《国际政治经济学》文献资料（Political Economy of International Trade：International Influences）State Power and the Structure of International Trade

State Power and the Structure of International Trade STOR Stephen D.Krasner World Politics,Vol.28,No.3.(Apr.,1976),pp.317-347 Stable URL: http://links.jstor.org/sici?sici=0043-8871%28197604%2928%3A3%3C317%3ASPATSO%3E2.0.CO%3B2-B World Politics is currently published by The Johns Hopkins University Press. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use,available at http://www.istor org/about/terms html.JSTOR's Terms and Conditions of Use provides,in part,that unless you have obtained prior permission,you may not download an entire issue of a journal or multiple copies of articles,and you may use content in the JSTOR archive only for your personal,non-commercial use. Please contact the publisher regarding any further use of this work.Publisher contact information may be obtained at http://www.jstor.org/journals/jhup.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. The JSTOR Archive is a trusted digital repository providing for long-term preservation and access to leading academic journals and scholarly literature from around the world.The Archive is supported by libraries,scholarly societies,publishers, and foundations.It is an initiative of JSTOR,a not-for-profit organization with a mission to help the scholarly community take advantage of advances in technology.For more information regarding JSTOR,please contact support@jstor.org. http://www.jstor.org Thu Jan1016:34:382008

State Power and the Structure of International Trade Stephen D. Krasner World Politics, Vol. 28, No. 3. (Apr., 1976), pp. 317-347. Stable URL: http://links.jstor.org/sici?sici=0043-8871%28197604%2928%3A3%3C317%3ASPATSO%3E2.0.CO%3B2-B World Politics is currently published by The Johns Hopkins University Press. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/journals/jhup.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. The JSTOR Archive is a trusted digital repository providing for long-term preservation and access to leading academic journals and scholarly literature from around the world. The Archive is supported by libraries, scholarly societies, publishers, and foundations. It is an initiative of JSTOR, a not-for-profit organization with a mission to help the scholarly community take advantage of advances in technology. For more information regarding JSTOR, please contact support@jstor.org. http://www.jstor.org Thu Jan 10 16:34:38 2008

STATE POWER AND THE STRUCTURE OF INTERNATIONAL TRADE By STEPHEN D.KRASNER* INTRODUCTION I N recent years,students of international relations have multina- tionalized,transnationalized,bureaucratized,and transgovernment- alized the state until it has virtually ceased to exist as an analytic con- struct.Nowhere is that trend more apparent than in the study of the politics of international economic relations.The basic conventional as- sumptions have been undermined by assertions that the state is trapped by a transnational society created not by sovereigns,but by nonstate actors.Interdependence is not seen as a reflection of state policies and state choices (the perspective of balance-of-power theory),but as the result of elements beyond the control of any state or a system created by states. This perspective is at best profoundly misleading.It may explain developments within a particular international economic structure,but it cannot explain the structure itself.That structure has many institu- tional and behavioral manifestations.The central continuum along which it can be described is openness.International economic struc- tures may range from complete autarky (if all states prevent move- ments across their borders),to complete openness (if no restrictions exist).In this paper I will present an analysis of one aspect of the international economy-the structure of international trade;that is, the degree of openness for the movement of goods as opposed to cap- ital,labor,technology,or other factors of production. Since the beginning of the nineteenth century,this structure has gone through several changes.These can be explained,albeit imperfectly,by a state-power theory:an approach that begins with the assumption that the structure of international trade is determined by the interests and power of states acting to maximize national goals.The first step in this argument is to relate four basic state interests-aggregate national *I would like to thank Robert Art,Peter Gourevitch,Samuel Huntington,Robert Keohane,Rachel MeCulloch,Joseph Nye,Ronald Rogowski,and Robert W.Tucker for their comments.My greatest intellectual debt,and one not adequately refected in the footnotes,is to Robert Gilpin.Completion of this paper was made possible by support from the Washington Center of Foreign Policy Research of the Johns Hopkins School of Advanced International Studies and the Center for International Affairs at Harvard University

STATE POWER AND THE STRUCTURE OF INTERNATIONAL TRADE By STEPHEN D. KRASNERX INrecent years, students of international relations have multina￾tionalized, transnationalized, bureaucratized, and transgovernment￾alized the state until it has virtually ceased to exist as an analytic con￾struct. Nowhere is that trend more apparent than in the study of the politics of international economic relations. The basic conventional as￾sumptions have been undermined by assertions that the state is trapped by a transnational society created not by sovereigns, but by nonstate actors. Interdependence is not seen as a reflection of state policies and state choices (the perspective of balance-of-power theory), but as the result of elements beyond the control of any state or a system created by states. This perspective is at best profoundly misleading. It may explain developments within a particular international economic structure, but it cannot explain the structure itself. That structure has many institu￾tional and behavioral manifestations. The central continuum along which it can be described is openness. International economic struc￾tures may range from complete autarky (if all states prevent move￾ments across their borders), to complete openness (if no restrictions exist). In this paper I will present an analysis of one aspect of the international economy-the structure of international trade; that is, the degree of openness for the movement of goods as opposed to cap￾ital, labor, technology, or other factors of production. Since the beginning of the nineteenth century, this structure has gone through several changes. These can be explained, albeit imperfectly, by a state-power theory: an approach that begins with the assumption that the structure of international trade is determined by the interests and power of states acting to maximize national goals. The first step in this argument is to relate four basic state interests-aggregate national +I would like to thank Robert Art, Peter Gourevitch, Samuel Huntington, Robert Keohane, Rachel McCulloch, Joseph Nye, Ronald Rogowski, and Robert W. Tucker for their comments. My greatest intellectual debt, and one not adequately reflected in the footnotes, is to Robert Gilpin. Completion of this paper was made possible by support from the Washington Center of Foreign Policy Research of the Johns Hopkins School of Advanced International Studies and the Center for International Affairs at Harvard University

