Legalization of International Institutions and Global Economic Order

Abstract

Many scholars criticize international organizations and multilateral negotiations, arguing that they are driven by power politics. The current trend towards legalization of international institutions calls existing views on how international institutions shape state behavior into question. In the large literature on international adjudication, many theories and empirical results conflict with one another. In the context of international trade institutions, I examine whether legalization of dispute settlement mechanism helps put small and weak states on an equal footing with powerful states, thereby maintaining the liberal international trade order. I develop a game theoretic model of trade disputes and examine trade bargaining across international trade regimes. I test the implications of my theory using original data on disputes at the GATT/WTO from 1980 to 2018 and post-dispute trade flows for each GATT/WTO dispute initiated between 1989 and 2015.