Mark S. Manger. 2009. Investing in Protection: The Politics of Preferential Trade Agreements between North and South (New York: Cambridge University Press)

Abstract

Investing in Protection by Mark Manger (2009) is an excellent piece of scholarship, as it deftly provides unique macro-level theoretical insights and supports them with illustrative micro-level case analysis. The central question of interest is what explains the recent and rapid proliferation of North-South preferential trade agreements (PTAs)? Manger argues that this pattern is best explained by foreign direct investment (FDI). Developed states form PTAs with developing countries to increase the ability of domestic firms to benefit from FDI, while simultaneously restricting the ability of foreign competitors to use these states as export platforms. Other developed states respond to this ‘offensive’ action by forming their own ‘defensive’ PTAs with the developing state to protect their domestic firm’s sunk-cost investments. This theory represents a significant advancement in our understanding of this process, offering novel predictions for both general proliferation and the specific location of North-South trade agreements. Previous explanations for PTA proliferation argue that gridlock during multilateral trade negotiations (MTNs) at the GATT/WTO have caused states to increasingly turn to bilateral and regional agreements (Mansfield and Reinhardt 2003). Though the failures of MTNs have certainly influenced the decisions of states to form PTAs, these systemic level explanations have limited explanatory power for the proliferation of North-South agreements. First, many of the specific arguments advanced in this literature as to why states form PTAs (e.g. further integration of inter-industry trade, increased bargaining leverage in MTN, etc.) simply do not apply for this subset of cases. Second, such theories offer no predictions for the specific choice of partners in such agreements, simply that PTAs in general are more likely. Manger’s book takes a large step forward toward filling this void in the literature. Rev Int Organ (2010) 5:501–504 DOI 10.1007/s11558-010-9082-5