The global expansion of the European state system suggests strong connections between political “life chances” and international status. Polities recognized as sovereign within the Western international community are much less likely than unrecognized polities to be colonized and are much less likely than dependencies to merge or dissolve. These variations in stability are difficult to understand through balance-of-power politics. They may be more plausibly explained through the institutional structure of the state system and, in particular, the organization of the system as a community of mutual recognition. Sovereign members of this community are treated in fundamentally different ways than are those seen as outside Western state society or as the dependent possessions of sovereign states.

Leadership plays a critical but poorly understood role in determining the success or failure of the processes of institutional bargaining that dominate efforts to form international regimes or, more generally, institutional arrangements in international society. An examination of the nature of institutional bargaining serves as a springboard both for pinpointing the role of leadership in regime formation and for differentiating three forms of leadership that regularly come into play in efforts to establish international institutions: structural leadership, entrepreneurial leadership, and intellectual leadership. Because much of the real work of regime formation occurs in the interplay of different types of leadership, the study of interactions among individual leaders is a high priority for those seeking to illuminate the processes involved in the creation of international institutions. Not only does such a study help to explain the conditions under which regimes form or fail to form, but it also provides an opportunity to bring the individual back in to an important area of international affairs.

Capital moves more rapidly across national borders now than it has in at least fifty years and perhaps in history. This article examines the effects of capital mobility on different groups in national societies and on the politics of economic policymaking. It begins by emphasizing that while financial markets are highly integrated within the developed world, many investments are still quite specific with respect to firm, sector, or location. It then argues that contemporary levels of international capital mobility have a differential impact on socioeconomic groups. Over the long run, increased capital mobility tends to favor owners of capital over other groups. In the shorter run, owners and workers in specific sectors in capital-exporting countries bear much of the burden of adjusting to increased capital mobility. These patterns can be expected to lead to political divisions about whether or not to encourage or increase international capital market integration. The article then demonstrates that capital mobility also affects the politics of other economic policies. Most centrally, it shifts debate toward the exchange rate as an intermediate or ultimate policy instrument. In this context, it tends to pit groups that favor exchange rate stability against groups that are more concerned about national monetary policy autonomy and therefore less concerned about exchange rate stability. Similarly, it tends to drive a wedge between groups that favor an appreciated exchange rate and groups that favor a depreciated one. These divisions have important implications for such economic policies as European monetary and currency union, the dollar-yen exchange rate, and international macroeconomic policy coordination.

An analysis of a small sample of countries shows that the higher the level of termsof-trade risk that a nation faces in international markets, the more likely it is to increase barriers. The analysis also shows that the greater the availability of social insurance programs mounted by a nation's government, the less likely it is to block free trade. In comparison with the small open economies of Western Europe, therefore, developing countries may remain protectionist because they lack the resources to mount internal programs of transfer payments as a means of coping with risk from international markets.

Analysts have commonly argued that there has been a decline in international coordination of the kinds of policies that governments can use to manage the international payments imbalances that emerge when different governments pursue different macroeconomic policies. The decline typically has been attributed to a posited decline in American hegemony. In contrast, this article argues that international coordination of macroeconomic adjustment policies (trade and capital controls, exchange rate policies, balance-of-payments financing, and monetary and fiscal policies) was at least as extensive for much of the 1980s as it had been in the 1960s. There was, however, a shift away from coordination of balance-of-payments financing and other policies that have limited direct consequences for domestic economic and political conditions and a concurrent shift toward coordination of monetary and fiscal policies that are critically important for domestic politics and economics. This change is best explained as a consequence of changes in the structure of the international economy. Most important, international capital market integration encouraged governments to coordinate monetary and fiscal policies because balance-of-payments financing and exchange rate coordination alone are insufficient to manage the enormous payments imbalances that emerge when capital is able to flow internationally in search of higher interest rates and appreciating currencies.

The unexpected approval in 1986 of the Single European Act and its program for completing the European Community's internal market by 1992 did not, according to the historical data presented in this article, result from an elite alliance of the European Community Commission, European Parliament, and pan-European business groups. Instead, it rested on interstate bargains involving Britain, France, and Germany, for which the two essential preconditions were the convergence of European economic policy prescriptions following the French turnaround in 1983 and the bargaining leverage that France and Germany gained by threatening to create a “two-track” Europe and exclude Britain. This suggests that theories stressing supranational factors, including certain variants of neofunctionalism, should be supplanted by an “intergovernmental institutionalise” approach combining a realist emphasis on state power and national interests with a proper appreciation of the important role of domestic factors in determining the goals that governments pursue.

