GDAE Working Paper No. 09-01 Resources, Rules and International Political Economy
When applied to conflict between developed and developing countries, the
expectations derived from a structuralist approach are rather simple and straightforward.
If rich and poor countries have conflicting interests, to the extent that rich countries have
more resources (which by definition they do) and thus power, we should expect rich
countries’ interests to prevail. Thus structuralists expect the international political
economy to reflect the interests of the more developed countries 10
While the distribution of resources may be a useful predictor of how conflicts will
be resolved, it is not without its shortcomings. Actors with more resources obviously do
not always impose their will; actors often consent to institutional arrangements (i.e. rules)
that mitigate resource differentials and produce outcomes that would be reflective of
alternative distributions of power. The question, then, is why actors with more resources
would accept institutions that constrain the exercise of their own resources? After all,
from a structuralist perspective, such rules distort the “natural” order of things.
Institutionalists provide an answer to this question by concerning themselves with
the reasons why actors want rules in the first place. Actors demand institutions because of
the invaluable functions that they perform: institutions reduce transaction costs involved
in securing information, monitoring activities, and enforcing compliance. Furthermore,
by providing standards of behavior that demarcate likely patterns of conduct, institutions
increase predictability and reduce uncertainty.11 Actors cannot know what the precise
outcome of any given interaction will be, but the array and probability of different
scenarios can be anticipated, and this certainty and predictability are cherished.
Integrating these simple observations derived from the structuralist and
institutionalist approaches leads to the following implications regarding North-South
politics in the international economy. First, and most fundamentally, developed countries
write the rules. To paraphrase Krasner, there are “makers, breakers, and takers”12 of
international institutions: developed countries are makers, developing countries are takers
(and, at times, breakers).
Yet notwithstanding their prevailing rule-making capacities, developed countries
may create and abide by rules that fail to reflect underlying distributions of power in
order to secure compliance on the part of developing countries and thereby reduce the
costs of monitoring and enforcement. Indeed, the prevalence of information asymmetries,
which raise the costs of monitoring and enforcement, gives developed countries
incentives to establish rules that encourage self-enforcement. That is, more powerful
actors’ demand for international rules may lead them to accept, as a side effect, the
distorting effects that rules can have on the “natural” order of things.
Developing countries are likely to accept, and perhaps appear to embrace, even
unfavourable agreements because of the stability and predictability that institutions
promise to deliver. For developing countries, the principal advantages of - and thus
source of demand for - institutions are the provision of predictability and reduction of
uncertainty. The stability that comes from knowing what is and what is not acceptable
behaviour can help ameliorate some of the vulnerability that marks developing countries’