Showing papers in "International Organization in 2002"

Why Democracies Cooperate More: Electoral Control and International Trade Agreements

Abstract: Over the past fifty years, barriers to international trade have decreased substantially. A key source of this decline in protectionism has been the proliferation of agreements among countries to liberalize commerce. In this article, we analyze the domestic political conditions under which states have concluded such agreements and, more generally, explore the factors affecting interstate economic cooperation. We argue that interstate cooperation on commercial issues depends heavily on the political regime types of participants: as states become more democratic, they are increasingly likely to conclude trade agreements. To test our claim, we examine whether the regime types of states have influenced their propensity to form and expand preferential trading arrangements (PTAs) during the period since World War II. We find that democratic countries are about twice as likely to form a PTA as autocratic countries, and that pairs of democracies are roughly four times as likely to do so as autocratic pairs. These results provide strong evidence that democracies are more commercially cooperative than less democratic countries.

In the Shadow of Law or Power? Consensus-Based Bargaining and Outcomes in the GATT/WTO

Abstract: This article explains how consensus decision making has operated in practice in the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO). When GATT/WTO bargaining is law-based, consensus outcomes are Pareto-improving and roughly symmetrical. When bargaining is power-based, states bring to bear instruments of power that are extrinsic to rules, invisibly weighting the process and generating consensus outcomes that are asymmetrical and may not be Pareto-improving. Empirical analysis shows that although trade rounds have been launched through law-based bargaining, hard law is generated when a round is closed, and rounds have been closed through power-based bargaining. Agenda setting has taken place in the shadow of that power and has been dominated by the European Community and the United States. The decision making rules have been maintained because they help generate information used by powerful states in the agenda-setting process. Consensus decision making at the GATT/WTO is organized hypocrisy, allowing adherence to the instrumental reality of asymmetrical power and the sovereign equality principle upon which consensus decision making is purportedly based.

Globalization and the Decline of the Welfare State in Less-Developed Countries

Abstract: Why have trends in government welfare spending in developing countries diverged from those in developed countries? I address this question by investigating the effects of capital and trade flows on government welfare spending in fifty-three developing countries. Using an original measure of labor power in developing countries, I test the links between international markets, labor's political strength, and the welfare state. I argue that labor's collective-action problems, caused by large populations of low-skilled and surplus workers, offset labor's potential political gains from globalization. I show that when the proportion of low-skilled workers in a nation is high, globalization will lead to a decline in welfare spending. Most significantly, the results suggest that in nations where labor-market institutions are not yet well developed, government social-welfare spending is constrained by international market, forces.

Democracy from the Outside-In? International Organizations and Democratization

Abstract: Scholars and policymakers alike have recently begun to tout the ability of international organizations (IOs) to encourage and secure democracy throughout the world. Despite this stance, little theoretical attention or empirical investigation has attempted to ascertain why or whether this relationship truly exists. One challenge to answering this puzzle is that extant theories of international institutions do not generally delineate clear hypotheses about how IOs influence domestic politics. In this article, I address this paucity of both theory and empirical evidence. I delineate three causal mechanisms that link IOs to domestic actors' calculations about political liberalization and test the argument. I find that membership in regional IOs is correlated with transitions to democracy during the period from 1950 to 1992.

Paths to Compliance: Enforcement, Management, and the European Union

Abstract: In recent years, the question of what determines compliance with international regulatory agreements has gained an increasingly prominent position on the research agenda through a burgeoning literature on international regime effectiveness and international legal systems. The contemporary debate is framed in terms of two alternative perspectives on compliance: enforcement or management. The two perspectives present contending claims about the most effective means of addressing non-compliance in international cooperation. Whereas enforcement theorists characteristically stress a coercive strategy of monitoring and sanctions, management theorists embrace a problem-solving approach based on capacity building, rule interpretation, and transparency. (Less)