The international political economy literature on regimes has focused on relations among the industrialized Western countries. Despite the increasing participation of East European countries in international economic organizations, the literature has neglected the subject of East–West economic relations. To redress this void in the literature, this article assesses the extent to which and the conditions under which realism, mercantilism, and regime theory help explain the Western positions toward negotiations between East European countries and the General Agreement on Tariffs and Trade (GATT). It argues that a thorough explanation requires drawing on insights from all three modes of analysis: realism provides a useful starting point and sets the context, while mercantilism and regime theory enrich the explanation in circumstances in which political issues concerning security subside and trade policy issues surface.

In comparative research on industrial policy strategies, attention has shifted from national-level variables to sectoral variables in both the description and the explanation of policy. The sectoral literature, however, lacks analytic focus and has provided little systematic insight into the causes of cross-sectoral variance in governance structures and policy strategies. Based on recent contributions to the economics and sociology of formal organizations, this article attempts to sharpen the concept of “industrial sector” and to provide a rationale for why sectoral structures and strategies vary. Next, it develops a synthetic explanatory framework that combines sectoral analysis and national domestic structuralism in order to account for industrial innovation strategies in advanced capitalist countries. In the final section, the fruitfulness of this approach is illustrated by developing a new account of Japan's success and failure in industrial innovation, an account that overcomes the contradictions among the main alternatives offered in the past. The key objective of the article, however, is to develop a new set of theoretical hypotheses for cross-national research, not a rigorous empirical test of its main propositions.

The political economy of trade policy has largely neglected popular elections. When legislatures determine protection, politicians supply tariffs that are demanded by their constituents. A model of this political market is specified and tested with data related to the McKinley Tariff of 1890. An index of the extent to which tariff protection accrued to individual congressional districts is applied, along with demand and supply variables, to three questions: Did representatives supply tariffs to their districts as the model predicts? Did they vote in accordance with the district tariff interest in the roll-call vote on the McKinley Tariff? Did electors reward representatives for the district tariff protection in a manner consistent with a political market model? Empirical estimations based on the model provide answers that are generally affirmative and appear to be inconsistent with the traditional view that the Republican defeat in 1890 was a result of the McKinley Tariff.

Over the past century, Germany has repeatedly attempted to use trade as a tool of foreign policy vis-à-vis Imperial Russia, the Soviet Union, Poland, and Czechoslovakia. Against the background of continual German economic superiority, this article analyzes Germany's ability to apply trade leverage in terms of four other factors: the nature of the prevailing international trade regime, government views of trade leverage as a tool of statecraft, the degree of German state autonomy in setting trade policies, and the availability of an effective bureaucratic mechanism for controlling German imports and exports. The historical record demonstrates that beyond economic superiority, the application of trade leverage requires a permissive international trade regime, state acceptance of trade-based economic statecraft, an autonomous domestic regime, and a rigorous trade control bureaucracy. Surprisingly, this conjunction of factors, as they applied to Eastern Europe, occurred during both the Nazi period and the early years of the Federal Republic. The article closes by pointing out how two important factors—the politicized nature of the East-West trade regime and the Federal Republic's high degree of state autonomy in setting Eastern trade policy–are being eroded by political and economic change in Eastern Europe.

Contributors to the literature on international organization (IO) have traditionally been overly optimistic about the ability of multilateral management to stabilize in-ternational relations and have tended to ignore the destabilizing effects of IO. While recent revisionist scholarship has acknowledged both the potential for organizational failure and the conditionality of management, it has tended to focus on how IO fails within specific issue-areas and institutions. This article offers a typology of the inherent (systematic) failures of IO across issue-areas and institutions and thereby seeks to bridge the gaps in our understanding of why many different institutions and managerial schemes have adverse effects. It argues that IO is prone to failure (1) when it attempts to manage complex, tightly coupled systems of relations and issues; (2) when it serves as a substitute either for more substantive and long-term resolutions to international problems or for responsible domestic or foreign policy; (3) when it intensifies international disputes; and (4) when it generates moral hazard. In offering a general theoretical approach to understanding the destabilizing effects of IO, the analysis is intended to serve both as a focal point for understanding critical approaches to the study of IO and as an alternative rationale for eliminating the excesses of multilateral management.

Informal agreements are the most common form of international cooperation and the least studied. Ranging from simple oral deals to detailed executive agreements, they permit states to conclude profitable bargains without the formality of treaties. They differ from treaties in more than just a procedural sense. Treaties are designed, by long-standing convention, to raise the credibility of promises by staking national reputation on their adherence. Informal agreements have a more ambiguous status and are useful for precisely that reason. They are chosen to avoid formal and visible national pledges, to avoid the political obstacles of ratification, to reach agreements quickly and quietly, and to provide flexibility for subsequent modification or even renunciation. They differ from formal agreements not because their substance is less important (the Cuban missile crisis was solved by informal agreement) but because the underlying promises are less visible and more equivocal. The prevalence of such informal devices thus reveals not only the possibilities of international cooperation but also the practical obstacles and the institutional limits to endogenous enforcement.

