The forces of attraction: How security interests shape membership in economic institutions

Abstract

The link between security and economic exchange is widely recognized. But when and how much do geopolitical interests matter for economic cooperation? While existing work focuses on bilateral trade and aid, we examine how geopolitics shapes membership in multilateral economic organizations. We demonstrate that substantial discrimination occurs as states welcome or exclude states based on foreign policy similarity. Biased selection of members can politicize economic cooperation despite multilateral norms of non-discrimination. We test the geopolitical origins of institutional membership by analyzing new data on membership patterns for 231 economic organizations from 1949 – 2014. Evidence shows that security ties shape which states join and remain in organizations at both the formation and enlargement stages. We use a finite mixture model to compare the relative power of economic and geopolitical considerations, finding that geopolitical alignment accounts for nearly half of the membership decisions in economic institutions.