Summary : The structure of foreign trade and its strategic consequences

24 avril, 2015 | Commentaires fermés sur Summary : The structure of foreign trade and its strategic consequences

The S. Krasner’s article : State power and the structure of foreign trade, “World politics”, vol 28 28 n°3, april 1976, is a classic of political economy still heavily quoted today. I provide a quick summary of the logic highlighted by this fundamental analysis which is still prevalent today.


Stephen D. KRASNER

The international trade structure  is determined, as the dependent variable, by the interest and power of States. These interests are aggregate national income, social stability, political power and economic growth. Thus, the decision tree of the State as an actor of the international society is :

State (openness, autarky) -> national income (small, great) -> social stability (decrease, mitigate) -> political power (gain, loss) -> economic growth (tech, notech)

The State potential economic power is the independent variable which conditions the  international trade openness . The economic power is coming from the size of the country, endowment for labor, natural resources and the level of development.

If we establish preferences for a large and developed country in the precedent decision tree, such State will promote market openness. As a consequence, if this country is an hegemon, it will favored free trade for goods movement. Hence, international trade structure will be  increasingly open.


Moreover, we will get the same supports from small States. Both results tend to demonstrate that an hegemon with small States will prefer open trading structure. If the hegemon has the ability to use military, economic and symbolic power to induce medium size country to accept an open trading structure through international organisations, free trade is most likely to dominate all the transnational corporations strategies .


Three historical periods illustrate this dynamic : 1820-1879, 1880-1900 and 1945-1970 with Great Britain then the US as the hegemon country. However, two periods don’t validate the case, 1900-1913 and 1918-1939. S. Krasner suggests an institutional explanation where States are locked in by their prior choices on their domestic political structures.