1. THEORIES OF INTERNATIONAL
ORGANIZATIONS
Organization theorists, especially from sociology, provide insights relevant
to studying international organizations as organizations.
ORGANIZATIONS are created to solve problems that require collaborative
action; they are not just mechanical tools doing what their founders
envisioned.
ORGANIZATIONS thus develop mechanisms for learning a new
developments in the environment; they search for means of action and to
decide what problems can and should be solved.
Organizations theorists see organizations as open systems that are
continually responding to the environment, developing and changing goals
through negotiations among the dominant coalitions, and utilizing various
technologies.
Perrow, 1970.

2. THEORIES OF INTERNATIONAL
ORGANIZATIONS
Four concepts drawn from organization theory are particularly useful
for studying IGOs, NGOs, and MNCs. These are;
1.Organizational Culture
2. Organizational Adaptation and Learning
3. Interorganizational Relations
4. Networks

3. INTERNATIONAL ORGANIZATIONS
INTERGOVERNMENTAL NON-GOVERNMENTAL
ORGANIZATIONS (IGOs) ORGANIZATIONS (NGOs)
GLOBAL REGIONAL GLOBAL REGIONAL
COMMON CHARACTERISTICS OF BOTH IGO AND NIGO
• a permanent organization to carry on a continuing set of function
• voluntary membership of eligible parties
• a basic improvement stating goals, structure and methods of operation
• a broadly representative consultative conference organ
• a permanent secretariat to carry on continuous administrative,
research and information functions.
•NGOs are voluntary organizations formed by individuals to perform a variety of functions
and roles.

4. CHIEF FUNCTION OF INTERNATIONAL ORGANIZATION’S IS TO;
• PROVIDE THE MEANS OF COOPERATION AMONG STATES
IN AREAS IN WHICH COOPERATION PROVIDES ADVANTAGES
FOR ALL OR A LARGE NUMBER OF NATIONS.
SUBFUNCTION OF INTERNATIONAL ORGANIZATION’S IS TO;
•PROVIDE MULTIPLE CHANNELS OF COMMUNICATION AMONG
GOVERNMENTS SO THAT AREAS ACCOMODATION MAYBE
EXPLORED AND ANY ACCESS WILL BE AVAILABLE WHEN
PROBLEMS ARISE.
•THOSE MOST PROBABLY WILL BE THE CHANNEL OF DIPLOMACY
AND PEACEFULL SETLEMENT.
•IN ADDITION UN SPECIALIZED AGENCIES AND REGIONAL
ORGANIZATIONS PROVIDE MULTIPLE AND CONTINUOUS CONTACT
POINTS THROUGH WHICH ACCOMODATION CAN BE EXERCISED.

5. AS OF 2008 THERE ARE;
194 NATION STATES (including Kosovo)
300 INTERGOVERNMENTAL ORGANIZATIONs
5000 NON-GOVERNMENTAL ORGANIZATIONs
OPERATING IN INTERNATIONAL SYSTEM.
ALMOST ALL THE LATTER HAVE BEEN ESTABLISHED THE
PAST CENTURY, MOSTLY AFTER WW II.

6. IGOs and NGOs CAN BE THOUGHT AS GLOBAL and REGIONAL
IGOs
GLOBAL REGIONAL
Multipurpose - Alliance - Functional
• UN • ASEAN
• League of Nations • EUROPEAN UNION
• Universal Postal Union • Organization of African Unity
• International Telegram Union • Leage of Arap States
• World Health Organization • WEU
• World Trade Organization • OPEC
• Hague Conference • NATO
• Concert of Europe • Rhein and Danube River Co

7. IGOs and NGOs CAN BE THOUGHT AS GLOBAL and REGIONAL
NGOs
GLOBAL REGIONAL
• Greenpeace • Part of the Some Global NGO
for regional function,
• Doctor’s Without Borders
• UN credited NGOs
• Friends of the Earth
• Millenium Forum
• Jurnalists Without Borders
•Peace,security,disarmament
• Amnesty International
•The eradication of poverty
• Human Rigths Watch
•Human rights
•Sustainable development
and environment
•The challenges of
globalization
•Strengthening the UN

