Domestic Incentives Research Articles

Incomplete Cooperation and Co-Benefits: Deepening Climate Cooperation with a Proliferation of Small Agreements

Case study and model results lend some optimism for the potential of small coalitions with partially excludable public goods to substantially deepen international cooperation on energy and climate issues. Drawing motivation from other issue areas in international relations ranging from nuclear non-proliferation, transboundary air pollution and liberalized trade, we use an evolutionary-game-theoretic model to analyze regimes that yield domestic incentives to contribute to public goods provision (co-benefits). Co-benefits may be limited, but can create a nucleus for formation of coalitions that grow while deepening provision of global public goods. The Climate and Clean Air Coalition (CCAC) is a prime example of an agreement that employs partially excludable club benefits to deepen cooperation on non-CO2 greenhouse gases. Our game-theoretic results support two important insights for the building blocks approach to addressing climate change: sustained cooperation in club agreements is possible even when public goods are not entirely excludable and some members of the population free ride; and second, cooperation in small club configurations yields larger non-excludable public goods benefits than cooperation in more inclusive forums. This paper lends positive support that a proliferation of small agreements under a building blocks approach at the UNFCCC may be more effective (not just more likely) for deepening climate change cooperation than a fully inclusive approach.

Foreign Aid, Democratization, and Autocratic Survival

Does foreign aid prop up authoritarian regimes or is it conducive to democratic reforms? We use a two-level perspective that takes the domestic incentives of both the recipient and the donor into account to review the existent literature respecting this question. By bringing together research on democracy and autocracy with the literature on aid effectiveness and the political economy of aid provision, we provide a political economy perspective against which the mixed effects of foreign aid on political regimes can plausibly be explained. Against this background, research on aid effectiveness may give more attention to incentives in recipient countries and may take on a more comprehensive perspective on international relations. At the same time, the debate on authoritarianism may also gain insight into authoritarian strategies by investigating aid negotiations.

Samaritans, Family Builders, and the Politics of Intercountry Adoption

Critics of intercountry adoption define it as a demand-driven market for babies, from which parents in rich countries benefit at the expense of those in poor countries. Advocates hold that it often provides the best chance for orphaned children to grow up in a family. This paper investigates these opposing claims. It develops a theory that outlines the circumstances under which intercountry adoption is likely to result in a “baby trade,” and evaluates expectations derived from that theory on the basis of data on adoptions to the United States. The findings suggest that sending countries with large and fast-growing adoption programs may be particularly vulnerable to the temptation to supply a demand-driven market. However, sending countries do not simply respond to international incentives. Instead, the variation in participation in intercountry adoption between sending countries is partially driven by domestic incentives. The paper ends with suggestions for future research and policy.

No Space for Constructivism? A Critical Appraisal of European Compliance Research

This article aims at critically reviewing the European compliance literature. As this literature is dominated by a rational and positivist understanding of norm adherence primarily emphasizing domestic implementation costs, administrative capacities or external incentives during EU enlargement, this paper reinvigorates a constructivist epistemology of norm compliance in contrast to the analytical limitations of the rational approach.

Optimal domestic regulation under asymmetric information and international trade: a simple general equilibrium approach

We investigate the design of domestic incentive regulations in a small economy opened to trade and its implications for international specialization and for trade openness to remain welfare‐improving. More specifically, we append to an otherwise standard 2 × 2 Heckscher‐Ohlin model of a small open economy a continuum of intermediate sectors producing nontradable goods used in tradable sectors. Those goods are produced by privately informed regulated firms. Asymmetric information induces distortions with general equilibrium impacts. The small economy becomes relatively richer in the informationally sensitive factor so that asymmetric information might reverse trade patterns. Free trade is Pareto‐dominated by autarky when it exacerbates agency distortions.

Divergent Incentives for Dictators

Although they are arguably the worst violators of human rights, dictators sometimes commit to international human rights treaties like the United Nations Convention Against Torture (CAT) to appease their domestic opposition. Importantly, however, executives facing effective judiciaries must anticipate ex post costs that can arise when international treaties are likely to be enforced domestically. This suggests that one domestic institution—a political opposition party—may provide a dictator with incentives to commit to international human rights treaties and violate human rights, while another—an effective domestic judiciary—may constrain the dictator’s ability to violate human rights and incentivize him to avoid international commitment. How do dictators make choices about commitment to human rights law and respect for human rights when they face conflicting domestic incentives? Furthermore, how do these divergent incentives affect compliance when dictators do commit to international treaties? In this article, I argue that the domestic incentives dictators face to support the CAT and engage in torture are moderated in countries with effective domestic judiciaries.

