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.

Do IOs matter?

Plan
1. Some descriptive facts about IOs

2. A&S Take-away point

Plus: PD & coordination

3. Other perspectives
Realism, Constructivism, (Principal-Agent/Bureaucratic)

4. Motives (e.g., laundering dirty politics)

Dramatic action
United Nations Security Council (UNSC):
sanctions & military action Iran, Iraq (1991 v. 2003?), 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) EXTERNALITIES? (Implicit action?)
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) World Bank IMF
verging on a sovereign state (GDP of 15-19 trillion $)

>10,000 employees from 160 countries (2/3 in Washington)

Aug. 2008: $341 billion moving to nearly $1 trillion postGFC

Specialized agencies (look up on your own):

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?Document ID=43

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

The main take-away point?

Abbot, Kenneth and Duncan Snidal. 1998. Why States Act through Formal Organizations. Journal of Conflict Resolution 42:3-32.
http://scholar.google.com/scholar?q=Why+States+Act+through+Formal+Organizations&um=1&ie=UTF-8&sa=N&hl=en&tab=ws

IOs allow for:

CENTRALIZATION
An organizational structure & administrative apparatus managing collective activities
May allow for immediate action (UN Security Council) Or for specialization (OECD has >200 working groups) Governance 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 create/use IOs when benefits of cooperation outweigh (sovereignty) costs
IOs
produce collective goods in PD settings solve coordination problems (battle of the sexes)

PD settings?
Prisoner's dilemma

http://www.youtube.com/watch?v=ED9gaA b2BEw&feature=related http://www.youtube.com/watch?v=p3Uos2f zIJ0

Prisoner's Dilemma:
A non-cooperative, non-zero-sum game. (Mixed game of cooperation and conflict.) Individual rationality brings about collective irrationality.

Player 2 Player 1
Cooperate w/friend Defect (rat) Cooperate w/friend Defect (rat)

-3, -3 -1, -25

-25, -1 -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.

In the repeated setting, there are multiple equilibria:

Player 2 Player 1
Cooperate w/friend Defect (rat)
(1) Defect Defect

Cooperate w/friend

Defect (rat)

-3, -3 -1, -25

-25, -1 -10, -10

(2) Tit-for-Tat Cooperate Cooperate

Battle of the sexes coordination game: (This one is NOT a prisoners dilemma)

Ballet socialite Football socialite

Football Ballet Football Ballet

4,3 1,1

2,2 3,4

 IOs facilitate cooperation by coordinating states on superior equilibria/outcomes. And they also lower the transaction costs of doing so.

Alternatives to the rationalinstitutionalist perspective

Realist theory
States do not cede authority

IOs thus lack strong enforcement capacities

Anarchy rules international relations 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 do 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?)

High Effort/skill

Nature chooses the state of the world (luck)

od Go
Bad

Government
Low Effort/skill

ct ele Re

Voter
High Effort/skill

Government
Low Effort/skill

No t

 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)

Why would states want an IO to do these things?...

Laundering Enforcement? Neutrality? Community representative?

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

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

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=O0n2YpwPWY&feature=PlayList&p=BBF5269792FC9ED6&playnext=1& playnext_from=PL&index=15

Community representative
Legitimacy

Articulate global (regional) norms?

Answers to today's question:

IO's coordinate on superior equilibria & reduce transaction costs

Enable members to:

Enforce norms & international law Have a neutral community representative Legitimacy - shared beliefs that coordinate actors regarding what actions should be accepted, tolerated, resisted, or stopped LAUNDER dirty politics

To these ends IOs are created: CENTRALIZED & INDEPENDENT

Analytical tools
Coordination games & Prisoners dilemma

Realist theory
Constructivist theory My perspective: Interests & Institutions
Interests of LEADERS (Chief executives) Constraints/opportunities posed by DOMESTIC & INTERNATIONAL Institutions

Thank you WE ARE GLOBAL GEORGETOWN!