The United States faces a formidable and growing economic challenge from Japan. Over the last decade, the American state has characteristically responded to the loss of domestic market dominance in the manufacturing sector to foreign firms by invoking the principles of free and fair trade in order to delegitimate this foreign competition and legitimate the imposition of trade barriers designed to encourage the investment of multinational corporations (MNCs) in the United States. These tactics have largely succeeded in attracting investment and thus aided domestic employment and the balance of trade. The short-term benefits, however, have been achieved at long-term, unforeseen, undesirable economic and political costs in terms of both the balance of payments and state autonomy. Alternative state responses to the threat posed by Japanese MNCs, while consistent with principles of free trade, challenge the traditional liberal conception of the scope and domain of state behavior and provide more effective policies in achieving both short- and long-term objectives. This article draws on data relating to the treatment of subsidiaries of American automobile manufacturers by European governments with competing indigenous producers in specifying two variables critical to identifying policy alternatives: first, the degree of access granted by the state to foreign firms (limited or unlimited access) and, second, the type of support provided by the state to domestic firms (discriminatory or nondiscriminatory intervention). The analysis suggests that there are four possible policy combinations, which generally reflect the four different postwar state policies pursued by West Germany, France, Britain, and the United States. Of these four, the combination employed by West Germany has proved most effective in pursuing policies consistent with liberal trade principles while reconciling short-term employment and fiscal goals with the broader long-term objectives of sustaining state autonomy and balance-of-payments surpluses in the face of foreign competition. British policies, which have consistently proved the most ineffective, have sacrificed long-term objectives for short-term ones. As a result of structural changes during the 1970s, the American state's chosen policy combination was altered and now replicates the traditional British formula. The United States therefore risks comparable economic and political consequences.

One challenge facing hegemonic stability theory is to specify the processes by whichhegemonic countries construct and maintain a liberal international economic order. Earlier studies have focused on direct coercion or ideological manipulation by the hegemon as a principal technique for manipulating the trade policies of other countries. This article explores a different “face” of hegemony. Specifically, we contend that by altering relative prices through the exercise of their international market power, hegemonic leaders influence the trade policy preferences of their foreign trading partners. We examine this argument in the case of the American Walker Tariff of 1846. American tariff liberalization was intimately related to Britain's repeal of its Corn Laws. In the antebellum United States, Northern protectionist and Southern free trade proclivities were fixed; Western grain growers held the balance of power. By allowing access to its lucrative grain market, Britain altered the economic and political incentives of Western agriculturalists and facilitated the emergence of the free trade coalition essential to the passage of the Walker Tariff.

Why do actors in international society succeed in forming institutional arrangements or regimes to cope with some transboundary problems but fail to do so in connection with other, seemingly similar, problems? This article employs a threefold strategy to make progress toward answering this question. The first section prepares the ground by identifying and critiquing the principal models embedded in the existing literature on regime formation, and the second section articulates an alternative model, called institutional bargaining. The third section employs this alternative model to derive some hypotheses about the determinants of success in institutional bargaining and uses these hypotheses, in a preliminary way, to illuminate the process of regime formation in international society. To lend empirical content to the argument, the article focuses throughout on problems relating to natural resources and the environment.

Alternative explanations for the formation of U.S. foreign economic policy are explored using the acrimonious but inconclusive conflict between the United States and its largest South American ally over Brazil's restrictive policies toward the computer industry. After comparing a post-dependency/bargaining perspective, the theory of hegemonic stability, and Stephen Krasner's structural conflict model, the article argues that systemic perspectives on foreign economic policy must be complemented by an account of the interaction between the effects of international position and the dynamics of domestic politics. The resulting politicized state-centric approach, which integrates interest-based politics and ideologically defined state aims, is proposed as a means of more fully understanding the dilemmas of a declining hegemon.

Since the close of World War II, the United States has supported contradictory tradepolicies. In manufacturing, the United States has fostered a liberal trade regime, spurning government involvement in market transactions. In agriculture, it has sanctioned policies of import restrictions, export subsidies, and import fees. This variation is rooted in decisions that were made in the 1930s and institutionalized in the 1940s. In the wake of the Great Depression, policymakers concluded that state intervention helped agriculture and hurt industry. This article argues that the choice of government policy and its appropriateness to the economic problems faced by each sector reflect the accepted knowledge at the time. Neither liberalization nor subsidization was inevitable; both were economically viable options. However, central decision-makers made choices that were often based on inaccurate beliefs about the utility of different policy options.

