09-01 "Resources, Rules and International Political Economy: The Politics of Development in the WTO"



GDAE Working Paper No. 09-01 Resources, Rules and International Political Economy

study of international political economy (IPE), structuralism and institutionalism. The
structuralist approach focuses on the distribution of
resources as the key determinant for
explaining international outcomes, while the institutionalist approach focuses on the
effects of
rules. What we see is that, within a broad set of constraints that is determined
by the distribution of resources, the rules of the WTO drive the outcomes. In particular,
the WTO’s rules of unweighted voting and consensus decision-making have inflated
developing countries’ influence in the post-Uruguay Round setting and allowed them to
block the efforts of wealthier countries to impose new constraints on national policy in
the areas of IP and investment.

In the second section of the chapter I present these two analytic approaches to the
study of IPE, deriving a set of expectations about North-South relations. In sections three
and four I consider the North-South politics of IP and investment, respectively, both in
the Uruguay Round and the post-Uruguay Round period. These issue areas are marked by
endemic and underlying sources of conflict, which I highlight in each instance. In both
cases we see developing countries blocking developed countries’ efforts to impose new
international regulations, and in both instances the power that allows developing
countries’ to “prevail”1 is derived from rules and not resources. In the fifth and
concluding section, I summarize the findings and I address a subsequent question that
logically follows from the analysis: why, if developing countries can block developed
countries’ initiatives now were they unable to do so during the Uruguay Round?

Before proceeding, a caveat is in order. Throughout the chapter I refer to
“developed” and “developing” countries, and I treat them as homogenous blocks. Doing
so is problematic, to say the least, and invites criticisms from all corners. To be sure, not
all wealthy countries share the same interests on all issues and nor do all poorer
countries; plenty of issues in the international political economy - and even the WTO -
are marked by cross-cutting alliances where some coalitions of developed and developing
countries are pitted against other coalitions of developed and developing countries.
Notwithstanding these observations, it is also true that there exist certain underlying
cleavages in the international political economy that are based on income - that countries
of different levels of economic development are likely to have different interests in the
regulation of the international political economy and, these differences are the source of
persistent and endemic conflict. Indeed, an examination of the politics of the post-World
War II international trading system leaves the undeniable sense that the “North-South”
cleavage has been - and continues to be - a prevailing axis of conflict.2

Resources, Rules, and North-South Conflict

Traditionally the field of IPE has been organized around the topic of international
cooperation and coordination.3 Scholars have concerned themselves with how countries
with overlapping but non-identical interests and preferences can act collectively. With the
basic metaphor being the prisoners’ dilemma, where the result of each country striving
for its most-preferred choice is an outcome that is worse for all actors than had they
cooperated and settled mutually on second-best choices, much of the field of IPE has



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