318 WORLD POLITICS income,social stability,political power,and economic growth-to the degree of openness for the movement of goods.The relationship be- tween these interests and openness depends upon the potential eco- nomic power of any given state.Potential economic power is opera- tionalized in terms of the relative size and level of economic development of the state.The second step in the argument is to relate different distributions of potential power,such as multipolar and hege- monic,to different international trading structures.The most impor- tant conclusion of this theoretical analysis is that a hegemonic distribu- tion of potential economic power is likely to result in an open trading structure.That argument is largely,although not completely,sub- stantiated by empirical data.For a fully adequate analysis it is neces- sary to amend a state-power argument to take account of the impact of past state decisions on domestic social structures as well as on inter- national economic ones.The two major organizers of the structure of trade since the beginning of the nineteenth century,Great Britain and the United States,have both been prevented from making policy amendments in line with state interests by particular societal groups whose power had been enhanced by earlier state policies. THE CAUSAL ARGUMENT:STATE INTERESTS,STATE POWER,AND INTERNATIONAL TRADING STRUCTURES Neoclassical trade theory is based upon the assumption that states act to maximize their aggregate economic utility.This leads to the conclusion that maximum global welfare and Pareto optimality are achieved under free trade.While particular countries might better their situations through protectionism,economic theory has generally looked askance at such policies.In his seminal article on the optimal tariff, Harry Johnson was at pains to point out that the imposition of succes- sive optimal tariffs could lead both trading partners to a situation in which they were worse off than under competitive conditions.'Neo- classical theory recognizes that trade regulations can also be used to correct domestic distortions and to promote infant industries,but these are exceptions or temporary departures from policy conclusions that lead logically to the support of free trade. 1 Johnson,"Optimum Tariffs and Retaliation,"in Harry Johnson,International Trade and Economic Growth (Cambridge:Harvard University Press 1967),31-61. 2 See,for instance, Everett Hagen,"An Economic Justification of Protectionism," Ouarterly Journal of Economics,Vol.72 (November 1958),496-514;Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions,"in Robert Baldwin and others,Trade,Growth and the Balance of Payments:Essays in Honor of Gottfried Haberler (Chicago:Rand McNally 1965),3-34;and Jagdish Bhagwati,Trade, Tarifis,and Growth (Cambridge:MIT Press 1969),295-308

318 WORLD POLITICS income, social stability, political power, and economic growth-to the degree of openness for the movement of goods. The relationship be￾tween these interests and openness depends upon the potential eco￾nomic power of any given state. Potential economic power is opera￾tionalized in terms of the relative size and level of economic development of the state. The second step in the argument is to relate different distributions of potential power, such as multipolar and hege￾monic, to different international trading structures. The most impor￾tant conclusion of this theoretical analysis is that a hegemonic distribu￾tion of potential economic power is likely to result in an open trading structure. That argument is largely, although not completely, sub￾stantiated by empirical data. For a fully adequate analysis it is neces￾sary to amend a state-power argument to take account of the impact of past state decisions on domestic social structures as well as on inter￾national economic ones. The two major organizers of the structure of trade since the beginning of the nineteenth century, Great Britain and the United States, have both been prevented from making policy amendments in line with state interests by particular societal groups whose power had been enhanced by earlier state policies. Neoclassical trade theory is based upon the assumption that states act to maximize their aggregate economic utility. This leads to the conclusion that maximum global welfare and Pareto optimality are achieved under free trade. While particular countries might better their situations through protectionism, economic theory has generally looked askance at such policies. In his seminal article on the optimal tariff, Harry Johnson was at pains to point out that the imposition of succes￾sive optimal tariffs could lead both trading partners to a situation in which they were worse off than under competitive conditions.' Neo￾classical theory recognizes that trade regulations can also be used to correct domestic distortions and to promote infant industries,' but these are exceptions or temporary departures from policy conclusions that lead logically to the support of free trade. 1Johnson, "Optimum Tariffs and Retaliation," in Harry Johnson, Znternational Trade and Economic Growth (Cambridge: Harvard University Press 1967), 31-61. See, for instance, Everett Hagen, "An Economic Justification of Protectionism," Quarterly lournal of Economics, Vol. 72 (November 1958), 496-514; Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Robert Baldwin and others, Trade, Growth and the Balance of Payments: Essays in Honor of Gottfried Haberler (Chicago: Rand McNally 1965), 3-34; and Jagdish Bhagwati, Trade, Tarifls, and Growth (Cambridge: MIT Press 1969), 295-308

