Hostname: page-component-cd9895bd7-p9bg8 Total loading time: 0 Render date: 2024-12-27T09:29:58.741Z Has data issue: false hasContentIssue false
  • English
  • Français

Cooperation in the liberalization of international trade: after hegemony, what?

Published online by Cambridge University Press:  22 May 2009

Beth V. Yarbrough  and
Robert M. Yarbrough
Get access

Extract

Nations dwell in perpetual anarchy, for no central authority imposes limits on the pursuits of sovereign interests. … Because as states, they cannot cede ultimate control over their conduct to an supranational sovereign, they cannot guarantee that they will adhere to their promises. The possibility of a breach of promise can impede cooperation even when cooperation would leave all better off. Yet, at other times, states do realize common goals through cooperation under anarchy.

Type
Articles
Information
International Organization , Volume 41 , Issue 1 , Winter 1987 , pp. 1 - 26
Copyright
Copyright © The IO Foundation and Cambridge University Press 1987

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1. For example, contractual promises extracted through duress, fraud, or undue influence may be exempt from enforcement.

2. Conybeare, J. A. C., “International Organization and the Theory of Property Rights”, International Organization 34 (Summer 1980), pp. 325–26.CrossRefGoogle Scholar

3. Stoessinger, J., “The Anatomy of the Nation-State and the Nature of Power,” in Smith, M., Little, R., and Shackleton, M., eds., Perspectives on World Politics (London: Croom Helm, 1981), p. 26.Google Scholar

4. The members of the two groups discussed here accept to a greater or lesser extent the desirability of a liberal international trading system. A third group could be added, including many Marxist analysts, who do not accept the basic premise of mutual gains from liberal world trade.

5. A variety of perspectives can be found in Gilpin, R., U.S. Power and the Multinational Corporation (New York: Basic, 1975)CrossRefGoogle Scholar; Kindleberger, C. P., The World in Depression (Berkeley: University of California Press, 1973)Google Scholar, and “Dominance and Leadership in the International Economy,” International Studies Quarterly 25 (06 1981), pp. 242–54CrossRefGoogle Scholar; Keohane, R., “The Theory of Hegemonic Stability and Changes in International Economic Regimes,” in Holsti, O. R., Siverson, R. M., and George, A. L., eds., Change in the International System (Boulder: Westview, 1980)Google Scholar; Krasner, S. D., “State Power and the Structure of International Trade,” World Politics 38 (04 1976), pp. 317–43CrossRefGoogle Scholar; and Snidal, D., “The Limits of Hegemonic Stability Theory,” International Organization 39 (Autumn 1985), pp. 579–614.CrossRefGoogle Scholar

6. See Conybeare, , “International Organization”; Keohane, R., After Hegemony: Cooperation and Discord in the World Political Economy (Princeton: Princeton University Press, 1984)Google Scholar; Strange, S., “Protectionism and World Politics,” International Organization 39 (Spring 1985), pp. 233–60Google Scholar; and Yarbrough, B. V. and Yarbrough, R. M., “Free Trade, Hegemony, and the Theory of Agency,” Kyklos 38, fasc. 3 (1985), pp. 348–64CrossRefGoogle Scholar, “Reciprocity, Bilateralism, and Economic ‘Hostages’: Self-Enforcing Agreements in International Trade,” International Studies Quarterly 30 (03 1986), pp. 7–21CrossRefGoogle Scholar, and “Opportunism and Governance in International Trade: After Hegemony, What?” (Paper read at the National Bureau of Economic Research Conference on the Political Economy of Trade Policy, MIT Endicott House, Dedham, Mass., 10–1101 1986).Google Scholar

7. These questions are the focus of the traditional hegemonic stability literature as well as of business-cycle theories of trade policy.

8. This question is emphasized in political economy, public choice, and pressure-group theories of trade policy.

9. The other questions mentioned can also be addressed using the framework developed in this article. However, we chose to limit our focus to the single question of the various possible forms of international trade liberalization. Understanding the historical variation in the structure of international trade liberalization is essential to progress toward a general structural or systemwide theory of trade policy. Some theories that have been suggested (e.g., hegemonic stability) may be able to explain this historical variation; others (e.g., business-cycle theories or domestic pressure-group theories) seem by their nature less likely to be able to address this question, although they certainly play a role in the actual determination of trade policy.

