July 1: What is the role of international organizations and do they really matter?

Abbot, Kenneth and Duncan Snidal. 1998. Why States Act through Formal Organizations. Journal of Conflict Resolution 42:3-32.

Last class take-home point

• Analytical tool: – Time inconsistent preference problem– A.K.A. (also known as):

• Commitment problem• Present bias

Do IOs matter?

Dramatic action

• United Nations Security Council (UNSC) sanctions on Libya

• International Atomic Energy Agency (IAEA) inspectors in North Korea

• United Nations (UN) peacekeepers in the Middle East

• North Atlantic Treaty Organization (NATO) in Bosnia

• The Uruguay Round the World Trade Organization (WTO) & the dispute settlement mechanism

Ongoing action:

• Global health policy (the WHO)

• Development (the World Bank)

• Monetary policy (the International Monetary Fund)

• Participation reduces the chances of war among members

• Participation increases the chances of democracy

Various sizes:

• From:

– Asia-Pacific Economic Cooperation forum (APEC) - $2 million budget (pays for their annual meeting?)

• To:

– European Union (EU) - verging on a sovereign state

– World Bank - >10,000 employees from 160 countries (2/3 in Washington)

– IMF (Aug. 2008: $341 billion)

Specialized agencies:

• ILO– http://www.ilo.org/global/What_we_do/lang--en/index.htm

• ICAO – http://www.icao.int/icao/en/howworks.htm

• FAO– http://www.fao.org/about/about-fao/en/

• Others:– UNEP

• http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=43

– EBRD • http://www.ebrd.com/about/index.htm

Finding research on IOs:

• Google Scholar!!! http://scholar.google.com/

• ISI Web of Science http://isiknowledge.com/

IOs allow for:

• CENTRALIZATION– A concrete and stable organizational structure and an

administrative apparatus managing collective activities• May allow for immediate action (UN Security Council)• Or for specialization (OECD has >200 working groups)• May have flexible design (IMF voting structure) or be rigid

(UN Security Council)

• INDEPENDENCE– The ability/authority to act with a degree of autonomy

within defined spheres

Rational choice perspective:

• LEADERS found/use IOs when benefits of cooperation outweigh (sovereignty) costs

• IOs produce collective goods in PD settings & solve coordination problems

• Coordination problems?– E.g., Battle of the sexes game

PD settings?

• Prisoner's dilemma

• http://www.youtube.com/watch?v=ED9gaAb2BEw&feature=related

• http://www.youtube.com/watch?v=p3Uos2fzIJ0

Prisoner's Dilemma:

• A non-cooperative, non-zero-sum game. (Mixed game of cooperation and conflict.)

• Individual rationality brings about collective irrationality.

Example…

– You're reading Tchaikovsky's music on a train back in the USSR.

– KGB agents suspect it's secret code.

– They arrest you & a "friend" they claim is Tchaikovsky.

– "You better tell us everything. We caught Tchaikovsky, and he's already talking…"

• You know that this is ridiculous – they have no case.

• But they may be able to build a case using your testimony and "Tchaikovsky's."

• If you "rat" out your "friend" – they will reduce your sentence.

• If not, they will throw the book at you.

Player 2

Player 1Cooperate

w/friend Defect (rat)

Cooperate w/friend -3, -3 -25, -1

Defect (rat) -1, -25 -10, -10

• The same situation can occur whenever "collective action" is required.

• The collective action problem is also called the "n-person prisoner's dilemma."

• Also called the "free rider problem."

• "Tragedy of the commons."

• All have similar logics and a similar result:

– Individually rational action leads to collectively suboptimal results.

Is cooperation ever possible in Prisoner's Dilemma?

• Yes

• In repeated settings

• Axelrod, Robert M. 1984. The Evolution of Cooperation. New York: Basic Books.

• So, IOs facilitate cooperation by coordinating states on superior equilibria/outcomes

• And lower the transaction costs of doing so

Alternatives to the rational-institutionalist perspective

Realist theory

• States do not cede to supranational institutions the strong enforcement capacities necessary to overcome international anarchy

• Thus, IOs and similar institutions are of little interest

• They merely reflect national interests and power and do not constrain powerful states

• Does realism = rational choice?