Lost in Europeanisation: The Western Balkans and Turkey

The article analyses the EU's impact on the rule of law in the Western Balkans and Turkey. It enquires into the reasons behind the patchy record of rule-of-law reforms in Turkey, Croatia and Albania by examining judicial reforms in response to the EU accession requirements. It argues that a credible EU accession perspective and an adequate degree of state capacity are necessary but not sufficient conditions for explaining the fluctuations in the rule-of-law standards in EU accession countries. The genuine, partial or non-alignment of the ruling elites' domestic incentives with the EU incentives is a key determinant of rule-of-law trends in the Western Balkans and Turkey.

Catching Up? Consolidating Liberal Democracy in Bulgaria and Romania after EU Accession

This article investigates the most important determinants of domestic institutional change in combating corruption and reforming the judiciary in Bulgaria and Romania since EU accession in 2007. It explores how EU and domestic incentives trigger domestic institutional change, and how the two interact with one another. It argues that political leaders and parties will only continue and deepen reforms in response to the twin forces of EU and domestic influence. The EU incentives that shape elite choices stem primarily from public monitoring by the European Commission of government performance and the possibility of sanctions by the EU. The domestic incentives centre on winning elections and holding power, with substantial variation explained in part by diverging sources of domestic support.

Domestic Unrest and the Initiation of Negotiations

AbstractThe main argument of this article is that we need to incorporate domestic-pressure arguments into conflict management studies and, at the same time, we need to include conflict-management opportunities in the study of domestic-international theory. This study looks at the impact of domestic incentives on a state’s decision to negotiate. The primary hypothesis is that domestic turmoil will increase the likelihood that rival states with a history of aggressive interaction shift their foreign policy to a more accommodative one. Testing my argument on strategic rivals between 1945 and 1995, I find that after controlling for the factors of history and level of hostility between the rivals, anti-government unrest actually increases the likelihood of negotiations taking place, while acts threatening the downfall of the regime tend to decrease the chance of witnessing negotiations.

Nuclear Logics: Contrasting Paths in East Asia & the Middle East

For those who live in the American International Relations community, Etel Solingen's Nuclear Logics: Contrasting Paths in East Asia & the Middle East undoubtedly represents a stunning success of the study of nuclear proliferation. In 1994, Solingen published an influential article in this field of research, ‘The Political Economy of Nuclear Restraint', in International Security, and argued that countries with ruling coalitions pursuing economic liberalization have stronger incentives to refrain from developing nuclear weapons than those with ‘inward-looking, nationalist, and radical-confessional coalitions'. Based on the review of cases in South Asia, on the Korean Peninsula, in the Middle East, and in Latin America, she concluded that the former are internationalist in nature and are unwilling to damage international trade and investment by going nuclear, whereas the latter are more likely to pursue nuclear weapons because they care much less about the economic costs of nuclearization. In Nuclear Logics, Solingen expands such findings of her 1994 article and argues even more persuasively that ‘internationalizing models of political survival make the development of nuclear weapons less likely than inward-looking models’ (p. 46). Starting from ‘the puzzle of contrasting historical trajectories’ across East Asia and the Middle East since the late 1960s (p. 4), Solingen conducts the first ever ‘systematic efforts’ (p. 11) to explain why East Asia has largely moved toward denuclearization while the norm among the core Middle East powers has been nuclearization. Criticizing four alternative theories of nuclear choices of states, i.e. neorealism, neoliberal institutionalism, constructivism, and ‘theories about democracy and foreign policy', as insufficient to solve her puzzle, Solingen insists that the study of nuclear proliferation must pay more attention to the effects of internationalization on domestic politics and nuclear policy. According to Solingen, ‘[w]hereas inward-looking models might have regarded nuclear weapons as assets in the arsenal of building regime legitimacy, outward-oriented ones regarded them as liabilities’ (p. 277) and the two distinct patterns of nuclear choices in the Middle East and East Asia during the ‘second nuclear age’ can be well explained by the heavy regional concentrations of respective models in respective regions. In East Asia, the concentration of leaders who stake their political survival on economic growth through integration into the global economy reinforced individual, domestic incentives of leaders to avoid nuclearization across the borders. In the Middle East, the concentration of leaders who resist internationalization by trade protection, import substitution, and state entrepreneurship had the opposite effect. In fact, Solingen's careful case studies of four ‘nuclear aspirants’ in East Asia and five in the Middle East successfully demonstrate that ‘[t]he nuclear choices of all pertinent cases’ in the two regions since the 1960s ‘are compatible with domestic survival models’ (p. 277).