10. J. D. Richardson has suggested the term minilateralism for agreements among small numbers of like-minded participants; see, for example, his “Trade-Policy Implications of ‘Strategic’ Economic Models” (Paper read at the NBER Conference on the Political Economy of Trade Policy, MIT Endicott House, Dedham, Mass. (10–1101 1986).Google Scholar

11. Transaction costs include information, negotiation, contracting, and inspection or enforcement costs. See Coase, R., “The Problem of Social Cost,” Journal of Law and Economics 3 (10 1960), pp. 1–44.CrossRefGoogle Scholar

12. This general approach to problems has come to be known by various names, including transaction-costs economics and the economics of organization. See Williamson, O. E., The Economic Institutions of Capitalism (New York: Free, 1985)Google Scholar; Yarbrough, B. V. and Yarbrough, R. M., “Institutions for the Governance of Opportunism in International Trade,” Journal of Law, Economics, and Organization (forthcoming).Google Scholar

13. For a similar caution in a business-regulation context, see Klein, B., “Transaction Cost Determinants of ‘Unfair’ Contractual Relations,” American Economic Review 70 (1980), pp. 356–62.Google Scholar

14. The primary assumptions include competitive output and factor markets, the absence of external effects in production or consumption, and the absence of economies of scale.

15. Keohane, , After Hegemony, especially pp. 51–55.Google Scholar

16. Factors such as monopoly power, economies of scale, and externalities in production and consumption are ignored or, alternatively, are assumed to be dealt with using policies other than restrictions on trade.

17. The division of gainers and losers refers to the short run. In the long run, the owners of resources used intensively in production of the country's goods of comparative advantage gain from liberalization, while the owners of resources used intensively in production of the country's goods of comparative disadvantage lose according to the Stolper-Samuelson Theorem.

18. This is a functional view of institutions, holding that the existence of institutions can be understood through the functions that those institutions serve. For a discussion in terms of international issues, see Keohane, After Hegemony, especially chaps. 5 and 6.

19. Piccioto, S., “Political Economy and International Law,” in Strange, S., ed., Paths to International Political Economy (London: Allen & Unwin, 1984), p. 172.Google Scholar

20. Baldwin, R. E., “The Changing Nature of U.S. Trade Policy since World War II,” in Baldwin, and Krueger, A. O., eds., The Structure and Evolution of Recent U.S. Trade Policy (Chicago: University of Chicago Press, 1984), pp. 5–27.Google Scholar

21. See, for example, Kronman, A. T., “Mistake, Disclosure, Information, and the Law of Contracts,” Journal of Legal Studies 7 (01 1978), pp. 1–34.CrossRefGoogle Scholar

22. Millar, T. B., ed., Current International Treaties (New York: New York University Press, 1984), p. 2.Google Scholar

23. Cowhey, P. F. and Long, E., “Testing Theories of Regime Change: Hegemonic Decline or Surplus Capacity?” International Organization 37 (Spring 1983), p. 178.CrossRefGoogle Scholar

24. Conybeare, J. A. C., “Trade Wars: A Comparative Study of Anglo-Hanse, Franco-Italian, and Hawley-Smoot Conflicts,” in Oye, K. A., ed., Cooperation under Anarchy (Princeton:Princeton University Press, 1986), p. 159.Google Scholar

25. Cowhey and Long, “Testing Theories.”

26. Williamson, Economic Institutions. Transaction-specific investment can occur in any durable asset, including human skills. The term capital is used to denote durability.

27. Williamson, , Economic Institutions, especially pp. 194–95.Google Scholar

28. Strange, S., “The Management of Surplus Capacity: or, How Does Theory Stand up to Protectionism 1970s Style?” International Organization 33 (Summer 1979), pp. 303–34CrossRefGoogle Scholar; Strange, S. and Tooze, R., eds., The International Politics of Surplus Capacity (London: Butterworth, 1980)Google Scholar; Tsoukalis, L. and da Silva Ferreira, A., “Management of Industrial Surplus Capacity in the European Community,” International Organization 34 (Summer 1980), pp. 355–76CrossRefGoogle Scholar; Cowhey and Long, “Testing Theories.”