International regimes have received increasing attention in the literature on international relations. However, little attention has been systematically paid to how compliance with them has been achieved. An analysis of the Mediterranean Action Plan, a coordinated effort to protect the Mediterranean Sea from pollution, shows that this regime actually served to empower a group of experts (members of an epistemic community), who were then able to redirect their governments toward the pursuit of new objectives. Acting in an effective transnational coalition, these new actors contributed to the development of convergent state policies in compliance with the regime and were also effective in promoting stronger and broader rules for pollution control. This suggests that in addition to providing a form of order in an anarchic international political system, regimes may also contribute to governmental learning and influence patterns of behavior by empowering new groups who are able to direct their governments toward new ends.

Economic interdependence complicates domestic policymaking by interposing the decisions of foreigners in the loop that links policy instrument settings to economic outcomes. Nowhere was this vulnerability to external decisions demonstrated more forcefully—even for the world's major economies—than by the energy supply shocks of 1973 and 1979. The oil shocks posed challenges that offer unusual insight into the way nations choose policies: their severity forced a policy response; their unpredictable timing and (at least in 1973) unprecedented nature ruled out conventional formulas and brought to the fore explicit policy trade-offs. This article seeks to explain how policymakers in the world's two major economies responded to these external shocks. The analysis successively employs three vantage points—system, society, and state—in tracing the sources of domestic adjustment policies. It focuses specifically on the extent to which policies accommodated or extinguished each shock's inflationary impulses and on the coherence and consistency with which the executive in each government formulated and pursued particular policy goals. A comparison of these four cases illustrates the strengths and weaknesses of increasingly detailed theoretical frameworks for explaining policy choice. Although the research does not contradict the depiction of the United States and Japan in terms of state strength, it does underscore the importance of looking beyond formal institutional arrangements to consider how elite policy preferences, ambitions, and capacities can define the way constraints influence policy.

Conventional theories of the political economy of trade argue that industries in import-competing businesses favor protectionism, while multinational firms and export-dependent corporations advocate unconditional free trade. However, many multinational industries have recently advocated “strategic” trade policies: that is, they are willing to support free trade at home only if foreign markets are opened or foreign governments reduce subsidies to their firms. If demands for strategic trade policy were adopted by the United States, they could represent a threat to the General Agreement on Tariffs and Trade (GATT) and the multilateral trading system. This article seeks to explain the emergence of these new corporate trade demands and thereby broaden theories of the political economy of trade. The article begins with the widely supported position that multinational and export-oriented firms prefer unconditional free trade. Building on concepts from theories of industrial organization and international trade, the article then hypothesizes that rising economies of scale and steep learning curves will necessitate that these firms have access to global markets via exports. If growing dependence on world markets is combined with foreign government subsidies or protection, the trade preferences of firms will shift from unconditional free trade to demands that openness at home be contingent on openness overseas. The manner in which firm demands then get translated into industry demands will vary with the industry's structure. If the industry consists of firms with symmetric strategies, it will seek strategic trade policy; but if the industry is highly segmented, it will turn toward protectionism. The article concludes with a preliminary test of these hypotheses in four brief studies of the politics of trade in the semiconductor, commercial aircraft, telecommunications equipment, and machine tool industries.

Recent works in international relations theory have focused on the value of reciprocity as a means of achieving cooperation in international politics. They argue that even in an anarchic setting in which self-help typifies the behavior of sovereign nation states, the strategy of matching comparable responses to the actions of other nations may educate them over time to cooperate. This article empirically confirms that this assumption is correct. It examines the use of flexible reciprocal bargaining strategies between the United States and its major trading partners in key sectors in which surplus capacity and domestic adjustment difficulties have made commercial conflicts apparent. The outcomes of most of the disputes demonstrate that reciprocity is an effective means of eliciting cooperation from trading partners. Results also illustrate that this cooperation is usually consistent with the General Agreement on Tariffs and Trade (GATT) norms of liberal trade and dispute settlement, even when it is inconsistent with the GATT principle of nondiscrimination.

Slavery and war have both historically been considered inevitable consequences of human nature. Yet slavery has been abolished, and moral progress may have contributed to slavery's disappearance. Both realists and Marxists are skeptical about the impact of ethical constraints on political decisions, while idealists as well as at least some regime analysts emphasize the role of those constraints. However, elements of all of these approaches support the proposition that moral progress may bring an end to international war.

