CENTER FOR INTERNATIONAL BUSINESS EDUCATION AND RESEARCH
(GT CIBER)
WORKING PAPER SERIES
96001

Institutional Choice in International Politics : A Glimpse at European Union Members' Industrial Policies

by Katja Weber

Abstract

This paper argues that countries have a choice between cooperative economic arrangement with different degrees of "bindingness" and that the key to understanding countries' institutional choices can be found by examing the interaction effect between two variables -- power and economic costs. Realist/neorealist, functionalist, neofunctionalist and neoliberal arguments all fall short (are incomplete), but recognizing that economists account for hierarchy by forcusing on transaction costs, the paper uses this insight to develop an interest-based explanation for structural "bindingness" (degree of institutionalization) in the international environment. Finally, to illustrate states' institutional choices the paper focuses on three industrial sectors within the European Union : pharmaceuticals, automobiles, and aerospace.