Part I:
Systemic Approaches to the
International Trading System
The concentration of capabilities and
international trade
Edward D. Mansfield
Over the course of the previous two decades, political scientists have become increasingly interested in the relationship between international politics and global trade. Much of the literature on this topic centers on the effects of a hegemonic distribution of power on commerce. Hegemonic stability theorists argue that hegemony is a necessary condition for the existence of a liberal economic order and that in the absence of a hegemon, a liberal international economy is particularly difficult to establish and maintain. However, a growing number of theoretical and empirical critiques have been leveled against hegemonic stability theory, and the issue of whether hegemony helps shape patterns of global trade continues to be the topic of heated debate.
Despite the interest that this debate has spawned, virtually no longitudinal statistical tests of the relationship between hegemony (or, more generally, the distribution of power) and international trade have been conducted. In this article, I conduct some of the first quantitative tests of the influence that both political and economic features of the international system have on trade. The results indicate that the distribution of power strongly affects international commerce but that the nature of the relationship is much different than is commonly thought.
Discussions of the systemic correlates of trade do not, however, revolve solely around the effects of hegemony. Some observers argue that war may be a more salient political influence on trade than is hegemony; others criticize hegemonic stability theorists for ignoring the effects of global economic conditions on trade. My results demonstrate the importance of each of these factors: in addition to the distribution of power, both war and global income are strongly related to trade.
Hegemony and trade
Hegemonic stability theorists agree that hegemony is associated with an open trading system, while the lack of a hegemon is associated with closure. Many of them also agree that because a liberal trading system takes on features of a public good, its creation and maintenance engender collective action problems.1 Without a state that is willing and able to act as a privileged group and unilaterally provide a liberal trading order, the establishment of a system characterized by free trade is unlikely.
Hegemonic stability theorists disagree, however, on why hegemons provide a liberal trading system. On the one hand, Charles Kindleberger suggests that hegemons provide public goods largely for altruistic reasons.2 He maintains that the central cause of the depression during the 1930s was the absence of a benevolent âstabilizerâ to coordinate the international economy;3 Great Britain was no longer able to assume this role as it had done in the nineteenth century, and the United States was not yet willing to assume the mantle of leadership. On the other hand, Robert Gilpin, Stephen Krasner, and David Lake argue that because the hegemon derives disproportionately greater gains from such a system, it has an incentive to create and sustain a liberal international economic order.4 They maintain that the periods of relatively free trade during the nineteenth century and after World War II can be explained best by the benefits that accrued to Great Britain and the United States from an open trading system.5
During the past decade, much has been written on the theoretical limitations of hegemonic stability theory. Many critics argue that systems need not be hegemonic in order to be open and, hence, no strong relationship exists between international trade on the one hand and a hegemonic or nonhegemonic system on the other. Because the theory of collective action does not preclude the provision of public goods by small (or k) groups,6 certain nonhegemonic systems can also lead to a liberal trading order. The existence of a hegemon may ameliorate collective action problems when public goods such as a trade regime are initially supplied; but hegemony is not necessary for either their provision or their maintenance.7 Others maintain that hegemony is unrelated to trade because hegemonic stability theory incorrectly identifies free trade as a public good. Since free trade does not meet the criterion of nonexcludability, a hegemon need not act as a privileged group to ensure its provision.8
Analysts have also argued that hegemony is related to trade but that the relationship is inverse rather than direct. They posit that nonhegemonic systems are likely to be relatively liberal because in the absence of a hegemon, no state possesses sufficient market power to influence world prices through the use of trade barriers. A hegemon, in contrast, has the market power necessary to improve its terms of trade by imposing an optimal tariff, and the noncooperative aspects of international commerce provide it with the incentive to take advantage of this ability.9
However, the extent to which the critiques described in this section undercut hegemonic stability theory remains open to question. Joanne Gowa recently argued that critics âhave not deprived hegemonic stability theory of its analytic base: hegemons can reject the prescriptions of standard trade theory [to impose optimal tariffs]; . . . open international markets [often] do present public-good problems; and privileged groups enjoy a stronger advantage than small-group advocates acknowledge.â10 Moreover, not all variants of this theory ascribe equal importance to the provision of public goods in the international political economy. Those analysts who place less weight on this aspect of hegemony are less susceptible to critiques that highlight either the absence of public goods in the international system or the ability of small groups to provide these goods. This suggests that the debate over the analytic underpinnings of hegemonic stability theory remains far from resolved. Also unresolved is the issue of what, if any, empirical relationship exists between hegemony and international trade.