STATE POWER AND INTERNATIONAL TRADE 319 STATE PREFERENCES Historical experience suggests that policy makers are dense,or that the assumptions of the conventional argument are wrong.Free trade has hardly been the norm.Stupidity is not a very interesting analytic category.An alternative approach to explaining international trading structures is to assume that states seek a broad range of goals.At least four major state interests affected by the structure of international trade can be identified.They are:political power,aggregate national income, economic growth,and social stability.The way in which each of these goals is affected by the degree of openness depends upon the potential economic power of the state as defined by its relative size and level of development. Let us begin with aggregate national income because it is most straightforward.Given the exceptions noted above,conventional neo- classical theory demonstrates that the greater the degree of openness in the international trading system,the greater the level of aggregate economic income.This conclusion applies to all states regardless of their size or relative level of development.The static economic bene- fits of openness are,however,generally inversely related to size.Trade gives small states relatively more welfare benefits than it gives large ones.Empirically,small states have higher ratios of trade to national product.They do not have the generous factor endowments or po- tential for national economies of scale that are enjoyed by larger- particularly continental-states. The impact of openness on social stability runs in the opposite direc- tion.Greater openness exposes the domestic economy to the exigencies of the world market.That implies a higher level of factor movements than in a closed economy,because domestic production patterns must adjust to changes in international prices.Social instability is thereby increased,since there is friction in moving factors,particularly labor, from one sector to another.The impact will be stronger in small states than in large,and in relatively less developed than in more developed ones.Large states are less involved in the international economy:a smaller percentage of their total factor endowment is affected by the international market at any given level of openness.More developed states are better able to adjust factors:skilled workers can more easily be moved from one kind of production to another than can unskilled laborers or peasants.Hence social stability is,ceteris paribus,inversely related to openness,but the deleterious consequences of exposure to the international trading system are mitigated by larger size and greater economic development

STATE POWER AND INTERNATIONAL TRADE 319 STATE PREFERENCES Historical experience suggests that policy makers are dense, or that the assumptions of the conventional argument are wrong. Free trade has hardly been the norm. Stupidity is not a very interesting analytic category. An alternative approach to explaining international trading structures is to assume that states seek a broad range of goals. At least four major state interests affected by the structure of international trade can be identified. They are: political power, aggregate national income, economic growth, and social stability. The way in which each of these goals is affected by the degree of openness depends upon the potential economic power of the state as defined by its relative size and level of development. Let us begin with aggregate national income because it is most straightforward. Given the exceptions noted above, conventional neo￾classical theory demonstrates that the greater the degree of openness in the international trading system, the greater the level of aggregate economic income. This conclusion applies to all states regardless of their size or relative level of development. The static economic bene￾fits of openness are, however, generally inversely related to size. Trade gives small states relatively more welfare benefits than it gives large ones. Empirically, small states have higher ratios of trade to national product. They do not have the generous factor endowments or po￾tential for national economies of scale that are enjoyed by larger￾particularly continental-states. The impact of openness on social stability runs in the opposite direc￾tion. Greater openness exposes the domestic economy to the exigencies of the world market. That implies a higher level of factor movements than in a closed economy, because domestic production patterns must adjust to changes in international prices. Social instability is thereby increased, since there is friction in moving factors, particularly labor, from one sector to another. The impact will be stronger in small states than in large, and in relatively less developed than in more developed ones. Large states are less involved in the international economy: a smaller percentage of their total factor endowment is affected by the international market at any given level of openness. More developed states are better able to adjust factors: skilled workers can more easily be moved from one kind of production to another than can unskilled laborers or peasants. Hence social stability is, ceteris paribus, inversely related to openness, but the deleterious consequences of exposure to the international trading system are mitigated by larger size and greater economic development