Some historical trends do not support the idea that international war is on the verge of disappearance, but there has not been a war between major powers since 1945. In addition, norms against colonialism are strong. No war has occurred between democratic states, nor does a war appear likely among the rather sizable number of industrialized democratic states in the international system today. Explanations of these pockets of peace based on caution induced by nuclear weapons or on economic interdependence, for example, are certainly not beyond question. Therefore, it may be that norms inhibiting the initiation of international war have already made obsolete not only wars between the richest and most powerful states in the world but also some forms of depradation by the strong against the relatively weak states.

One of the most intriguing aspects of postwar Japan is a reversal of economic roles in which consumers serve producers rather than vice versa. By acquiescing to “consumer unfriendly” price and distribution systems, Japanese consumers have subsidized Japanese industry and Western consumers as well. Although much of the recent theorizing about Japanese production and consumption has focused on Japanese consumers as end users, it has seldom addressed the question of how Japanese producers that pay more than others for factor inputs remain competitive in world markets. This article uses the case of nuclear fuel price insensitivity, derived from security concerns, to explore how this behavior is institutionalized through regulatory policy in the larger Japanese economic culture.

The economic theory of international trade has changed dramatically over the last decade by admitting into its mainstream a body of literature that focuses on the implications of monopolistic and oligopolistic elements in international markets. By applying the tools of the “new” industrial organization in an international context, two new classes of models have emerged: models of intra-industry trade and models of strategic trade policy. The policy implications of models of strategic trade policy were quite disturbing for the economics profession, since these models demonstrated that the classical harmony between national and cosmopolitan welfare maximization does not exist if one assumes opportunities for strategic manipulation of oligopolistic international industries. This article reviews two prominent models of strategic trade policy—the Brander-Spencer model and the Krugman model—and relates them to more familiar earlier concepts, such as Stackelberg's asymmetrical duopoly solution and the venerable infant-industry argument for government intervention. The primary purpose of this article, however, is to provide a synopsis of the large literature addressing the question of whether models of strategic trade policy can give guidance for government policy.

Recent developments in the philosophy of science, particularly those falling under the rubric of “scientific realism,” have earned growing recognition among theorists of international relations but have failed to generate substantive programs of research. Consequently, the empirical relevance of much philosophical discourse, such as that centering on the agent-structure problem in social theory, remains unestablished. This article attempts to bridge the gap between the philosophy and practice of science by outlining a model of international structure based on the principles of scientific realism and by considering its implications for a structural research program in international relations theory. Appealing to Imre Lakatos's methodology of theorychoice, the article presents an ontological case for adopting a “transformational” model of structure over the “positional” model developed in the work of Kenneth Waltz. The article demonstrates that the positional approach offers no conceptual or explanatory hold on those features of the international structure that are the intended products of state action. In conclusion, the article argues that the stakes in the agent-structure debate include the capacity to generate integrative structural theory and the ability to theorize the possibilities for peaceful change in the international system.

An analysis of the economic adjustment policies of Hong Kong, Singapore, South Korea, and Taiwan during the 1970s and 1980s shows that these East Asian newly industrializing countries (NICs), which faced common problems in sustaining their recent industrial growth, responded to the challenge with industrial adjustment strategies that differed in their degree of intensity of state involvement and emphasis on national control. To explain this divergence in adjustment strategies, the article explores the variations in the national political structures of the four NICs and focuses particularly on three aspects of state structure: the organization of the economic bureaucracy, the institutional links between the state and private sector, and the larger state-society relations. The article demonstrates the usefulness of moving beyond the generalizations of the “developmental state” view by carefully disaggregating these aspects of state structure and by exploring the ordering logic that gives coherence to them.

Much of the contemporary literature on the utility of international sanctions approaches the apparent riddle of why sanctions are embraced so eagerly when they are supposedly such an “ineffective” tool of statecraft by focusing on the instrumental and rational purposes of sanctions. As a result, one purpose that does not always lend itself to a rational means-end calculus—the purpose of punishment—tends to be overlooked or, more commonly, dismissed outright. This article explores punishment as both a useful and an effective purpose of international sanctions. It argues not only that sanctions should be distinguished from other forms of hurtful statecraft but also that they are a form of “international punishment” for wrongdoing, despite the difficulties of applying the term “punishment” in the context of international relations. The article then examines the purposes of punishment and reveals that only some are understandable when a model of means-end rationality is used, suggesting that the element of the nonrational also plays an important role in international sanctions. The argument is then applied to the case of U.S. sanctions imposed after the Soviet Union's invasion of Afghanistan to demonstrate the different purposes of punishment at work in this case. The article concludes that just as we cannot understand punishment as a purposive human activity solely by reference to a rational model of a means to a clearly delineated end, so too we cannot entirely understand sanctions as a form of international punishment by an attachment to a rational model of policy behavior. However, some forms of punishment are exceedingly effective, and this may explain why sanctions continue to be a popular instrument of statecraft.

