Impetus and Constraint: The Effects of Hegemony on International Trade.

Hegemonic Governance and International Trade: Systemic and Dyadic Effects This paper examines the impact of hegemonic governance on interstate trade. The questions of whether and how this particular type of international leadership affects the international political economy have lately received scant attention in the political science and economics literatures. This is unfortunate, given the potential explanatory power of this rich theoretical perspective. This paper has three (3) objectives. First, we review the theoretical arguments and earlier empirical investigations linking hegemonic leadership to international economic stability. Although the majority of previous studies tend to find support for the hypothesis that hegemony is not a necessary condition for financial stability (measured in terms of free trade), these examinations leave many important questions unanswered, or at best, with ambiguous answers. Thus, we develop a more complete theoretical argument explaining how hegemony affects interstate trade ? at the system, sub-systemic, and dyadic levels of analysis. The theory of hegemonic governance stipulates that strong hegemony increases trade across the system and also within nation-state pairs where the hegemon?the state with the ability, the will, and the acceptance of other states to assume leadership?has a stake. Finally, we use comprehensive, multidimensional indicators (from Sacko 2003) to conduct a much?improved assessment of the effects of both the hegemonic power and hegemonic interest of the United Kingdom (1816-1945) and the United States (1946-1992) on interstate trade. We find that hegemonic governance does not statistically significantly affect aggregate, world trade. Hegemonic governance, however, is statistically significantly and positively related to both major power sub-system trade ? and to trade within dyads strategically relevant to the hegemon. [ABSTRACT FROM AUTHOR]