320 WORLD POLITICS The relationship between political power and the international trad- ing structure can be analyzed in terms of the relative opportunity costs of closure for trading partners.The higher the relative cost of closure, the weaker the political position of the state.Hirschman has argued that this cost can be measured in terms of direct income losses and the adjustment costs of reallocating factors.These will be smaller for large states and for relatively more developed states.Other things being equal,utility costs will be less for large states because they generally have a smaller proportion of their economy engaged in the interna- tional economic system.Reallocation costs will be less for more ad- vanced states because their factors are more mobile.Hence a state that is relatively large and more developed will find its political power enhanced by an open system because its opportunity costs of closure are less.The large state can use the threat to alter the system to secure economic or noneconomic objectives.Historically,there is one impor- tant exception to this generalization-the oil-exporting states.The level of reserves for some of these states,particularly Saudi Arabia,has reduced the economic opportunity costs of closure to a very low level despite their lack of development. The relationship between international economic structure and eco- nomic growth is elusive.For small states,economic growth has gen- erally been empirically associated with openness.Exposure to the inter- national system makes possible a much more efficient allocation of resources.Openness also probably furthers the rate of growth of large countries with relatively advanced technologies because they do not need to protect infant industries and can take advantage of expanded world markets.In the long term,however,openness for capital and technology,as well as goods,may hamper the growth of large,devel- oped countries by diverting resources from the domestic economy,and by providing potential competitors with the knowledge needed to develop their own industries.Only by maintaining its technological lead and continually developing new industries can even a very large state escape the undesired consequences of an entirely open economic system.For medium-size states,the relationship between international trading structure and growth is impossible to specify definitively, 3 This notion is reflected in Albert O.Hirschman,National Power and the Structure of Forcign Trade (Berkeley:University of California Press 1945);Robert W.Tucker, The New Isolationism:Threat or Promise?(Washington:Potomac Associates 1972); and Kenneth Waltz,"The Myth of Interdependence,"in Charles P.Kindleberger,ed., The International Corporation (Cambridge:MIT Press 1970),205-23. Hirschman (fn.3),I3-34. 5 Simon Kuznets,Modern Economic Growth:Rate,Structure,and Spread (New Haven:Yale University Press 1966),302

320 WORLD POLITICS The relationship between political power and the international trad￾ing structure can be analyzed in terms of the relative opportunity costs of closure for trading partnem3 The higher the relative cost of closure, the weaker the political position of the state. Hirschman has argued that this cost can be measured in terms of direct income losses and the adjustment costs of reallocating factom4 These will be smaller for large states and for relatively more developed states. Other things being equal, utility costs will be less for large states because they generally have a smaller proportion of their economy engaged in the interna￾tional economic system. Reallocation costs will be less for more ad￾vanced states because their factors are more mobile. Hence a state that is relatively large and more developed will find its political power enhanced by an open system because its opportunity costs of closure are less. The large state can use the threat to alter the system to secure economic or noneconomic objectives. Historically, there is one impor￾tant exception to this generalization-the oil-exporting states. The level of reserves for some of these states, particularly Saudi Arabia, has reduced the economic opportunity costs of closure to a very low level despite their lack of development. The relationship between international economic structure and eco￾nomic growth is elusive. For small states, economic growth has gen￾erally been empirically associated with opennes~.~Exposure to the inter￾national system makes possible a much more efficient allocation of resources. Openness al~o-~robabl~ furthers the rate of growth of large countries with relatively advanced technologies because they do not need to protect infant industries and can take advantage of expanded world markets. In the long term, however, openness for capital and technology, as well as goods, may hamper the growth of large, devel￾oped countries by diverting resources from the domestic economy, and by providing potential competitors with the knowledge needed to develop their own industries. Only by maintaining its technological lead and continually developing new industries can even a very large state escape the undesired consequences of an entirely open economic system. For medium-size states, the relationship between international trading structure and growth is impossible to specify definitively, This notion is reflected in Albert 0. Hirschman, National Power and the Structure of Foreign Trade (Berkeley: University of California Press 1945); Robert W. Tucker, The New Isolationism: Threat or Promise? (Washington: Potomac Associates 1972); and Kenneth Waltz, "The Myth of Interdependence," in Charles P. Kindleberger, ed., The International Corporation (Cambridge: MIT Press 1970)~ 205-23. Hirschman (fn.3), 13-34 5 Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven: Yale University Press 1966), 302

STATE POWER AND INTERNATIONAL TRADE 321 either theoretically or empirically.On the one hand,writers from the mercantilists through the American protectionists and the German historical school,and more recently analysts of dependencia,have argued that an entirely open system can undermine a state's effort to develop,and even lead to underdevelopment.On the other hand, adherents of more conventional neoclassical positions have maintained that exposure to international competition spurs economic transforma- tion.'The evidence is not yet in.All that can confidently be said is that openness furthers the economic growth of small states and of large ones so long as they maintain their technological edge. FROM STATE PREFERENCES TO INTERNATIONAL TRADING STRUCTURES The next step in this argument is to relate particular distributions of potential economic power,defined by the size and level of development of individual states,to the structure of the international trading sys- tem,defined in terms of openness. Let us consider a system composed of a large number of small,highly developed states.Such a system is likely to lead to an open international trading structure.The aggregate income and economic growth of each state are increased by an open system.The social instability produced by exposure to international competition is mitigated by the factor mobility made possible by higher levels of development.There is no loss of political power from openness because the costs of closure are symmetrical for all members of the system. Now let us consider a system composed of a few very large,but unequally developed states.Such a distribution of potential economic power is likely to lead to a closed structure.Each state could increase its income through a more open system,but the gains would be modest. Openness would create more social instability in the less developed countries.The rate of growth for more backward areas might be e See David P.Callco and Benjamin Rowland,America and the World Political Economy (Bloomington:Indiana University Press 1973),Part II,for a discussion of American thought;Eli Heckscher,Mercantilism (New York:Macmillan 1955);and D.C.Coleman,ed.,Revisions in Mercantilism (London:Methuen 1969),for the classic discussion and a collection of recent articles on mercantilism;Andre Gunder Frank, Latin America:Underdevelopment or Revolution (New York:Monthly Review 1969); Arghiri Emmanucl,Unequal Exchange:A Study of the Imperialism of Trade (New York:Monthly Review 1972);and Johan Galtung,"A Structural Theory of Imperial. ism,"Journal of Peace Research,vul,No.2 (I971),81-117,for some representative argu- ments about the deleterious effects of free trade. 1 See Gottfried Haberler,International Trade and Economic Development (Cairo: National Bank of Egypt 1959);and Carlos F.Diaz-Alejandro,"Latin America:Toward 2000 A.D.,"in Jagdish Bhagwati,ed.,Economics and World Order from the 1g7os to the rogos (New York:Macmillan 1972),223-55,for some arguments concerning the benefits of trade

