Business Elites and Germany’s Economic Hedging toward China (2014–2021): A Prospect Theory Perspective
Year: 2025
Type: article
Abstract: This article argues that business elite perceptions significantly shape state-level economic hedging behavior toward rising powers. Why? When business elite perceptions shift from gains to losses, business elites become more risk-acceptant and willing to support stricter economic policies, even at the cost of potential retaliation. Paradoxically, compared to the richness of conceptualizations of hedging, how domestic actors influence hedging in the field of foreign economic policies has received scant attention. Yet, perceptions of these actors change and are consequential. Building on insights from prospect theory, this article develops a typological theoretical framework elucidating the mechanisms of how and when business elite perceptions influence a state’s foreign economic policy choices toward a rising power. The findings draw on empirical evidence from the case of Germany’s economic policies toward China between 2014 and 2021. The article advances the hedging literature by clarifying the factors that influence the evolution of economic hedging outcomes.
Source: Foreign Policy Analysis
DOI: 10.1093/fpa/oraf039
Author: Barbora Valockova
Institution: National University of Singapore
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,320
OpenAlex ID: W7117356257