broadens our theoretical perspective on institutions by noting that the typical IO
constitutes only one point on a wide spectrum of forms of international organiza-
tion, ranging from complete anarchy to hierarchical organization, as in empires.
Kenneth Abbott and Duncan Snidal ( 1998 ) returned to one of the initial questions
posed by the regimes literature, about why sometimes states cooperate informally,
while at other times they choose to create formal IOs. Coming from a contractual
perspective, Abbott and Snidal argue that transaction costs and trade-oVs between
autonomy and the beneWts of commitment explain patterns of formalization.
Overall, these developments in the study of international institutions provide a
Wrm foundation for more specialized studies of IEIs. They suggest that one of the
Wrst questions to be asked when studying a particular organization is to ask about
the problems it was designed to address. An understanding of these issues then
leads to predictions about the form and functioning of the organization, and about
its eVects on economicXows and conditions. Two areas where this style of analysis
has been applied most extensively are trade institutions and the IFIs. I turnWrst to
analysis of the GATT/WTO and regional trade agreements, then to the Bretton
Woods institutions.
2 Trade Institutions
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Much recent work in IEIs has turned to rigorous empirical analysis, applying the
kinds of models and analytical frameworks described above. Most international
trade is now regulated by structures of rules and formal organizations, most
notably the GATT/WTO on the global level. In addition, a number of powerful
regional trade agreements such as the North American Free Trade Agreement
(NAFTA) have developed. Understanding the functioning of these global and
regional organizations, their form and eVects, is crucial for an understanding of
international trade more generally, and has implications for the broader analysis of
international political institutions. In general terms, the story of the institutional-
ization of international trade can be described as a continuing struggle between
attempts to negotiate and enforce consistent norms and rules, and the desire of
powerful states to exert their inXuence over outcomes. Whether we consider the
process of bargaining, of dispute resolution, or the use of institutional loopholes,
we see this struggle deWning the terms of political and scholarly debate. As the
works discussed in this section suggest, while there are large potential beneWts
to be gained from consistently enforced rules, the evidence suggests that most
international trade outcomes continue to be heavily inXuenced by power politics.
international economic institutions 659