foreign direct investment suggests that sanctions have no effect on investments in targeted countries or may even encourage investment inflows. A key limitation of this research, however, is its aggregate country-level focus, which fails to capture company-level decision-making processes and factors shaping them. In contrast, this paper evaluates multinational companies' investment plans as reflected in new investment announcements and shows that sanctions in fact lead to significant adjustments in multinational companies' plans to invest in a targeted country. Our company-level analyses of new investment projects in Russia show that companies are less likely to announce new investments after the imposition of economic sanctions against the country.

Existing research on the relationship between economic coercion and foreign direct investment suggests that sanctions have no effect on investments in targeted countries or may even encourage investment inflows. A key limitation of this research, however, is its aggregate country-level focus, which fails to capture company-level decision-making processes and factors shaping them. In contrast, this paper evaluates multinational companies' investment plans as reflected in new investment announcements and shows that sanctions in fact lead to significant adjustments in multinational companies' plans to invest in a targeted country. Our company-level analyses of new investment projects in Russia show that companies are less likely to announce new investments after the imposition of economic sanctions against the country.

This article explores when and why sanction threats succeed in extracting concessions from the targeted country. We focus on two different, albeit not mutually exclusive, mechanisms that can explain the success of sanction threats. The first mechanism relates to incomplete information regarding the sanctioner's determination to impose sanctions and suggests that threats help to extract concessions by revealing the sanctioner's resolve. The second mechanism underscores the direct impact of common interest between the two countries and explains the success of sanction threats by the targeted country's greater dependence on this link between the two countries and the sanctioner's ability to exploit this dependence. We test the hypotheses using a new strategic structural estimator. Our results provide no evidence in favor of the informational hypothesis, while lending robust support for the coercive hypothesis. Adapted from the source document.