Sabotaging the Peace: The Politics of Extremist Violence

Abstract: Why are extremists able to sabotage peace processes in some cases but not others? And under what conditions will the public respond to such provocation and return to unpopular wars? We seek to show that extremist violence is not indiscriminate or irrational as many people have assumed but quite strategic. We argue that extremist violence intentionally plays on the uncertainty that exists between the more moderate groups who are attempting to negotiate a peace agreement. Using a game-theoretic model of the interaction of extremist violence and mistrust, we identify the conditions under which extremists will succeed and fail. We find that extremists are most likely to succeed in derailing a peace process when the targeted side believes that opposition moderates are strong. At these times, the public perceives moderates as best able to control and suppress extremists within their own ranks. When moderates are viewed as weak and unable to crack down on extremists, terrorism is more likely to fail. We discuss this finding, as well as a number of additional implications of the model, in connection with the IsraeliÐPalestinian case.

Why Is There No NATO in Asia? Collective Identity, Regionalism, and the Origins of Multilateralism

Abstract: Regional groupings and regional effects are of growing importance in world politics. Although often described in geographical terms, regions are political creations and not e xed by geography. Even regions that seem most natural and inalterable are products of political construction and subject to reconstruction attempts. Looking at specie c instances in which such constructions have occurred can tell us a great deal about the shape and the shaping of international politics. In the aftermath of World War II, the United States attempted to create and organize both a North Atlantic and a Southeast Asian region. The institutional forms of these regional groupings, however, differed dramatically. With its North Atlantic partners, the United States preferred to operate on a multilateral basis. With its Southeast Asian partners, in contrast, the United States preferred to operate bilaterally. Why? Perceptions of collective identity, we argue, played an underappreciated role in this decision. Shaped by racial, historical, political, and cultural factors, U.S. policymakers saw their potential European allies as relatively equal members of a shared community. America’ s potential Asian allies, in contrast, were seen as part of an alien and, in important ways, inferior community. At the beginning of the Cold War, this difference in mutual identie cation, in combination with material factors and considerations of efe ciency, was of critical importance in dee ning the interests and shaping the choices of U.S. decision makers in Europe and Asia. Different forms of cooperation make greater or lesser demands on shared identities. Multilateralism is a particularly demanding form of international coop

Trade, Democracy, and the Size of the Public Sector: The Political Underpinnings of Openness

Abstract: Politics remains prominently absent in the literature showing that higher levels of trade integration lead to a larger public sector. As openness increases, the state, acting as a social planner, adopts a salient role to minimize the risks of economic integration and secure social peace. Given the highly redistributive nature of both trade and fiscal policies, we claim, however, that the interaction of the international economy and domestic politics leads to three distinct political-economic equilibria. First, nations may embrace protectionist policies to shore up the welfare of key domestic sectorsNwithout engaging, therefore, in substantial public spending. Second, to maintain trade openness in democracies, policymakers develop compensation policies to muster the support of the losers of openness. Finally, given the tax burden of public compensation, pro-free trade sectors may impose an authoritarian regime to exclude (instead of buying off) their opponents. After formally stating the conditions under which each regime emerges, we test the model on a panel data of around sixty-five developing and developed nations in the period 1950Ð1990 and explore its implications through a set of key historical cases drawn from the last two centuries.

Democratic Transitions, Institutional Strength, and War

Abstract: The relationship between democratization and war has recently sparked a lively debate We find that transitions from autocracy that become stalled prior to the establishment of coherent democratic institutions are especially likely to precipitate the onset of war This tendency is heightened in countries where political institutions are weak and national officials are vested with little authority These results accord with our argument that elites often employ nationalist rhetoric to mobilize support in the populist rivalries of the poorly-institutionalized democratizing state but then get caught up in the belligerent politics that this process eventually unleashes In contrast, we find that transitions that quickly culminate in a fully coherent democracy are much less perilous Further, our results refute the view that transitional democracies are merely the targets of attack due to their temporary weakness: in fact, they tend to be the initiators of war We also refute the view that any regime change is likely to precipitate the outbreak of war: transitions toward democracy are significantly more likely to generate hostilities than transitions toward autocracy