8. CHART OF INTERNATIONAL ORGANIZATIONs
THIRTY YEAR’S WAR
WORLD WAR II
WORLD WAR I
Hellenic
Union
338 BC
Hague United
Attica-Delos
System Nations
Sea Union Treaty of Presburg,
Roman 1890-
476 BC 1806 End of Roman
Empire 1907
Empire
Charter
Atlantic
San Fransisco
Peleponnesian Concert of
Union 461 BC Europe 1815
Yalta to
Treaty of Hanseatic League of
Kadesh Leageu Nations Dumbarton
1295 BC 1356-1669 Oaks onvers.
The Treaty of
Westphalia Regional International Organizations
1648 1918 1945 1991
(1) Peleponnesian Wars (441-445 BC) For 30 year Treaty between Delos Union and Spartan in 445 BC.
(2) Tyucidides as first realist wrote his book “Peleponnesian War”
(3) While Attica-Delos established in lead of Athens, Peleponnesian Union Sparta.
(4) Macedon King Philippos II gathered all Greek city-states in Corinth Conference. Everey member states named “Helen”, Synedrion was common assembely to operate the
Union’s function. Synedrion was also a court. Hellenic Unon built up against Persian and defeated her at the end of the war. And Kallias Treaty was signed in 445 BC.
(5) Hanseatic League comprised of 100-160 Northern European Cities, was formed to facilitate common monetary, customs union and trade. It was a system of regional federation.
(6) Czar Nicholas II, convened two conferences to problem solving and preventing war. All European and non European states icluding Japan, Chine and Latin America.

10. CHART OF INTERNATIONAL ORGANIZATIONs
ECONOMIC
Eliminating
POLITICAL Poverty
COOPERATION Disease
ELIMINATING Hunger
WAR
SOCIAL
PRE - WESTPHALIAN SOVEREIGNTY TREATY of WESTPHALIA POST- BEYOND-
WESTPHALIAN WESTPHALIAN
SOVEREIGNTY SOVEREIGNTY

11. WAR
AS A STATE POLICY PARAMOUNT EVIL TO BE ELIMINATED
Plato (427-347 BC Confucius(551-479 BC)
Aristotle (384-322 BC Mo Ti (500’s BC)
St Augustine (354-430) Desiderus Erasmus (1466-1536)
Thomas Aquinas (1225-1274) W.Ellery Channing (1780-1842)
Pierre Dubouis (1250-1322) Norman Angell (1874-1967)
Hugo Grotious (1538-1645) William Penn (1694
Jeremy Bentham (17
UNIVERSALIST-WORLD GOVERNMENT A Hobson (1902-
Richard Cobden (1804-1865)
Emeric Cruce(1623
Dante Alighieri
Cicero
Seneca
Abbe de St Pierre (1700’s
Emanuel Kant (1795
William Ladd (1840

12. PLATO ;
State should not neglect its military defense, but the ideal state would be
an isolated, self sufficient unit with a little dependence on the rest of the
world as possible
ARISTOTLE ;
He generally opposed war except in self defense, but because he believed that
some people were suited only to serve as slaves, so he justified the conquest of
inferior people.
ST AUGUSTINE ;
He disapproved of war of conquest but accepted war of defense. The church
during the middle age generally accepted war under certain conditions. For
example war against infidel were approved, but among chiristians were
undesireable.
THOMAS AQUINAS;
Acceptance war is inhuman but crusaders.
DANTE – CICERO - SENECA;
Service to the world socıety, , universal and superior law of justice.

13. ABBE DE SAINT PIERRE ;
Both advice that establishment of general parliament or assembly to settle all
disputes by a three-fourths vote, with collective sancstions including armed
forces.
PIERRE DUBOIS;
He suggest Christion Ruler under French leadership. War should be prohibited
among christians but encourages against infidel.
EMMANUEL KANT ;
Main element of him a federation open to voluntarily membership of any state, a
congress to settle dispute, no standing armies, free movement from one country
to another.
WILLIAM LADD ;
“Essay on a Congress Nations” He takes the US and Swiss government as a
mode. He advocated the establishment of a congress of nation and Court of
Nations with legislative and judicial.
RICHARD COBDEN ;
His suggest is interdependence of states. Universal organization not limited to
christian ruler, promotion of trade.

14. INTEGRATION
Integration is defined as the voluntary linking
in the economic domain of two or more
formerly independent states to the extend
that authority over key areas of domestic
regulation and policy is shifted to the
supranational level.

15. REGIONAL INTEGRATION
Regional integration is the process of
providing common rules, regulations, and
policies for a region.