Politics and Privatization: Exogenous pressures, domestic incentives and state divestiture in Latin America

AbstractDespite a pervasive trend towards state retrenchment in Latin America since the 1980s, there remains significant variation in the levels of privatization across the region. However, very few cross-national studies of the determinants of privatization have been conducted and we still do not truly know why states privatize. This paper examines the determinants of privatization for 14 Latin American states over the period 1975 to 2003. I contend that privatization is best conceptualized as a two-stage process involving an initial decision to privatize, followed by a subsequent decision concerning the extent and intensity of privatization. In addition, privatization cannot be simply explained by either international or domestic level-variables. Rather, endogenous and exogenous variables will have different impacts at different stages of this process. The results of the statistical tests yield two important insights. Firstly, the initial decision to privatize is primarily shaped by international factors, in particular, international diffusion, while variation in the level of state divestiture across the region can primarily be explained by domestic economic and political conditions.

Opportunities and hurdles in applying CCS Technologies in China — With a focus on industrial stakeholders

Abstract In collaboration with several Chinese institutions, we interviewed over 100 stakeholders in mid -2008 to improve our understanding of the drivers and the barriers to deploying CCS in China. We investigated a range of stak eholders’ perceptions with regard to the socio -economic impacts, environmental concerns, energy security and international cooperation and investment. In addition to general questions applicable to all stakeholders, we asked tailored qu estions appropriate to specific sectors such as finance, electricity generation and national and local government for more detailed responses. We explored the factors that may create an enabling environment for CCS including international and domestic incentives, financing me chanisms, the legal and regulatory framework, technology and IPR, baseline determination, and social acceptance. The overall results are compared with similar studies conducted in China in 2006 and internationally.

Nationalist Discourse and Domestic Incentives to Prevent Settlement of the Territorial Dispute Between Guatemala and Belize

This article attempts to explain the difficulties involved in settling an enduring territorial dispute between Guatemala and Belize with a theory involving nationalism, discourse, and domestic politics. Leaders of both states have been unable to pursue settlement options that contradict nationalist discourse framing the territorial dispute. Settlement would damage leaders' credibility and reputations, resulting in domestic punishment. Analysis of 23 years of nationalist discourse, territorial dispute policies, and domestic responses in both Guatemala and Belize provides strong support for the theory.

When Doves Cry: International Rivalry, Unreciprocated Cooperation, and Leadership Turnover

Varied research traditions suggest that dovish leaders will be thrown out of office under harsh external circumstances. Below, I elaborate a model of rivalry maintenance that draws on and refines the insight from studies of leadership tenure and foreign policy. Specifically, I expect a leader who offers unreciprocated cooperation to a rival (a dove) to be more likely to be deselected from power than a leader that takes a harder line vis‐à‐vis the rival (a hawk). I test this expectation using event history techniques and data spanning the 1950–1990 time period and find strong evidence that dovish leaders pay an electoral price within a rivalry context. The findings suggest an internationally contingent domestic incentive to maintain rivalry and conflict over time.

Trade Liberalization in a Globalizing World

Globalization is not only about the rise of trade, FDI, and migration. It is also about the changing linkages among these flows. The main findings of the paper can be summarized as follows. First, at least in the nineties, import trade liberalization fostered not only trade but also inward investment, confirming that trade and FDI toward developing countries have become largely complements. Second, the presence of a skilled labour force is a relevant factor to attract FDI. Moreover, trade policies and the stock of FDI have a positive impact on the incentives to invest in education. This set of findings highlights the possibility of a low equilibrium trap where the lack of human capital discourages FDI and inadequate investment from abroad limits the domestic incentives to acquire education. Rich countries, by encouraging skilled immigration from relatively poor countries, are definitely aggravating such a risk. Third, we find little evidence supporting the contrary argument of a brain gain, where the possibility for skilled workers to migrate abroad raises the return to education and the investment in human capital. Overall, our results highlight the need to study globalization in a fully integrated way, not just as the sum of its different components. They also show that backtracking in one area (e.g. trade) feeds negatively on other areas (e.g. FDI).