• Realism focuses on state interests - ignores microfoundations (leader incentives, domestic politics)

Constructivist theory

• Where to ideas and preferences come from?

• Focus on norms, beliefs, knowledge, and (shared) understandings

• IOs are the result of international ideas, and in turn contribute towards shaping the evolution of international ideas

• Vital for the understanding of major concepts such as legitimacy and norms

Abbot & Snidal:

States use IOs to…

• Reduce transaction costs;

• Create information, ideas, norms, and expectations;

• Carry out and encourage specific activities;

• Legitimate or delegitimate particular ideas and practices;

• Enhance their capacities and power

Principal-Agent framework

• IOs are thus "agents"

• Their (biggest) members are the "principals"

• Agency slack?

– "bureaucratic" perspective

The principal-agent problem

• The agent works for the principal

• The agent has private information

• The principal only observes an outcome

• Must decide to reelect/pay/rehire/keep the agent

• If standards are too low, the agent “shirks”

• If standards are too high, the agent gives up

• We need a Goldilocks solution – set standards “just right.”

• We may have to accept some an “information rent”

– Either pay extra or accept agency slack (corruption?)

Nature chooses the state of the world (“luck”)

GovernmentGood

Bad

High Effort/skill

Low Effort/skill

High Effort/skill

Low Effort/skill

Government

VoterReelect

Not

• If reelection criteria are too high, the government will not supply effort when exogenous conditions are bad.

• If reelection criteria are too low, the government will not supply effort when conditions are good.

• What should you do?

• Intuition: It depends on the probability of good/bad conditions & on the difference in outcomes when conditions are good/bad…

Solution?

• TRANSPARENCY?

Public choice/Bureaucratic theory

• IOs are like any bureaucracy

• Allow governments to reward people with cushy jobs

• The bureaucracy is essentially unaccountable

• Seek to maximize their budgets

• Look for things to do

Back to rational-institutionalist view…

What do IOs do for their members?

• Pooling resources (IMF/World Bank, World Health Organization) - share costs, economies of scale

• Direct joint action - e.g., military (NATO), financial (IMF), dispute resolution (WTO)

LAUNDERING

• Allow states to take (collective) action without taking direct responsibility (or take responsibility with IO support)

• Examples:– The IMF does the dirty work

– UN Security Council resolutions - a form of laundering?

• When an IO legitimates retaliation, states are not vigilantes but upholders of community norms, values, and institutions

• Korean War - The United States cast essentially unilateral action as more legitimate *collective* action by getting UN Security Council approval

Neutrality• Providing information

– Really? http://www9.georgetown.edu/faculty/jrv24/IMFforecasts.html

• Collecting information– Really! http://www9.georgetown.edu/faculty/jrv24/transparency.html

• Example– Blue helmets: – http://www.youtube.com/watch?v=O0n2-

YpwPWY&feature=PlayList&p=BBF5269792FC9ED6&playnext=1&playnext_from=PL&index=15

Community representative

Legitimacy

• Articulate norms? http://goodliffe.byu.edu/papers/catcascade2.pdf

• Universal Jurisdiction (more than a norm - a legal standard) – The CAT

• Honduras and the OAS??

Enforcement?

• The problem of endogeneity– 100% Compliance may mean the IO is doing

*nothing*– Be careful what conclusions we draw from

observations

• Compliance is meaningful only if the state takes action it would not take in the absence of the IO

• IMF/World Bank CONDITIONALITY

Answers to today's question:• IO's reduce transaction costs - costs of doing

business & coordinate on superior equilibria

• Enabling members to have:– LAUNDERING– Neutrality– Community representative– Enforcement– Legitimacy - shared beliefs that coordinate actors

regarding what actions should be accepted, tolerated, resisted, or stopped

• To these ends IOs are created centralized & independent

Analytical tools

• Time inconsistent preference problem / Commitment problem / Present bias

• Research networking

• Prisoner’s dilemma

• Principal-Agent framework

• Realist theory

• Constructivist theory

• Public choice/Bureaucratic theory

Thank you