The theoretical and empirical literature on international alliances has tended to support the realist view that the pursuit or tightening of external alignments stems predominantly from external security threats. Consequently, the role of domestic factors has generally been ignored or downplayed. This article begins with the observation that leaders confronted with external threats make trade-offs between the pursuit of external alignments and the mobilization of domestic resources. It then argues that the choice of strategy depends on a combination of systemic and domestic factors, including the perceived degree of external threat to state security, the perceived degree of domestic instability and threat to the government, and the constraints that derive from the domestic political economy. The analysis of Egypt's alignment behavior during the period from 1962 to 1973 underscores the impact of domestic and economic political constraints on the choice of domestic mobilization or alliance formation and the central role of alliances in providing resources for confronting domestic as well as foreign threats.

Concepts from bargaining theory and neorealist theory are integrated in a partners-and-rivals (PAR) model that explains the terms of collaboration between rational actors (for example, firms) that are potential competitors. The model contends that the stronger player's incentive to collaborate is determined not only by its interest in absolute welfare benefits from collaboration but also by its concern about and loss of utility from unfavorable shifts in relative position vis-à-vis the weaker player. Two propositions are derived from the model. According to the disparity principle, the stronger player's net payoff from collaboration (the sum of its welfare benefits and positional costs) is a function of the disparity in capabilities between the two players. The net payoff curve is low when the disparity in capabilities is large, reaches an optimum when the disparity is moderate, and then falls again as the disparity approaches zero. The slope of the curve is also affected by a coefficient, α, which reflects the stronger player's sensitivity to positional losses. According to the compensation principle, for collaboration to arise, the weaker player must make an adjustment in the terms of the bargain, or a side-payment, to compensate the stronger player for its positional losses from collaboration. The validity of the PAR model is tested by comparing Franco-German collaboration on military aircraft in two cases, one in which the disparity in capabilities between the players was moderate and the other in which the disparity was small.

Heightened economic interdependence in recent years is commonly argued to have generated great pressures for convergence in economic policies across the advanced industrial democracies. Interdependence has clearly had a great impact on the types of economic policies that governments can pursue: they have been unable to pursue independent fiscal and monetary policies since the mid-1970s. Furthermore, all governments have been forced to attempt to promote the competitiveness of national goods and services in world markets and to increase the speed and efficiency with which national producers adjust to changes in global markets. There are, however, different policies consistent with these goals. Statistical analyses of economic policies since the mid-1970s show that governments of the left and the right continue to be able to enact distinctive supply-side policies that promote competitiveness and flexible adjustment and simultaneously further their partisan objectives.

Most debate about the efficacy of orthodox stabilization programs, such as those of the International Monetary Fund, has been fruitless. First, rarely are these programs fully implemented or sustained for long periods. Second, defenders and critics of the programs hold differing premises about the nature of capitalist economies. The debate is therefore not about the appropriate balance of supply-and demand-side measures but, rather, about what sort of supply- and demand-side measures will address the supply- and demand-side problems that each group perceives. The results of an orthodox stabilization program which incorporated demand- and supply-side elements and which was fully implemented and sustained by the New Zealand government from 1984 to 1990 reveal the limits to orthodox programs. New Zealand, a primary product exporter, suffers from a structural imbalance of payments and from an external debt burden equal in scale to that of the Latin American and other highly indebted less developed countries (LDCs), but it does not have the serious supplyside constraints on growth that critics claim typify underdeveloped economies. This makes New Zealand an appropriate test of the typical orthodox stabilization program. Despite the fact that its administrative capacity, political will, domestic support, and access to external resources were far in excess of those of the typical would-be LDC stabilizer, New Zealand achieved only a precarious macroeconomic and international payments stability. Moreover, as the case of New Zealand demonstrates, inflation control and financial liberalization policy components of orthodox plans have contradictory consequences for payments balance. This suggests that long-term stabilization, in New Zealand and elsewhere, cannot be achieved solely by internal reforms.

To reduce its strategic vulnerability, a small state may enter into a cliency relationship with a more powerful state. Among the consequences of cliency for the small state are the acquisition of resources, which can be used against threatening neighbors as well as against domestic populations, and the reduction of autonomy. In 1899, Mubarak, Kuwait's ruler, entered a cliency relationship with Britain. As a result, Kuwait was able to avoid incorporation into the Ottoman Empire. Although Mubarak and subsequent Kuwaiti rulers lost their foreign policy autonomy, they acquired resources enabling them to enhance their domestic autonomy by suppressing elite groups that were formerly integral participants in governing Kuwait. In 1961, oil revenues enabled Kuwait's rulers to end the cliency relationship and to provide their own resources for repressing or pacifying domestic groups. But the fact that oil revenues proved less effective than cliency in maintaining Kuwait's strategic security illustrates the fundamental security dilemma faced by all small states, even rich ones.