STATE POWER AND INTERNATIONAL TRADE 321 either theoretically or empirically. On the one hand, writers from the mercantilists through the American protectionists and the German historical school, and more recently analysts of dependencia, have argued that an entirely open system can undermine a state's effort to develop, and even lead to ~nderdevelopment.~ On the other hand, adherents of more conventional neoclassical positions have maintained that exposure to international competition spurs economic transforma￾ti~n.~The evidence is not yet in. All that can confidently be said is that openness furthers the economic growth of small states and of large ones so long as they maintain their technological edge. FROM STATE PREFERENCES TO INTERNATIONAL TRADING STRUCTURES The next step in this argument is to relate particular distributions of potential economic power, defined by the size and level of development of individual states, to the structure of the international trading sys￾tem, defined in terms of openness. Let us consider a system composed of a large number of small, highly developed states. Such a system is likely to lead to an open international trading structure. The aggregate income and economic growth of each state are increased by an open system. The social instability produced by exposure to international competition is mitigated by the factor mobility made possible by higher levels of development. There is no loss of political power from openness because the costs of closure are symmetrical for all members of the system. Now let us consider a system composed of a few very large, but unequally developed states. Such a distribution of potential economic power is likely to lead to a closed structure. Each state could increase its income through a more open system, but the gains would be modest. Openness would create more social instability in the less developed countries. The rate of growth for more backward areas might be See David P. Calleo and Benjamin Rowland, America and the World Political Economy (Bloomington: Indiana University Press r973), Part 11, for a discussion of American thought; Eli Heckscher, Mercantilism (New York: Macmillan 1955); and D. C. Coleman, ed., Revisions in Mercantilism (London: Methuen 1969), for the classic discussion and a collection of recent articles on mercantilism; Andre Gunder Frank, Latin America: Underdevelopment or Revolution (New York: Monthly Review 1969); Arghiri Emmanuel, Unequal Exchange: A Study of the Imperialism of Trade (New York: Monthly Review 1972); and Johan Galtung, "A Structural Theory of Imperial￾ism," lournal of Peace Research, VIII, No. 2 (1971), 81-117, for some representative argu￾ments about the deleterious effects of free trade. 7 See Gottfried Haberler, international Trade and Economic Development (Cairo: National Bank of Egypt 1959); and Carlos F. Diaz-Alejandro, "Latin America: Toward 2000 A.D.," in Jagdish Bhagwati, ed., Economics and World Order from the 1970s to the rggos (New York: Macmillan 1g72), 223-55, for some arguments concerning the benefits of trade

322 WORLD POLITICS frustrated,while that of the more advanced ones would be enhanced. A more open structure would leave the less developed states in a polit- ically more vulnerable position,because their greater factor rigidity would mean a higher relative cost of closure.Because of these disad- vantages,large but relatively less developed states are unlikely to accept an open trading structure.More advanced states cannot,unless they are militarily much more powerful,force large backward countries to accept openness. Finally,let us consider a hegemonic system-one in which there is a single state that is much larger and relatively more advanced than its trading partners.The costs and benefits of openness are not sym- metrical for all members of the system.The hegemonic state will have a preference for an open structure.Such a structure increases its ag- gregate national income.It also increases its rate of growth during its ascendency-that is,when its relative size and technological lead are increasing.Further,an open structure increases its political power,since the opportunity costs of closure are least for a large and developed state. The social instability resulting from exposure to the international sys- tem is mitigated by the hegemonic power's relatively low level of involvement in the international economy,and the mobility of its factors. What of the other members of a hegemonic system?Small states are likely to opt for openness because the advantages in terms of ag- gregate income and growth are so great,and their political power is bound to be restricted regardless of what they do.The reaction of medium-size states is hard to predict;it depends at least in part on the way in which the hegemonic power utilizes its resources.The potentially dominant state has symbolic,economic,and military capa- bilities that can be used to entice or compel others to accept an open trading structure. At the symbolic level,the hegemonic state stands as an example of how economic development can be achieved.Its policies may be emu- lated,even if they are inappropriate for other states.Where there are very dramatic asymmetries,military power can be used to coerce weaker states into an open structure.Force is not,however,a very efficient means for changing economic policies,and it is unlikely to be employed against medium-size states. Most importantly,the hegemonic state can use its economic resources to create an open structure.In terms of positive incentives,it can offer access to its large domestic market and to its relatively cheap exports. In terms of negative ones,it can withhold foreign grants and engage

