While regime change is generally viewed as a bad thing, international law and precedent make it a viable option for states to use in certain circumstances. As such, pressure from the United States and other countries may bring down a government in a country that is deemed to be a threat to global stability. This is known as regime change and involves the overthrow of a state leader, either through popular uprising or military coup.
Scholars have found that covert regime change campaigns aimed at achieving political, security, economic, or human rights goals almost always fail to achieve their intended objectives and often have deleterious side effects. These include civil war, increased human rights violations, and the rise of dictatorships that are anti-U.S.
We develop a model of citizens’ rational behavior in regime change scenarios. Citizens face a trade-off between their individual payoffs and the likelihood that there is a regime shift, with their degree of optimism in this regard being private information. They also face coordination considerations that impose a maximum reward for participating in the uprising. We show that a leader can maximize the probability of regime change by designing rewards to encourage citizens’ optimal level of participation in the revolt, taking into account the fact that their motivation depends on others’ contributions.
Our results show that while most regime change events increase capital outflows from a country, they are not necessarily always negative for investment. In particular, coups that result in a pro-business regime shift tend to see a positive market reaction and trigger large increases in investment.
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