Political System Transparency and Monetary Commitment Regimes

Abstract: Central bank independence (CBI) and fixed exchange rates are alternative monetary commitments that differ in transparency. While CBI is opaque and difficult to monitor, a commitment to a fixed exchange rate is easily observed. Political systems also vary in terms of transparency. I argue that the transparency of monetary commitments and the transparency of political systems are substitutes. Where political decision making is opaque (autocracies), governments must look to a commitment that is more transparent and constrained (fixed exchange rates) than the government itself. The transparency of the monetary commitment substitutes for the transparency of the political system to engender low inflation. Where the political process is transparent (democracies), a formal commitment to CBI can produce lower inflation because private agents and the political opposition are free to detect and punish government interference with the central bank. Statistical results indicate that (1) autocracies are more likely to adopt exchange-rate pegs than democracies, and (2) CBI is effective in limiting inflation in nations with high levels of political transparency.

Showing Ideas as Causes: The Origins of the European Union

Abstract: Why did Western Europe create uniquely strong international institutions in the 1950s, setting the foundations for today's quasi-federal European Union? This article contests explanations of the European Economic Community (EEC) as a straightforward response to structural interdependence, or as an institutionally “path-dependent” variation on such a response. Only leadership based on certain ideas explains why Europeans created the EEC rather than pursuing cooperation within weaker institutions or standard diplomatic instruments. In France—the only major state that insisted on the “community” framework—divided preferences and issue-linkages created “multiple equilibria” that allowed leaders to mobilize support for several European strategies. The EEC strategy was selected over viable alternatives by leaders who stood out from their party, bureaucratic, sectoral, and regional allies in holding certain ideas about Europe. This demonstration of the major, distinct impact of ideas offers concrete support to the growing theoretical literature on ideas and norms.

The Political Economy of Monetary Institutions

Abstract: In recent decades, countries have experimented with a variety of monetary institutions, including alternative exchange-rate arrangements and different levels of central bank independence. Political economists have analyzed the choice of these institutions, emphasizing their role in resolving both the time-inconsistency problem and dilemmas created by an open economy. This "first-generation" work, however, suffers from a central limitation: it studies exchange-rate regimes and central bank institutions in isolation from one another without investigating how one monetary institution affects the costs and benefits of the other. By contrast, the contributors to this volume analyze the choice of exchange-rate regime and central bank independence together and, in so doing, present a "second generation" of research on the determinants of monetary institutions. The articles incorporate both economic and political factors in explaining the choice of monetary institutions, investigating how political institutions, democratic processes, political party competition, and interest group pressures affect the balance between economic and distributional policy objectives.

Tax Havens and the Commercialization of State Sovereignty

Abstract: Over the past three decades there has been a spectacular rise in the number of microstates serving as tax havens and bogus locations for actual or phantom corporations. Most, but not all, of these havens — these “paradis fisscaux” as the French, with some irony, call them are small tourist resorts. Of the seventy or so tax havens identi ed in recent counts, most serve as mere booking centers for the larger nancial centers of London, Tokyo, and New York. Yet the combined effect of tax havens on the world economy is staggering: According to some estimates, as much as half of the world's stock of money either resides in tax havens or passes through them.

In View of Ratification: Governmental Preferences and Domestic Constraints at the Amsterdam Intergovernmental Conference

Abstract: The bargaining product of the Amsterdam Intergovernmental Conference-the Amsterdam Treaty-dwindled down the draft proposal to a consensus set of all fifteen member states of the European Union (EU). Using the two-level concept of international bargains, we provide a thorough analysis of how this consensus set was reached by issue subtraction with respect to domestic ratification constraints. Drawing on data sets covering the positions of all negotiating actors and ratifying national political parties, we first highlight the differences in the Amsterdam ratification procedures in the fifteen member states of the EU. This analysis allows us to compare the varying ratification difficulties in each country. Second, our empirical analysis of the treaty negotiations shows that member states excluded half of the Amsterdam bargaining issues to secure a smooth ratification. Because member states with higher domestic ratification constraints performed better in eliminating uncomfortable issues at the Amsterdam Intergovernmental Conference, issue subtraction can be explained by the extent to which the negotiators were constrained by domestic interests.