322 WORLD POLITICS frustrated, while that of the more advanced ones would be enhanced. A more open structure would leave the less developed states in a polit￾ically more vulnerable position, because their greater factor rigidity would mean a higher relative cost of closure. Because of these disad￾vantages, large but relatively less developed states are unlikely to accept an open trading structure. More advanced states cannot, unless they are militarily much more powerful, force large backward countries to accept openness. Finally, let us consider a hegemonic system-one in which there is a single state that is much larger and relatively more advanced than its trading partners. The costs and benefits of openness are not sym￾metrical for all members of the system. The hegemonic state will have a preference for an open structure. Such a structure increases its ag￾gregate national income. It also increases its rate of growth during its ascendency-that is, when its relative size and technological lead are increasing. Further, an open structure increases its political power, since the opportunity costs of closure are least for a large and developed state. The social instability resulting from exposure to the international sys￾tem is mitigated by the hegemonic power's relatively low level of involvement in the international economy, and the mobility of its factors. What of the other members of a hegemonic system? Small states are likely to opt for openness because the advantages in terms of ag￾gregate income and growth are so great, and their political power is bound to be restricted regardless of what they do. The reaction of medium-size states is hard to predict; it depends at least in part on the way in which the hegemonic power utilizes its resources. The potentially dominant state has symbolic, economic, and military capa￾bilities that can be used to entice or compel others to accept an open trading structure. At the symbolic level, the hegemonic state stands as an example of how economic development can be achieved. Its policies may be emu￾lated, even if they are inappropriate for other states. Where there are very dramatic asymmetries, military power can be used to coerce weaker states into an open structure. Force is not, however, a very efficient means for changing economic policies, and it is unlikely to be employed against medium-size states. Most importantly, the hegemonic state can use its economic resources to create an open structure. In terms of positive incentives, it can offer access to its large domestic market and to its relatively cheap exports. In terms of negative ones, it can withhold foreign grants and engage

STATE POWER AND INTERNATIONAL TRADE 323 in competition,potentially ruinous for the weaker state,in third- country markets.The size and economic robustness of the hegemonic state also enable it to provide the confidence necessary for a stable international monetary system,and its currency can offer the liquidity needed for an increasingly open system. In sum,openness is most likely to occur during periods when a hegemonic state is in its ascendency.Such a state has the interest and the resources to create a structure characterized by lower tariffs,rising trade proportions,and less regionalism.There are other distributions of potential power where openness is likely,such as a system composed of many small,highly developed states.But even here,that potential might not be realized because of the problems of creating confidence in a monetary system where adequate liquidity would have to be pro- vided by a negotiated international reserve asset or a group of national currencies.Finally,it is unlikely that very large states,particularly at unequal levels of development,would accept open trading relations. These arguments,and the implications of other ideal typical con- figurations of potential economic power for the openness of trading structures,are summarized in the following chart. Size of States RELATIVELY EQUAL VERY UNEQUAL SMALL LARGE Level of EQUAL Moderate- Low- High Moderate High Development of States UNEQUAL Moderate Low Moderote- High CHART I.PROBABILITY OF AN OPEN TRADING STRUCTURE WITH DIFFERENT DISTRIBUTIONS OF POTENTIAL ECONOMIC POWER THE DEPENDENT VARIABLE:DESCRIBING THE STRUCTURE OF THE INTERNATIONAL TRADING SYSTEM The structure of international trade has both behavioral and institu- tional attributes.The degree of openness can be described both by the fow of goods and by the policies that are followed by states with respect to trade barriers and international payments.The two are not unre- lated,but they do not coincide perfectly. In common usage,the focus of attention has been upon institutions. Openness is associated with those historical periods in which tariffs

STATE POWER AND INTERNATIONAL TRADE 323 in competition, potentially ruinous for the weaker state, in third￾country markets. The size and economic robustness of the hegemonic state also enable it to provide the confidence necessary for a stable international monetary system, and its currency can offer the liquidity needed for an increasingly open system. In sum, openness is most likely to occur during periods when a hegemonic state is in its ascendency. Such a state has the interest and the resources to create a structure characterized by lower tariffs, rising trade proportions, and less regionalism. There are other distributions of potential power where openness is likely, such as a system composed of many small, hghly developed states. But even here, that potential might not be realized because of the problems of creating confidence in a monetary system where adequate liquidity would have to be pro￾vided by a negotiated international reserve asset or a group of national currencies. Finally, it is unlikely that very large states, particularly at unequal levels of development, would accept open trading relations. These arguments, and the implications of other ideal typical con￾figurations of potential economic power for the openness of trading structures, are summarized in the following chart. Size of States RELATIVELY EQUAL VERY UNEQUAL SMALL LARGE EQUAL Moderote- Low- Level of High High Moderote Development of States UNEQUAL Moderote Low Moderate - High The structure of international trade has both behavioral and institu￾tional attributes. The degree of openness can be described both by the pow of goods and by the policies that are followed by states with respect to trade barriers and international payments. The two are not unre￾lated, but they do not coincide perfectly. In common usage, the focus of attention has been upon institutions. Openness is associated with those historical periods in which tariffs

