After%20Hegemony%20I - PowerPoint PPT Presentation

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After%20Hegemony%20I

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... Randall W. Stone, 2002. After Hegemony I. Robert O. Keohane Randall W. ... of hegemony ... International hegemony is beneficial. Property rights. Security ... – PowerPoint PPT presentation

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Title: After%20Hegemony%20I


1
After Hegemony I
  • Robert O. Keohane

2
Overview
  • I. The concept of hegemony
  • II. Repeated prisoners dilemma, regimes, and
    international cooperation
  • III. Assessment

3
International cooperation as a public good
NC
C
Payoffi
K group
n
Equilibrium?
All free ride
4
The case of hegemony
NC
C
Payoffi
n
Equilibrium?
  • Hegemon contributes
  • All others free ride

5
After hegemonic decline
NC
C
Payoffi
n
Equilibrium?
Everyone free rides
6
Implications
  • International hegemony is beneficial
  • Property rights
  • Security
  • Transaction costs
  • The weak exploit the strong
  • Burden sharing in NATO
  • MFN in GATT
  • Hegemonic decline threatens the system

7
Cases Britain 19th Century
  • Repeal of the 1815 Corn Law in 1846
  • Market opening strategies
  • Bilateral MFN negotiations with Scandinavia,
    France U.S.
  • Imperialism
  • Market creation
  • Protection for property
  • Reduction of risk for investors

8
Cases Britain 19th Century
  • Financial system
  • Gold standard, international reserve currency
  • Free capital market
  • Lender of last resort

9
Cases Britain 20th Century
  • Decline after WWI
  • Abandon the gold standard
  • Protectionism
  • Imperial preferences as a discriminatory trade
    bloc

10
Cases United States during the depression
  • Smoot-Hawley Act of 1930
  • Reluctant lender of last resort
  • J.P. Morgan and the New York Fed
  • Abandon the gold standard (1934)

11
Cases United States after WWII
  • 1944 Bretton Woods
  • International Monetary Fund (IMF)
  • World Bank (IBRD)
  • Trade ITO ? GATT
  • Marshall Plan (ERP) ? OECD
  • Oil producers regime
  • Low prices
  • Price stability

12
U.S. decline?
  • Rise of OPEC
  • Departure from the gold standard 1971
  • Triffins paradox
  • Vietnam War
  • Protectionism, NTBs, VERs

Just two cases?
13
Theoretical problems
  • How do you motivate the hegemon?
  • The U.S. was a potential hegemon before WWII
  • Wrong or tautological?
  • Only the crude theory makes predictions
  • The nuanced theory is tautological
  • Hegemonic temptations
  • Impose optimal tariffs
  • Unilateral macroeconomic policy
  • Exploit reserve status of the currency

14
Public goods
  • Non-rival
  • Non-excludable

15
Public goods
  • GATT/WTO
  • Members only
  • MFN status is a public good by design
  • IMF
  • Members only
  • But, benefits to net contributors are public
  • Systemic stability, free trade, capital flows
  • Oil
  • Suez crisis of 1954

16
Public goods
  • In any regime, enforcement is a public good
  • Temptations to cut a deal
  • Need a threat to punish the punishers
  • Exclusion itself may be the public good

17
Collective action in repeated games
  • Small groups substitute for hegemons
  • There is more cooperation, in Keohanes
    termsmutual adjustment
  • Cooperation may improve because hegemons can more
    credibly threaten to defect after decline
  • U.S.-Japanese trade in the 80s
  • U.S.-EC on NTBs ? Uruguay Round
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