Bad Loans to Good Friends: Money Politics and the Developmental State in South Korea

Abstract: Why has the literature on Asian development not addressed the issue of money politics in South Korea? How can we reconcile the view of an efficient developmental state in South Korea before 1997 with reports of massive corruption and inefficiency in that same country in 1998 and 1999? Politics is central to the answer. In this study I make two arguments. First, money politics was extensive in South Korea both during and after the high-growth era. Second, political—not economic—considerations dominated policymaking. This study explains both past and present and compares the patterns of money politics in the early post-independence era with those that arose after the democratic transition in 1987. While during the Park era a balance of power between businessmen and politicians kept corruption from spinning out of control, the transition to democracy altered the basic business-state relationship, allowing business to exert greater influence over policy decisions. The political hypothesis advanced in this study suggests a new direction for our research about the developmental state.

The Might of the Pen: A Reputational Theory of Communication in International Disputes

Abstract: I present a theory of effective diplomacy based on honesty and reputations. I model diplomacy as a form of "cheap talk" and international interactions as an infinitely repeated game in which similar states find themselves in disparate situations over time. The theory explains the success and failure of diplomacy. Reputations for honesty make honest communication possible. A state caught bluffing is less able to communicate and less likely to attain its goals in the near future. These findings imply that domestic audience costs are unnecessary for international signaling and that military strength is not the only way to build credibility.

Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration

Abstract: In the thirty years before Economic and Monetary Union was achieved, European currency policies varied widely among countries and over time. In this article, I argue that the sectoral impact of regional exchange-rate arrangements, in particular their expected real effects on European trade and investment, exerted a powerful influence on the course of European monetary integration. The principal benefit of fixing European exchange rates was facilitation of cross-border trade and investment within the European Union (EU); the principal cost of fixed rates was the loss of national governments' ability to use currency policy to improve their producers' competitive position. Empirical results indeed indicate that a stronger and more stable currency was associated with greater importance of manufactured exports to the EU's hard-currency core, while depreciations were associated with an increase in the net import competition faced by the country's producers. This suggests a powerful impact of real factors related to trade and investment, and of private interests concerned about these factors, in determining national currency policies.

Ethnic Bargaining in the Shadow of Third Party Intervention

Abstract: Relatively weak ethnic groups mobilize and rebel against their governments just as frequently (or infrequently) as strong ones. However, such seemingly irrational behavior is not inconsistent with a rationalist approach to ethnic separatism. A bargaining model that treats all the relevant actors as strategic players suggests that power disparities between an ethnic minority and the state—including those based on a group's access to third-party intervention—should affect how the state treats the group but not the likelihood that the group rebels against the state. Greater mistreatment by the state should not be correlated with greater external intervention on a group's behalf. New empirical support for the model is drawn from the Minorities at Risk data set, and the discussion has implications for the field of international relations beyond ethnic conflict to extended deterrence more generally.

Policy Learning in Embedded Negotiations: Explaining EU Electricity Liberalization

Abstract: Taking the example of the liberalization of the electricity supply industy, I analyze member-state negotiations in the European Union (EU). Confronting central tenets of the intergovernmental approach, I suggest that member-state executives act within the limits of bounded rationality and do not always hold clear and fixed preferences. I focus on the large member states Germany, France, and the United Kingdom and identify four institutional mechanisms that support outcomes above the least common denominator: (1) the role of norms that constrain strategic action and frame the negotiations, (2) the empowerment of supranational actors, (3) the decision routines of the Council of the European Union that provide standardized mechanisms for resolving conflicts and induce policy learning and preference changes, and (4) the vertical differentiation within the Council system that can unblock issue-specific controversies. Even if as a result of these techniques EU legal acts contain several flexibilization elements, they can trigger behavioral changes that clearly surpass their regulatory content.