324 WORLD POLITICS were substantially lowered:the third quarter of the nineteenth century and the period since the Second World War. Tariffs alone,however,are not an adequate indicator of structure. They are hard to operationalize quantitatively.Tariffs do not have to be high to be effective.If cost functions are nearly identical,even low tariffs can prevent trade.Effective tariff rates may be much higher than nominal ones.Non-tariff barriers to trade,which are not easily com- pared across states,can substitute for duties.An undervalued exchange rate can protect domestic markets from foreign competition.Tariff levels alone cannot describe the structure of international trade." A second indicator,and one which is behavioral rather than institu- tional,is trade proportions-the ratios of trade to national income for different states.Like tariff levels,these involve describing the system in terms of an agglomeration of national tendencies.A period in which these ratios are increasing across time for most states can be described as one of increasing openness. A third indicator is the concentration of trade within regions com- posed of states at different levels of development.The degree of such regional encapsulation is determined not so much by comparative ad- vantage (because relative factor endowments would allow almost any backward area to trade with almost any developed one),but by polit- ical choices or dictates.Large states,attempting to protect themselves from the vagaries of a global system,seek to maximize their interests by creating regional blocs.Openness in the global economic system has in effect meant greater trade among the leading industrial states.Peri- ods of closure are associated with the encapsulation of certain advanced states within regional systems shared with certain less developed areas. A description of the international trading system involves,then,an exercise that is comparative rather than absolute.A period when tariffs are falling,trade proportions are rising,and regional trading patterns are becoming less extreme will be defined as one in which the structure is becoming more open. TARIFF LEVELS The period from the 1820's to 1879 was basically one of decreasing tariff levels in Europe.The trend began in Great Britain in the 1820's, 8 Sec Harry Johnson,Economic Policies Toward Less Developed Countries (New York:Praeger 1967),90-94,for a discussion of nominal versus effective tariffs;Bela Belassa,Trade Liberalization among Industrial Countries (New York:McGraw-Hill 1967),chap.3,for the problems of determining the height of tariffs;and Hans O. Schmitt,"International Monetary System:Three Options for Reform,"International Affairs,L (April 1974),200,for similar effects of tariffs and undervalued exchange rates

324 WORLD POLITICS were substantially lowered: the third quarter of the nineteenth century and the period since the Second World War. Tariffs alone, however, are not an adequate indicator of structure. They are hard to operationalize quantitatively. Tariffs do not have to be high to be effective. If cost functions are nearly identical, even low tariffs can prevent trade. Effective tariff rates may be much higher than nominal ones. Non-tariff barriers to trade, which are not easily com￾pared across states, can substitute for duties. An undervalued exchange rate can protect domestic markets from foreign competition. Tariff levels alone cannot describe the structure of international trade." A second indicator, and one which is behavioral rather than institu￾tional, is trade proportions-the ratios of trade to national income for different states. Like tariff levels, these involve describing the system in terms of an agglomeration of national tendencies. A period in which these ratios are increasing across time for most states can be described as one of increasing openness. A third indicator is the concentration of trade within regions com￾posed of states at different levels of development. The degree of such regional encapsulation is determined not so much by comparative ad￾vantage (because relative factor endowments would allow almost any backward area to trade with almost any developed one), but by polit￾ical choices or dictates. Large states, attempting to protect themselves from the vagaries of a global system, seek to maximize their interests by creating regional blocs. Openness in the global economic system has in effect meant greater trade among the leading industrial states. Peri￾ods of closure are associated with the encapsulation of certain advanced states within regional systems shared with certain less developed areas. A description of the international trading system involves, then, an exercise that is comparative rather than absolute. A period when tariffs are falling, trade proportions are rising, and regional trading patterns are becoming less extreme will be defined as one in which the structure is becoming more open. TARIFF LEVELS The period from the 1820's to 1879 was basically one of decreasing tariff levels in Europe. The trend began in Great Britain in the 1820's~ See Harry Johnson, Economic Policies Toward Less Developed Countries (New York: Praeger 1967), 9094, for a discussion of nominal versus effective tariffs; Rela Belassa, Trade Liberalization among Industrial Countries (New York: McGraw-Hill I&), chap. 3, for the problems of determining the height of tariffs; and Hans 0. Schmitt, "International Monetary System: Three Options for Reform," International Aflairs, L (April 1974), 200, for similar effects of tariffs and undervalued exchange rates