Empirical evidence and issues regarding hegemonic stability theory
In addition to the analytic critiques discussed above, hegemonic stability theory has also been challenged on empirical grounds. First, some analysts have argued that the relationship between hegemony and an open international trading system is weak. For example, John Conybeare found little crosssectional or longitudinal evidence that hegemony is associated with national tariff levels, based on data from 1902 and 1971.11 Similarly, Timothy McKeown concluded that no strong relationship exists between variables related to hegemony and national import levels (as a percentage of national income) of the advanced industrialized states from 1880 to 1987.12
Second, while others have conceded that hegemony may be associated with a relatively open trading system, they have challenged the causal linkages between hegemony and commerce. For example, Timothy McKeown, Arthur Stein, Giulio Gallarotti, and Susan Strange have maintained that a variety of international political and economic factors provide more satisfactory explanations for the existence of a liberal trading system during the nineteenth century than does British hegemony.13 And Robert Keohane has argued that while the empirical record from 1966 to 1977 is consistent with the predictions of hegemonic stability theory, the causal relationship between American hegemony and trade in manufactured goods is weak.14
Third, hegemonic stability theorists have been criticized for failing to measure adequately the distribution of power. This, in the opinion of some observers, has led them to choose incorrectly the cases of hegemony that they hold up as support for the theory. For example, Bruce Russett concluded that the theory mistakenly attributes hegemonic status to Great Britain during the nineteenth century and that, contrary to the position of many critics and adherents of the theory, American control over outcomes in the international political economy has not declined since the early 1970s.15
Three fundamental disagreements over the definition, measurement, and operationalization of hegemony underlie much of the controversy surrounding the empirical relationship between hegemony and trade. First, there is disagreement about the scope of hegemonyâthat is, disagreement about the aspects of international relations over which a state must wield preponderant power in order to be considered a hegemon.16 Some scholars argue that hegemony is characterized by a situation in which a single state dominates and orders both economic and political relations.17 Others, however, maintain that hegemony is characterized by a situation in which a single state dominates and orders international economic relations and possesses sufficient political power to ward off military threats to the international system.18
Second, there is disagreement about the domain of a hegemonâthat is, disagreement about the range of actors over which a state must wield preponderant power in order to be considered a hegemon.19 Although hegemonic stability theory purports to explain systemic outcomes, as Stephan Haggard and Beth Simmons point out, âthe relevant âstructureâ is usually defined [by hegemonic stability theorists] as the distribution of power within the international capitalist system rather than within the world political system as a whole.â20
Finally, there is no consensus regarding the inequality of power that is necessary for hegemony to obtain. While analysts agree that a hegemon is more powerful than the other actors in the system, most have been conspicuously silent on the fundamental issue of how much more powerful it needs to be in order to meet the requirements for hegemony.21 A related problem is that analysts tend to treat as homogeneous all nonhegemonic distributions of power. However, the starkness of the dichotomy between hegemony and nonhegemony may mask the differential effects of various nonhegemonic distributions of power on outcomes in the international political economy.22
These disagreements over the definition, measurement, and operationalization of hegemony appear to influence substantially the empirical relationship between hegemony and trade. For example, Conybeareâs and McKeownâs statistical results indicate that hegemony is largely unrelated to trade.23 Alternatively, my own findings suggest that hegemony is associated with the level of global commerce: the relationship is direct when Robert Gilpinâs data on hegemony are used, but it is inverse when Immanuel Wallersteinâs data are used.24 Moreover, even if hegemony had an unambiguous effect on the international trading system and no disagreements existed regarding how to define, measure, and operationalize it, hegemony is only one aspect of the distribution of power. Various other features of this distribution, not only hegemony, may have effects on trade; and it would be useful to analyze the effects of hegemony in conjunction with t...