This article contrasts the effects of state-controlled oil revenues and privately controlled labor remittances on institutional development, state capacity, and businessgovernment relations in Saudi Arabia and the Yemen Arab Republic. These two countries represent extreme cases of dependence on external capital in deeply divided societies presided over by fragile, emerging bureaucracies. By tracing the two cases through a pattern of economic boom (1973-83) and recession (1983-87), the study demonstrates that the type, volume, and control of capital inflows decisively influence the relative development of the bureaucracy's extractive, distributive, and regulatory capacities and affect the ability of the state to respond to economic crisis. In both cases, external capital inflows precipitated the decline of extractive institutions. However, oil revenues and labor remittances had divergent effects on businessgovernment relations, and this circumscribed the state's ability to implement austerity programs during the recession. During the crisis, the Saudi government's efforts to cut subsidies to the private sector and to implement extractive policies were blocked by the state-sponsored merchant class. In contrast, the Yemeni government instituted a thoroughgoing austerity package that targeted the independent merchant class. In both cases, external capital inflows did not augment the efficacy of those that controlled them. These paradoxical outcomes are explained by tracing the different effects of oil revenues and labor remittances on the distribution of economic opportunity in the public and private sectors and the resulting effects on the regional, tribal, and sectarian composition of the bureaucracy and the commercial class.

In the study of comparative foreign policy, two schools of thought disagree over what accounts for variations in processes and outcomes of foreign policies within and between states. One holds that differences in the characteristics of the countries in question lead to differences in their foreign policies. The other argues that the important differences are not between countries but between issue-areas. A comparison of the Soviet Union and the United States in the issue-area of military policy (in particular, the process of weapons innovation) suggests that the policy processes differ substantially, contrary to what an issue-area approach would predict. On the other hand, the distinctions made by some students of political economy who focus on domestic structures appear to account well for differences between the U.S. and Soviet processes of innovation. The domestic structural approach should be applied to the study of comparative military policy as well as foreign economic policy.

A paradox is central to the nature of political boundaries in Africa: there is widespread agreement that the boundaries are arbitrary, yet the vast majority of them have remained virtually untouched since the late 1800s, when they were first demarcated. This article argues that, contrary to current theories, the present boundary system represents a rational response by both the colonialists and the present-day African leaders to the constraints imposed by the demographic and ethnographic structure of the continent. Using this framework of analysis, the article examines the institutions that formulated the decision-making rules for the creation and maintenance of boundaries in Africa, discusses the conditions under which cooperation among states has occurred, and explores the prospects for future changes in the borders of African states.

Recent interest in cognitive approaches to international interaction in general and international regimes in particular has not been matched by development in theory and methodology. This article details a systematic “subjective” approach that seeks to meet this need. Its claims are developed through its comparison with the accomplishments and shortcomings of more established approaches to the study of international interaction and, in particular, microeconomic formal theory. The subjective alternative can model both individual subjects and the systems in which they are participating. As such, it offers much more in terms of continuities and connections between agents and system structure than do traditional psychological analyses in international relations. The theoretical arguments proceed in the context of a study of cooperation and conflict over Antarctica and its evolving regimes.

Since the early 1970s, bankers have developed a host of new financial instruments and practices. These innovations have altered the nature of banking, and this in turn has complicated the task of banking regulation. National regulations have become largely ineffective in monitoring the safety and soundness of global banks. The resulting market changes and the growth of knowledge about the risks facing the international financial system have prompted governments to hold multilateral discussions regarding banking regulation. However, the task of international regulation has been compromised by the desire of states to attract foreign and domestic investment to the financial sector. Since states wish to create or maintain competitive banking institutions, they have often deregulated in order to provide banks with a cost advantage in the international marketplace. This “competitive deregulation” undermines collaborative efforts.

Under the leadership of the United States and Great Britain, a multilateral agreement on bank capital standards was reached in December 1987. This agreement suggests that the interplay of market factors, consensual knowledge, and leadership by powerful states can lead to international policy coordination. The article describes the multilateral negotiations that led to this banking accord.