29. Cowhey and Long, “Testing Theories,” p. 163.

30. For more extensive discussion of the concept of hegemony, see the works mentioned in nn. 5 and 6.

31. This line of reasoning, if carried further, leads to the Marxist view of hegemony as represented in the work of Stephen, Hymer, e.g., “The Efficiency (Contradictions) of Multinational Corporations,” American Economic Review 60 (1970), pp. 441–48.Google Scholar

32. See, for example, McKeown, T. J., “Hegemonic Stability Theory and 19th-century Tariff Levels in Europe,” International Organization 37 (Winter 1983), pp. 73–91CrossRefGoogle Scholar; Cowhey and Long, “Testing Theories”; Keohane, After Hegemony; Snidal, “Limits.”

33. For a detailed explanation, see Yarbrough, and Yarbrough, , “Free Trade, Hegemony.” The terminology hegemonic cooperation is from Keohane, After Hegemony, p. 55.Google Scholar

34. See Conybeare, J. A. C., “Public Goods, Prisoners' Dilemmas and the International Political Economy,” International Studies Quarterly 28 (1984), pp. 5–22.CrossRefGoogle Scholar

35. Keohane, After Hegemony, p. 39.

36. Gannett, J., “The Role of Military Power,” in Smith et al., Perspectives, p. 71.Google Scholar

37. MacBean, A. I. and Snowden, P. N., International Institutions in Trade and Finance (London: Allen & Unwin, 1981), p. 79.Google Scholar

38. For a more detailed examination of the incentives facing the hegemon in its bargaining with other countries, see Yarbrough, B. V. and Yarbrough, R. M., “Side-payments and Holdouts in a Principal-Agent Model” (Working paper, Department of Economics, Amherst College, 1985).Google Scholar

39. See Elliott, E. D., Ackerman, B. A., and Millian, J. C., “Toward a Theory of Statutory Evolution: The Federalization of Environmental Law,” Journal of Law, Economics, and Organization 1 (Fall 1985), p. 325.Google Scholar

40. Hirschman, A. O., National Power and the Structure of Foreign Trade (Berkeley: University of California Press, 1945).Google Scholar

41. Conybeare, “Trade Wars,” especially pages 152–58.

42. See Cuddington, J. T. and McKinnon, R. I., “Free Trade versus Protectionism: A Perspective,” in Tariffs, Quotas and Trade: The Politics of Protectionism (San Francisco: Institute for Contemporary Studies, 1979).Google Scholar The bilateral Cobden-Chevalier treaty was an exception to the basic unilateralism of Britain's trade policy, but noneconomic considerations were prominent in the negotiation of the treaty.

43. McKeown, “Hegemonic Stability.”

44. Cuddington and McKinnon, “Free Trade,” p. 12.

45. See Yarbrough and Yarbrough, “Reciprocity, Bilateralism,” p. 12.

46. For example, Vernon, R., “International Trade Policy in the 1980s,” International Studies Quarterly 26 (12 1982), pp. 504–5.CrossRefGoogle Scholar

47. Williamson, O. E., “Credible Commitments: Using Hostages to Support Exchange,” American Economic Review 73 (1983), pp. 519–40.Google Scholar

48. Axelrod, R., The Evolution of Cooperation (New York: Basic, 1984).Google Scholar

49. For development of the general theory of self-enforcing agreements, see Telser, L., “A Theory of Self-enforcing Agreements,” Journal of Business 27 (1980), pp. 27–44; for international applications, see Yarbrough and Yarbrough, “Reciprocity, Bilateralism.”CrossRefGoogle Scholar

50. Goldstein, J. L. and Krasner, S. D., “Unfair Trade Practices: The Case for a Differential Response,” American Economic Review 74 (1984), pp. 282–87; Axelrod, Evolution.Google Scholar

51. Conybeare, “Trade Wars,” pp. 153–57.