Veto Players and the Choice of Monetary Institutions

Abstract: I argue that two types of veto players matter in the choice of monetary institutions: party veto players and subnational governments, which are strong in federal systems but weak in unitary systems. A crucial issue is whether voters can readily identify the manipulation of the economy with party players. A second issue concerns the national party veto player's ability to control either fiscal or monetary policy. In one-party unitary governments identification and control are clear; parties where such governments are common prefer flexible exchange rates and dependent central banks. In multiparty coalition governments in unitary systems, identification is traditionally difficult, and the ability to target benefits to specific constituencies under fiscal policy makes fiscal policy autonomy more attractive for coalition governments. Such governments prefer central banks that are politically independent but that finance government debt. Under federalism, parties that constitute the central government have less control over fiscal policy and they prefer flexible exchange rates. Subnational governments do not support a dependent central bank that gives more power to the central government.

The Foreign Imposition of Domestic Institutions

Abstract: International relations research has paid little attention to why states often spend precious resources building and maintaining domestic institutions in other states. I identify 198 cases of forcible domestic institutional promotion, the most costly form of such interventions, between 1555 and 2000. I note several patterns in the data: these interventions come in three historical clusters; they are carried out by states of several regime types; states engage in the practice repeatedly; target states tend to be undergoing internal instability; states tend to promote their own institutions; and targets tend to be of strategic importance. The most intensive periods of promotion coincide with high transnational ideological tension and high international insecurity. I argue that these two conditions interact: forcible promotion is most likely when great powers (1) need to expand their power; and (2) find that, by imposing on in smaller states those institutions most likely to keep their ideological confreres in power, they can bring those states under their influence. Although in periods of high insecurity domestic variables alone may account for institutional impositions, such impositions may nonetheless extend the promoting states' influence and thereby alter the balance of international power.

Anarchy and culture: insights from the anthropology of war

Abstract: Some prominent scholars and public activists contend that a fundamental change in the nature of world politics can be brought about through efforts to change prevailing culture, norms, and ideas. In this view, behavior in anarchy is what the prevailing culture makes of it, since social reality is, in Alexander Wendt's words, "ideas almost all the way down." Anthropologists studying the causes of war in pre-industrial anarchies have tested this hypothesis extensively. Their research shows that war behavior cannot be reduced to either material factors or culture alone. Rather, material, institutional, and cultural elements must all be taken into account simultaneously in assessing an anarchical society's propensity for war and in designing strategies to promote change. Models of nested causality or of interaction effects between variables can sometimes capture these causal interrelationships, but they cannot capture nonlinear system effects that often play a prominent role. Patterns found in anthropological research can serve as a heuristic for understanding the democratic peace and processes of contemporary international cultural change.

Political Parties and Monetary Commitments

Abstract: We argue that political parties will choose monetary institutions in order to help them win elections and retain office. Increased levels of economic openness in the industrial democracies have complicated the pursuit of office by altering the policy preferences of constituents and decreasing the ability of cabinet ministers to deliver promised economic outcomes. We contend that monetary commitments can help political parties manage diverse constituent interests, restore policy effectiveness, and, ultimately, maintain their position in office. Therefore, we expect that fixed exchange rates and central bank independence can improve cabinet durability, especially under conditions of economic openness. In the first section, we discuss how fixed exchange rates and central bank independence can insulate cabinets from the political shocks of increased economic openness. To determine the political value of these commitments, we then test the effect of exchange-rate commitments and central bank independence on cabinet durability in the second section. In the third section, we use the results of our statistical models to generate expected cabinet durability for the countries in our sample under alternative institutional configurations. By comparing the expected durabilities, we show that most monetary reforms have helped (or at least not hurt) expected cabinet durability.