16. WHAT IS REGION ?
Groupings of countries that interact well
beyond what is expected on the basis of
countries relative contributions to world
import and exports.
If region has boundaries, these boundaries
are usually vast grey in tones and shades
rather than black and white.
(Richard Savage and Carl Deutsch, 1960)

17. THREE CRITERIA
FOR THE DEFINITION OF REGIONS;
. PHYSICAL PROXIMITY AND SEPARATENESS,
- Although related with the geography, even today it does not
follow automatically that the political and cultural patterns
shaped by geography have been eroded.
. INTERDEPENDENCE
- As economic terms, interdependency refers to interconnectedness of
among countries. A region in this sense is a zone where there is a
high density of economic transactions relative to other units.
HOMOGENITY
- A large number of variables fit within this framework;
similarity of of values, of economic systems, of political systems,
of way of life, of level of economic development and so on.
(Bruse Russett, International Regions and the International System, 1967)

18. INTEGRATION
Most political scientists studying integration
have been primarily interested in understanding
the institutional and policy dimensions of
integration.
They have sought to specify the political context
in which integration occurs and have provided
insightful accounts of the process of integration.

19. INTEGRATION
The critical question related with integration is;
Which forces drive the process of voluntary
integration?
There are basicly three types of so-called
explanations, mostly taking into consideration of
European Union. These are not wrong, but fail
basic tests of scientific inference. At least they
are insufficient.

20. INTEGRATION
The critical question related with integration is;
Which forces drive the process of voluntary
integration?
First;
It is said that politicians, hounted by the horrors
of the Second World War, were naturally driven
to devise a novel structure of European
governance capable of eradicating the very
roots of intra-European conflicts.

21. INTEGRATION
The critical question related with integration is;
Which forces drive the process of voluntary
integration?
Second;
Charismatic leaders, it is alleged, managed to
transcend the narrow-mindedness and
selfishness of domestic pressure groups hostile
to integration and European unity.

22. INTEGRATION
The critical question related with integration is;
Which forces drive the process of voluntary
integration?
Third;
An ever-popular third explanation refers to
changed preferences. The timing of a new
application for membership, it is claimed, is
attributable to the pressure from growing
segments of society desirous of being
connected to the larger “Euro-culture.”

23. TYPES OF INTEGRATION
At various times, social scientists have searched
for more rigorious explanations of economic and
political integration. In political science, three
major analytical framework for understanding
integration.
Functionalism,
Neofunctionalism,
Intergovermantalism.

24. TYPES OF INTEGRATION
Economists who study regional integration look
primarily at market relationship among goods and
factors of production within a region and assume
away the relevance of institutional and political
forces. They are interested in the welfare effects
of integration.
Customs union theory
Optimal currency area theory
The fiscal federalism theory

25. TYPES OF INTEGRATION
One explanation of integration in political science
is functionalism. It refers global integration based
on world peace. Peace is more likely working
together in workshops and marketplace than by
signing pacts in chancelleries.
Other explanation of integration in political
science is neofunctionalism. It refers to regional
integration. It bring a critics to functionalism
which functionalism as a teleologic.
Intergovernmentalism is an alternative approach
to integration in political science. Unlike
neofunctionalism it assigns a central role to
heads of states.

26. WEAKNESSES OF THESE EXPLANATIONS
functionalism.
neofunctionalism.
Intergovernmentalism

27. TYPES OF INTEGRATION
Customs union theory seeks to understand the
welfare implications of integration in terms of
trade creation, trade diversion, and terms of trade.
Optimal currency area theory specifies conditions
under which integration in the monetary domain is
economically efficient.
The fiscal federalism theory aIso seeks to issues
of regional integration.

28. WEAKNESSES OF EXPLANATIONS
Customs union theory
Optimal currency area theory
The fiscal federalism theory

29. THEORETICAL APPROACHES TO INTEGRATION
Political Approaches Economical Approaches
Functionalism Intergovermentalism Customs Fiscal
Union Theory Federalism
Neofunctionalism Optimal
Currency Area

30. THEORETICAL APPROACHES TO INTEGRATION
Political Approaches Economical Approaches
Functionalism Intergovermentalism Customs Fiscal
Union Theory Federalism
Neofunctionalism Optimal
Currency Area
Davit Mitrany Andrew Moravcsik
1943 1993
Earns Hass
1958
A Working
Peace Preferences & Power
System in the EU Community
Uniting of
Europe

31. THEORETICAL APPROACHES TO INTEGRATION
Political Approaches Economical Approaches
Functionalism Intergovermentalism Customs Fiscal
Union Theory Federalism
Neofunctionalism Optimal
Currency Area
Davit Mitrany Andrew Moravcsik Jacop
1943 1993 Viner
1950
Earns Hass
Robert Mundall
1958
1953
A Working
Peace Preferences & Power The Customs
System in the EU Community Union
Uniting of A Theory of Optimal
Europe Currency Area

32. FUNCTIONALISM
Main proponent, (Roman academician)
Davit Mitrany,
The book,
A Working Peace System

33. FUNCTIONALISM
Fundemental aspect of functionalism or
functional method is that “sovereignty can
not be transfered effectively through a
formula only through a function”.