STATE POWER AND INTERNATIONAL TRADE 325 with reductions of duties and other barriers to trade.In 1846 the abolition of the Corn Laws ended agricultural protectionism.France reduced duties on some intermediate goods in the 1830's,and on coal, iron,and steel in 1852.The Zollverein established fairly low tariffs in 1834.Belgium,Portugal,Spain,Piedmont,Norway,Switzerland, and Sweden lowered imposts in the 1850's.The golden age of free trade began in 1860,when Britain and France signed the Cobden- Chevalier Treaty,which virtually eliminated trade barriers.This was followed by a series of bilateral trade agreements between virtually all European states.It is important to note,however,that the United States took little part in the general movement toward lower trade barriers." The movement toward greater liberality was reversed in the late 187o's.Austria-Hungary increased duties in 1876 and 1878,and Italy also in 1878;but the main breach came in Germany in 1879.France increased tariffs modestly in 1881,sharply in 1892,and raised them still further in IgIo.Other countries followed a similar pattern.Only Great Britain,Belgium,the Netherlands,and Switzerland continued to follow free-trade policies through the 1880's.Although Britain did not herself impose duties,she began establishing a system of prefer- ential markets in her overseas Empire in 1898.The United States was basically protectionist throughout the nineteenth century.The high tariffs imposed during the Civil War continued with the exception of a brief period in the I8go's.There were no major duty reductions before I914. During the 192o's,tariff levels increased further.Western European states protected their agrarian sectors against imports from the Danube region,Australia,Canada,and the United States,where the war had stimulated increased output.Great Britain adopted some colonial pref- erences in I919,imposed a small number of tariffs in I92I,and ex- tended some wartime duties.The successor states of the Austro-Hun- garian Empire imposed duties to achieve some national self-sufficiency. The British dominions and Latin America protected industries nur- tured by wartime demands.In the United States the Fordney- Charles P.Kindleberger,"The Rise of Free Trade in Western Europe 1820-1875," The Journal of Economic History,xxxv (March 1975),20-55;Sidney Pollard,European Economic Integration 1815-1970 (London:Thames and Hudson 1974),117;J.B. Condliffe,The Commerce of Nations (New York:Norton 1950),212-23,229-30. 10 Charles P.Kindleberger,"Group Behavior and International Trade,"Journal of Political Economy,Vol.59 (February 1951),33;Condliffe (fn.9),498;Pollard (fn. 9),I2I;and Peter A.Gourevitch,"International Trade,Domestic Coalitions,and Liberty:Comparative Responses to the Great Depression of 1873-1896,"paper delivered to the International Studies Association Convention,Washington,1973

STATE POWER AND INTERNATIONAL TRADE 325 with reductions of duties and other barriers to trade. In 1846 the abolition of the Corn Laws ended agricultural protectionism. France reduced duties on some intermediate goods in the 183o's, and on coal, iron, and steel in 1852. The Zollverein established fairly low tariffs in 1834. Belgium, Portugal, Spain, Piedmont, Norway, Switzerland, and Sweden lowered imposts in the 1850's. The golden age of free trade began in 1860, when Britain and France signed the Cobden￾Chevalier Treaty, which virtually eliminated trade barriers. This was followed by a series of bilateral trade agreements between virtually all European states. It is important to note, however, that the United States took little part in the general movement toward lower trade barriers." The movement toward greater liberality was reversed in the late 1870's. Austria-Hungary increased duties in 1876 and 1878, and Italy also in 1878; but the main breach came in Germany in 1879. France increased tariffs modestly in 1881, sharply in 1892, and raised them still further in 1910. Other countries followed a similar pattern. Only Great Britain, Belgium, the Netherlands, and Switzerland continued to follow free-trade policies through the 1880's. Although Britain did not herself impose duties, she began establishing a system of prefer￾ential markets in her overseas Empire in 1898." The United States was basically protectionist throughout the nineteenth century. The high tariffs imposed during the Civil War continued with the exception of a brief period in the 1890's. There were no major duty reductions before 1914. During the 1920's, tariff levels increased further. Western European states protected their agrarian sectors against imports from the Danube region, Australia, Canada, and the United States, where the war had stimulated increased output. Great Britain adopted some colonial pref￾erences in 1919, imposed a small number of tariffs in 1921, and ex￾tended some wartime duties. The successor states of the Austro-Hun￾garian Empire imposed duties to achieve some national self-sufficiency. The British dominions and Latin America protected industries nur￾tured by wartime demands. In the United States the Fordney￾Charles P. Kindleberger, "The Rise of Free Trade in Western Europe 1820-1875," The Iournal of Economic History, xxxv (March 1975), 20-55; Sidney Pollard, European Economic Integration 18rfi-1970 (London: Thames and Hudson 1974)~ "7; J. R. Condliffe, The Commerce of Nations (New York: Norton 1950), 212-23, 229-30. 10 Charles P. Kindleberger, "Group Behavior and International Trade," Journal oj Political Economy, Vol. 59 (February rggr), 33; Condliffe (fn. g), 498; Pollard (fn. 9), 121; and Peter A. Gourevitch, "International Trade, Domestic Coalitions, and Liberty: Comparative Responses to the Great Depression of 1873-1896," paper delivered to the International Studies Association Convention, Washington, 1973