Delegation, Comitology, and the Separation of Powers in the European Union

Abstract: Although relatively unknown outside of Europe, comitology committees are an object of considerable controversy in the European Union (EU). Controversy stems from their pivotal role in overseeing policy implementation authority delegated from the Council of Ministers (Council) to the European Commission (Commission). In this article, we employ a game-theoretic model to analyze the influence of these committees on policy outcomes. Our analysis provides three important insights. First, we show that, contrary to the conventional wisdom, comitology committees move outcomes toward the Commission's preferred policies rather than the Council's. Second, we demonstrate that the possibility of a Council veto may also move outcomes away from Council members' policy preferences and toward the Commission's. Third, the 1999 changes to the comitology procedures, designed to enhance the Commission's autonomy in policymaking, may have had the exact opposite effect. Paradoxically, we conclude that comitology serves to enhance the Commission's role in policy implementation and thereby strengthens the separation of powers within the EU.

Partisan and Electoral Motivations and the Choice of Monetary Institutions Under Fully Mobile Capital

Abstract: Central bank independence and pegged exchange rates have each been viewed as solutions to the inflationary bias resulting from the time inconsistency of discretionary monetary policy. While it is obvious that a benevolent social planner would opt for such an institutional solution, it is less obvious that a real-world incumbent facing short-term partisan or electoral pressures would do so. In this article, I model the choice of monetary institutions from the standpoint of a survival-maximizing incumbent. It turns out that a wide range of survival-maximizing incumbents do best by forfeiting control over monetary policy. While political pressures do not, in general, discourage monetary commitments, they can influence the choice between fixed exchange rates and central bank independence. I highlight the importance of viewing fiscal policy and monetary policy as substitutes and identify the conditions under which survival-maximizing incumbents will view fixed exchange rates and central bank independence as substitutes. In so doing, I provide a framework for integrating other contributions to this volume.

Competing Commitments: Technocracy and Democracy in the Design of Monetary Institutions

Abstract: In this article, I refine and expand the agenda for research on monetary institutions. First, I evaluate the analyses and research designs presented in this special issue of International Organization. Out of this evaluation, several ideas about how to produce a "third generation" of research on this topic emerge. Specific ideas include how to: create a better synthesis with certain branches of economics, such as information economics; broaden the welfare criteria on which institutional choices are made; deepen the analyses of coalitional and other political processes on which the choice of institutions are based; and strengthen the tests that are offered in support of these choices. In the second part of this article, I explore questions of how popular sovereignty over economic policy and institutional choice are achieved. I show that the institutional regimes proposed in the special issue are, in a sense, democratic as long as the public's "perceived consensus" about economic policies and macroeconomic outcomes is real. However, if, as new work suggests, there is genuine dissensus about policy and macroeconomic objectives, it is no longer clear that the regimes proposed in the special issue are democratic. In the conclusion, I briefly discuss a possible crisis of imagination in institutional design.

The Long Peace: A Reconsideration

Abstract: In this article, we reconsider the rarity of the Long Peace in the light of a probability model that targets the collective experience of major powers. Our examination shows that consecutive periods of peace equal to the forty-two years of the so-called Long Peace are not uncommon over the past eighteen decades—these periods occurred slightly more than 30 percent of the time. The period between 1816 and 1913 actually contains less war involvement by major powers than the period of the putative Long Peace. Our analysis demonstrates that long periods of major power peace are not unusual; periods of major power war are more exceptional than normal. Thus we conclude that the Long Peace is not rare and that its role in evaluating theories of war is misleading.

International and domestic constraints on political business cycles in OECD economies : A comment

Abstract: We attempt to assess the effect of monetary policy in a panel model for 16 member countries of the Organization for Economic Cooperation and Development (OECD). To answer the question of whether central banks actively create political business cycles, we focus on the short-term interest rate as a proxy for the use of monetary instruments. Our results indicate that central banks do not create political business cycles. This conclusion holds whether or not central banks are independent and whether or not they are constrained by the exchange-rate system in force.