Economic Incentives and Bilateral Cooperation

Can the United States meet its security challenges through economic incentives and expanded commercial exchange? How can market access and technology transfer build stable long-term cooperative relations between countries? Incentives have been prescribed for diverse problems including dissuading North Korea from developing nuclear weapons or convincing the Ukraine to destroy them, and encouraging developing nations to adopt less environmentally dangerous economic policies. Unfortunately, international relations scholars have seldom considered the operation and possible uses of economic incentives as a means of international influence.
William Long uses three pertinent historical incentive cases to develop an original theory of how trade and technology incentives work to affect interstate cooperation and to provide some practical guidelines for policymakers regarding when incentives work and the factors that enhance or limit their success.
Theoretically, this book develops a two-level explanation of how economic incentives can alter the structure of a state's external payoffs and affect its internal preferences and choices to induce cooperation by the recipient. Externally, according to Long, incentives offer an exchange of economic gains from trade and technology transfer for political concessions and are compelling when the sender has market power in the traded goods, both recipient and sender stand to gain from economic relations and the recipient's total utility for the gains from trade remains positive. Internally, incentives shape state preferences in a cooperative direction by building alliances with actors in the recipient state who will benefit from the incentives: by creating support for the incentives in the sending state among actors who will benefit from the incentives and, unlike sanctions, by not encouraging the recipient state to find ways to evade the impact of the action or to filter out the message behind the incentives.
This book contributes to the scholarly literature on international cooperation and economic statecraft. It will also engage policymakers and practitioners involved in a wide range of issues where incentives are an option.
William J. Long is Associate Professor, School of International Affairs, Georgia Institute of Technology.