National Sentiment and Consumer Choice: The Iraq War and Sales of US Products in Arab Countries

• Published date: 01 July 2015
• Date: 01 July 2015
• DOI: http://doi.org/10.1111/sjoe.12112

Scand. J. of Economics 117(3), 829–851, 2015

DOI: 10.1111/sjoe.12112

National Sentiment and Consumer Choice:

The Iraq War and Sales of US Products

in Arab Countries∗

Sofronis Clerides

University of Cyprus, CY-1678 Nicosia, Cyprus

s.clerides@ucy.ac.cy

Peter Davis

Compass Lexecon, London, EC1A 4HD, UK

pdavis@compasslexecon.com

Antonis Michis

Central Bank of Cyprus, CY-1076 Nicosia, Cyprus

AntonisMichis@centralbank.gov.cy

Abstract

Did the rise in anti-American sentiment caused by the Iraq war affect sales of US goods

abroad? We address this question using data on soft drinks and fabric detergents sales in

nine Arab countries. We find a statistically significant negative impact of the war on sales of

US soft drinks in seven countries. The impact dissipates after a few months in two countries

but persists in the other five. In the case of detergents, we only find a significant negative

impact in one country. We conclude that international politics can sometimes affect consumer

behavior and market outcomes.

Keywords: Boycotts; international politics

JEL classification:D01; D12; L66

I. Introduction

The US-led war in Iraq dominated the international political scene from

the autumn of 2002 to the summer of 2003, and remained in the headlines

for several years thereafter. The acrimonious debate over the war’s military,

legal, and ethical justification led to a straining of relations between close

allies, particularly the US and France. French objections over the necessity

of war led to a rise in anti-French sentiment in the US. American displea-

sure toward the French manifested itself in a variety of ways, perhaps most

∗We thank Iacovos Avraamides, Marinella Panayiotou, and Egle Bareikaite for research

assistance, and the Nielsen Company for the data. The views expressed in this paper are

solely the views of the authors acting in a personal capacity, and are in no way reviewed or

endorsed by any of the institutions for which the authors work.

CThe editors of The Scandinavian Journal of Economics 2015.

830 National sentiment and consumer choice

famously in the renaming of french fries as “freedom fries”,1but also with

campaigns calling for boycotts of French products. The effectiveness of

these campaigns has been a subject of debate in recent economic research,

with one study reporting an estimated drop of 9 percent in bilateral trade

between the US and France, following a reported 48 percent decline in

the proportion of people in the US holding a favorable opinion of France,

according to surveys by Gallop (Michaels and Zhi, 2010).2

Most directly however, the Iraq war raised anti-American sentiment in

many parts of the world, particularly among Arabs (Pew Research Center,

2005). Surveys conducted in six Arab countries – Morocco, Saudi Arabia,

Jordan, Lebanon, United Arab Emirates (UAE), and Egypt – indicate that

the percentage of Arabs who had an unfavorable opinion of the US in-

creased from 74 to 84 percent between March 2002 and June 2004 (Arab

American Institute, 2004). This average masks considerable variation across

countries, with a staggering 98 percent of Egyptians reporting an unfavor-

able opinion of the US in 2004, up from 76 percent in 2002. In contrast,

citizens of the UAE show an improved view of the US over this period

(from 87 percent unfavorable in 2002 to 73 percent in 2004). When re-

spondents in the survey are asked to name the principal factors determining

their attitudes towards the US, they overwhelmingly cite the Iraq war, along

with US policy towards the Palestinians.

In this paper we provide some evidence of the extent to which the rise

of anti-American sentiment associated with the invasion of Iraq affected

the sales of US goods in Arab countries. Boycott campaigns against US

products are reported to have been organized in many Arab countries dur-

ing this period. The campaigns typically targeted iconic American brands,

such as McDonald’s and Coca-Cola, but also extended to products that are

less symbolic of America, such as cleaning supplies and electronics. Our

study focuses on two product categories: soft drinks and laundry detergents.

The soft drinks category was chosen as the primary focus of our analysis

because it includes Coca-Cola and Pepsi, flagship American brands that

might be most vulnerable to a boycott campaign relying on anti-American

sentiment. In the laundry detergents category, the major US producer is

Procter & Gamble (P&G), with Colgate having a smaller presence. These

companies are probably less high profile as US producers than Coca-Cola

or Pepsi. Studying detergents is nonetheless instructive because US pro-

ducers in this industry face competition from at least two major European

manufacturers in each country. The presence of high-quality alternatives

1For example, see “House cafeterias change names for ‘french’ fries and ‘french’ toast”,

CNN, March 12, 2003, http://edition.cnn.com/2003/ALLPOLITICS/03/11/sprj.irq.fries/.

2We discuss this literature in more detail in the next section.

CThe editors of The Scandinavian Journal of Economics 2015.