Full text: Assessing the opportunities and limits of a regionalization of economic activity (215)

14 liberal internationalism and concepts of global governance have great difficulty in explaining. Other schools of thought do provide some guidance on the changes underway in the international system; this is particularly true for IR literature. While distinct theoretical traditions co-exist in the field of IR, influential approaches in the (Neo-)Realist tradition emphasise the primacy of the political, i.e., the dominant role of (large) nation-states, in determining the structure of international trade (Krasner 2009). In contrast, approaches in the tradition of critical International Political Economy (IPE), though sharing the ultimate primacy of the political in determining economic issues, have a more nuanced understanding of the mutually constitutive relationship between the economic and the political, as well as of the role of non-state actors (Overbeek 2013; Gill 2014). In contrast to liberal economic doctrine, the Theory of Hegemonic Stability (HST), a product of different theoretical traditions in IR, including Realism and the systemic school, has observed that free trade has not been the norm throughout the history of capitalism (Kindleberger 1973). HST declines the primacy of economic actors in determining the structure of international trade but posits that the structure is ultimately determined by state power (see Krasner 1976; Hirschman 1945). States are thought of as largely independent actors, their actions being directed towards increasing power in the international system (Krasner 2009). States use a variety of measures including trade policy to foster their power in an international system of asymmetrical interdependence, in which all states are linked by trade relations, but larger states typically are less dependent on trade for their economic well-being than small states. An open international trading system thus depends on the extent to which large states can promote their main strategic interests via the pursuit of trade policies. These interests are focused on promoting economic income and growth, social stability, national security, and technological and financial dominance, amongst other things. While small states tend to favour an open system of trade, given their limited domestic market, such a system will emerge only if it is actively supported by large states, and, above all, by a hegemonic state, i.e., an economically and politically dominant power. What is more, an open international trading system may not be stable in the long term, but will eventually be undermined, for example, by ‘security externalities’; trade may have positive impacts on the military potential of other large economies as dynamic efficiency gains allow countries to upgrade both their technological and thus also their military capabilities (Gowa 1994). Thus the dominant position of the hegemon is eventually undermined by the ascendancy of other states, eroding the incumbent’s support for open multilateral trade. As a consequence, economic poles will emerge, composed of a large state with its allies tied to it by a system of bilateral/regional arrangements. Trade is thus closely connected to national security, as exports of advanced technology threaten to eventually undermine the technological superiority of the hegemon. It is widely acknowledged in IR theories that the political power of states is closely related to its economic and technological capacities, which together with its financial power, form the backbone of its military strength (see Strange 1988). Against this background, the ‘trade war’ launched by the Trump administration against China must be interpreted as an effort to maintain the technological and thus, ultimately, the military superiority of the US. In this undertaking, trade policy is explicitly put to the service of national security interests. The reassertion of large nation-states as key actors on the international stage, including both major global powers such as the US and China, but also second-tier regional powers such as Russia, India, Turkey, Iran, Indonesia, and Brazil, amongst others, has been underlined by the recent ascendency of looser forms of international cooperation such as the G-20, functioning outside of institutionalised international governance mechanisms

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