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Complex Interdependence and

Neoliberal Institutionalism
Complex Interdependence
The earliest example of interdependence
comes from Norman Angells classic, The
Great Illusion.
Example of the leaky boat and the rower and
Interdependence means mutual dependence:
peoples and governments are affected by
what happens elsewhere.
Complex Interdependence
In the 1970s, there was a greater emphasis on
interdependence specifically concentrating on
the variable of economics.
Previously, economics was peripheral to all IR
theories whose major concentration was
either politics, war, military strategy or law.
What brought economics into significance in
the 1970s?

Complex Interdependence
First, the example of the European
Community which was pursuing the goals of
economic development and developing a
highly qualified labour force.
Second, the examples of Japan and the New
Industrialising Countries (NICs) as developing
economic powerhouses.
Third, the oil shocks of 1973 after the Yom
Kippur War between Israel and Syria, Egypt.
Complex Interdependence
Theoretical foundations of the European
Community example: David Mitrany (1966)
and the functionalist theory of integration.
Cooperation should be arranged by technical
experts, not politicians.
Experts would devise solutions to common
problems in various functional areas including
transport, communication, finance etc.
Complex Interdependence
Ernst Haas developed a neo-functionalist theory of
international integration inspired by the intensifying
cooperation between countries of Western Europe in
the 1950s.
Technical matters cannot be separated from politics.
Integration requires that self-interested political
elites intensify their cooperation.
Cooperation leads to the notion of spillover, i.e.,
increased cooperation in one area leads to increased
cooperation in other areas.
Complex Interdependence
Major theorists: Robert Keohane and Joseph S. Nye
Jr. and their book Power and Interdependence.
Three main characteristics of complex
1. Multiple channels connect societies: interstate
relations (normal channels of communications
assumed by realists); transgovernmental relations
(informal ties among nongovernmental elites) and
transnational relations (between multinational banks
or corporations).

Complex Interdependence
2. The agenda of interstate relationships consists
of multiple issues that are not arranged in a
clear or consistent hierarchy.
This absence of hierarchy among issues means
that military security does not consistently
dominate the agenda.
No distinction, therefore, between high
politics and low politics.
Complex Interdependence
3. Military force is not used by governments
towards other governments within the region
when complex interdependence prevails.
Military force could be irrelevant to resolving
disagreements on economic issues among
members of an alliance.
However, military force could be important for
the same alliances political and military
relations with a rival bloc.
Neoliberal Institutionalism
Robert Keohane in later years moved away from
interdependence and transnational relations and
concerned himself with the extent of cooperation
possible under conditions of anarchy.
NLIs agree that world politics is not a homogenous
state of war and that cooperation varies among
issues and over time.
The central idea is again cooperation.
Neoliberal Institutionalism
A way to facilitate cooperation between states
is to establish international regimes.
Regimes can be defined as sets of implicit or
explicit principles, norms, rules, and decision-
making procedures around which actors
expectations converge in a given area of
international relations.
In the post-War era, international regimes
have been extensive.

Neoliberal Institutionalism
International trade regime (centered on GATT
and now WTO), international monetary
regime (IMF), the environmental regime
(Kyoto Protocol).
What other international regimes can you
think of?
Neoliberal Institutionalism
According to Keohane, international regimes can increase
probability of cooperation by:
A. Providing information about the behavior of others by
monitoring the behavior of members and reporting on
Regimes clearly define what constitutes a defection and often
clearly prescribe punishments for defection.
This reduces the fear that the state is being exploited by other
members of the regime and minimizes the chance for
misunderstanding. Prescribing sanctions reduces the incentive
to covertly defect.

Neoliberal Institutionalism
B. Reducing transaction costs.
By institutionalizing cooperation, regimes can reduce
the cost of future agreements. By reducing the cost
of reaching an agreement, regimes increase the
likelihood of future cooperation. For example, each
round of GATT resolved many procedural problems
that did not have to be revisited in subsequent
rounds, making cooperation easier and more likely.
Neoliberal Institutionalism
C. Generating the expectation of cooperation
among members.
By creating the belief that interaction will
continue for the foreseeable future, regimes
increase the importance of reputation and
allow for the employment of complex

Interdependence or Dependence? Marxist critique
on capitalism.
Prioritises the empirical evidence only from the
developed countries of the world particularly
Will the same institutional features of cooperation be
generated if complex interdependence develops in
South Asia, Central Asia, Africa or Latin America?
Has war become totally irrelevant or obsolete?
Prevalence of international anarchy means that
possibility of war remains in IR.