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MA in Political Science

International Economic Cooperation is affected by the (1) preferences aggregated by

domestic and international institutions, (2) the extent of the influence of International

Institutions and (3) technological advancement and open borders.

Under the Open Economy Politics Framework, it begins with individuals, sectors, or

factors of production as the units of analysis and derives their interests over economic policy from

each unit’s position within the international economy. It treats domestic political institutions as

mechanisms that aggregate interests and structure the bargaining of competing societal groups.

Finally, it introduces, when necessary, bargaining between states with different interests that will

lead to international cooperation.

Individual and group preference or interest are aggregated by domestic institutions.

Hiscox argued that preferences are influenced by the abundance of factors. Individual trade policy

preference may be affected by two factors namely, (a) economic factors, which have personal

effects on real income asset values and consumption and (b) non-economic factors such as

education and norms. But in contrast, realist believed that individual interest is irrelevant since

only state interest matters. But it should be noted that policy makes have their own personal

preferences, and can be considered as economic actors. Policy maker’s institutions shape policy

space or the range of policy options available and incentives to respond to certain groups over the

others. While domestic interest groups institutions shape those who represent capital owners, labor,

skilled or unskilled workers, importers vs exporters, generally industries competing, the range of

O’rouke and Taylor (2006) suggest that democratization promoted trade in both land scare countries and land abundant countries. Also. and V (up to 1960). The influence of International institutions extends into domestic arena. IV and V (after 1960). (1) the economic crises. The theory of state power explains trade openness in period I. where both labor wins. But it does not explain III. they will be more likely to have open trade. In period III.actions available to influence policy or the strategy space and the incentives to organize and mobilize (collective action). II. Krasner presented a 2x3 matrix of causal arguments on the relationship between the probability that a trading structure will be open and the distribution of potential economic power. Political regimes also affect trade policies. before 1980s many developing countries are protectionist (2) the pressure from Western Country especially the USA and (3) the spread of neoliberal policy ideas. Openness can be measured by flows of goods and by policies like tariffs. trade proportions (the ratio of trade to national income). It can be yes because any change in a political regime is likely to induce trade reforms. . Milner and Kubota explained how political regimes affected the shift to trade liberation. when states are at similar levels of development. But trade liberation occurred the same time as democratization among developing countries. and in latter period V. He argued that a system with one dominant state will be most likely to have open trade. openness grew while Britain was declining. and even less likely when there are many large states. Are the two trades related? Answers may vary. It can also be no since democracy is nor propitious for economic reform. somewhat less likely when there are many smaller states. and the concentration of trade within certain regions are examined. openness failed to grow while the USA was rising. in period IV.

even if there’s a popular impression that national borders and geography still impede trade and investment. difference in currencies. . then they will change them. World Bank. moving freely across borders and become flexible in how it adapts to changes in domestic and international politics. leading to a new focus on the political impact of deepening economic ties This new era was expected by some to transform the nature of international politics. trade as a proportion of economic activity began to rise rapidly in all advanced industrialized democracies. indicate that their current policy is ineffective. As observed by Frankel.” When crises (wars. the world has been increasingly integrated with finance and trade since the end of the World War II. Globalization was more dramatic. opening a new model of international politics characterized by “complex interdependence” and international regimes. Krasner amends his argument by explaining that domestic trade policies often fail to change when there are no cataclysmic external events to encourage that change. By the end of the 1960s. Hence technology advancement ease the barriers such as.openness failed to decline as the USA did. but there does not have to be a direct correspondence between power shifts and trade policy changes. because states become “locked in by the impact of prior choices on their domestic political structures. International Monetary Fund. Technological advancement and open borders affect the pace of economic. as the tariff cuts negotiated at the Kennedy Round of the GATT took full effect. languages and political system. depressions). The advent of globalization and the development of technology made capital increasingly mobile. and General Agreements on Tariffs and Trade (GATT) paved way to an era of increasing economic interdependence.