In February 2018, the cybersecurity firm FireEye published a report detailing the activities of a hacker group called APT37, which had carried out a series of cyberattacks across Asia. The report assessed “with high confidence” that the group was acting on behalf of the North Korean government. This is just one example of a rising trend, as states increasingly turn to “cyber proxies”—hacker groups that carry out cyber operations on behalf of or in concert with nation states.

As state-sponsored cyber operations have proliferated, some states are outsourcing these operations to non-state cyber proxies. However, given the relative ease of outsourcing cyber operations, it is puzzling why more states are not engaged in this practice. This study examines how domestic accountability institutions potentially explain this restraint in the use of cyber proxies.

In the wake of the major espionage operation in which people alleged to be Russian government agents infiltrated the digital networks of the U.S. Defense, Treasury and Homeland Security departments – as well as other government agencies and private companies – President Joe Biden is considering how to respond. It’s not clear exactly what data the hackers actually stole in the time they had access, roughly from March through December 2020, but they exploited software made by the Texas-based firm SolarWinds to gain access to key research and security information, including research for future nuclear weapons.

A state’s decision to engage in cyber operations has important implications for its trade. Successful cyber espionage could yield valuable trade secrets that could boost domestic production and spur economic growth. On the other hand, uncovered cyber operations could invite devastating sanctions that retard economic development. In spite of this, the nexus between trade and cyber attacks has received little attention in the literature. In this article, I explore how a state’s trade relations affect its propensity to engage in cyber attacks.