Attracting Trouble

Otherwise powerful, formidable democracies are tempting targets for international violence because they have leaders who, on average, have been in office for shorter periods of time than leaders of autocracies. Domestic incentives may make resistance more costly than offering concessions for inexperienced leaders of both democratic and authoritarian states. Over time, however, resistance may become domestically less costly, causing experienced leaders to be more likely to prefer resistance. Anticipating this response, potential challengers may be more likely to target inexperienced leaders. Because democracies generally have high rates of leadership turnover, they are tempting targets for international violence. Statistical analysis of crisis initiation between 1918 and 1992 confirms the perception that democracies are more likely to be targets of militarized challenges. Results are also consistent with the proposition that the relatively short tenure in office served by democratic leaders helps to account for the observed pattern of democratic attraction of foreign challenges.

Public Opinion and International Policy Choices: Global Commitments for Japan and Its Peers?

To understand the prospects for global order and progress in the coming years, we explore the joint implications of three premises: (1) states advantaged by the current international order have stakes in its regularity and predictability, and thus in moving to counter or prevent threats to those stakes; (2) along impure public and club goods lines, they are more likely to make efforts to do so when some private or club benefits result; and (3) public opinion provides a bounded policy acceptance envelope offering incentives and disincentives to national political elites to act as envisioned by the first two premises. We present a mosaic of public opinion in major OECD countries (the US, Japan, and major EU members) on three policy areas – foreign aid, UN peace-keeping operations, and environmental quality – that contain international public goods elements. Actual contribution tendencies in those areas found in our previous work largely conform to the public opinion patterns reported here. Within the limits of available data, domestic political incentives as represented by public opinion warrant neither extreme optimism nor pessimism about the prospects for continuing contributions by OECD states to sustaining orderly functioning of the current world system.

Taking Stock of Inter-American Bonds: Approaches to Explaining Cooperation in the Western Hemisphere

Scholars have furnished increasingly high-quality accounts of cooperation in the Americas during the 1980s and 1990s. The work has been rich empirically but sparse theoretically. This essay reviews the existing literature, providing a historical overview of the cooperation that has occurred as well as categorizing previous research into that focusing on internal versus external pressures for cooperation. The studies that explore international incentives for cooperation examine institutions, ideas, globalization, and the balance of power as potential explanations for what has happened, but fail to account for variation in individual countries' economic cooperativeness. The research focusing on internal pressures looks at domestic markets, politics, and bureaucracies, but often fails to step beyond the narrow case to consider a generalizable phenomenon. The article concludes with an argument in favor of a synthetic approach, calling for the careful specification of interaction effects linking international and domestic incentives.

Regionalism and Multilateralism: A Political Economy Approach

Preferential trading arrangements are analyzed from the viewpoint of the new political economy that views trade policy as being determined by lobbying of concentrated interest groups. Two conclusions are reached: first, that trade-diverting preferential arrangements are more likely to be supported politically; and second, that such preferential arrangements could critically change domestic incentives so multilateral liberalization that is initially politically feasible could be rendered infeasible by a preferential arrangement. The larger the trade diversion resulting from the preferential arrangement, the more likely this will be the case.

Managing foreign participation in government-funded applied space research and product development

Using the example of the USA, this article examines the economics of foreign participation in applied R&D space projects, with an emphasis on those with the goal of commercializing technology. Following an overview of the arguments within applied high-tech research in general — fear of subsidizing other countries economies and jeopardizing national prestige; benefits from nationally unavailable skills, reducing government costs and increasing domestic incentives for innovation — the authors consider specific characteristics of markets for space technology in the light of these arguments. They conclude with a discussion of policy options, such as the use of licenses or levy of royalties, to preserve the virtues of foreign competition while addressing concerns about ‘underwriting’ foreign competitors.