34. FUNCTIONALISM
Functionalism begins with the assumption
that; supranationality is the only method
available to states to secure maximum
welfare and then proceeds to provide an
insightful account of how integration evolves
using concepts such as functional spillover,
updating of common interests , and
subnational and supranational group
dynamics.

35. FUNCTIONALISM
His assumptions is based on that nation
states capabilities doing things efficient less
than the capabilities of international
organizations.

36. FUNCTIONALISM
“problem of our time is not how to keep
nations peacefully apart but how to
bring them actively together”
Peace “is more likely to grow through
doing things together in workshops and
marketplace than by singing pacts in
chancelleries”

37. FUNCTIONALISM
Mitrany claim that nationalism is threat to
world peace. He insists that dependencies
among nations based on mutually
cooperation and beneficiary agricultural,
health, transportation and other areas like
these should be reverse from national level
to international.

38. FUNCTIONALISM
Coactivity rather than national
coexistance defines the ideal of
peace.
He put his faith “not in protected
peace but in a working peace”.

39. FUNCTIONALISM
Functional cooperation does not start from the
political but from the low-key economic and
social plane such as the joint management of
scarce resources, unemployment, commodity
price fluctuations, labor standarts, and public
health.

40. FUNCTIONALISM
• Functionalism is applicable at both
regional and global levels and has been
important in explaining the evolution of
the European Union as a process of
economic integration, gradually spilling
over into limited political integration.

41. FUNCTIONAL INTEGRATION
Functional Integration, that is, the provision
of common rules, regulations, and policies
embodied in an integrated governance
structure, may begin with exchance rate
coordination.

42. FUNCTIONALISM
The weaknesses of functionalism;
1. It is not properly speaking a theory of
integration but rather than a normative
method.
2. Integration is in fact sought to secure peace,
is not fully compelling. (Why were not all
European countries participating in the
peace-building effort from the begining?)

43. Comparing Functionalism to Realism
John McCormick compares functionalism's fundamental principles with realism's thus:
Realism Functionalism
Dominant goals of
Military security Peace and prosperity
actors
Economic instruments
Instruments of state Military force and
and political acts of
policy economic instruments
will
Initial emphasis on low
Potential shifts in the
Forces behind agenda politics, such as
balance of power and
formation economic and social
security threats
issues
Substantial; new,
functional international
Minor; limited by state
organizations will
Role of international power and the
formulate policy and
organizations importance of military
become increasingly
force
responsible for
implementation

44. NEOFUNCTIONALISM
• One of its protagonists is Ernst B. Haas, a
US-political scientist. His book is “The
Uniting of Europe”.
• Unlike previous theories of integration,
functionalism; neofunctionalism declared
to be non-normative and tried to describe
and explain the process of regional
integration based on empirical data.

45. NEOFUNCTIONALISM
• In a significant departure from
functionalism, it shifts its analytical
focus from the teleology, a working
peace system, to the utilitarian
dimension of the functional method.
This makes it gain analytical clarity and
powerful implications.

46. NEOFUNCTIONALISM
Neofunctionalist approach is
concerned with explaining “how and
why nation-states cease to be wholly
sovereign, how and why voluntarily
mingle, merge, and mix with their
neighbors so as to lose the factual
attributes a sovereignty while acquiring
new techniques for resolving conflicts
between themselves.

47. NEOFUNCTIONALISM
• Neofunctionalism, describes a process”
whereby political actors in several distinct
national settings are persuaded to shift their
loyalties, expectations, and political activities
towards a new and larger center, whose
institutions possess or demand jurisdiction
over the pre-existing states.

48. NEOFUNCTIONALISM
Neofunctionalism’s main analytical attributes are;
• The actors
Interest groups, PP – NATION STATE – Supranational RI
• The motives
Good Europeans are not the main creators of the community
• The process
Spillover( functional, political ), upgrading common interests
• The context
Against functionalism, for neofunctionalism economy and
politics can not be separable.

49. NEOFUNCTIONALISM
AS A COMPOSITE THEORY, NEOFUNCTIONALISM HAS THREE COMPONENTS
• BACKGROUND CONDITIONS
• PROCESS CONDITIONS
• CONDITIONS THAT ARE LIKELY TO ENCOURAGE OR
DISCOURAGE TASK EXPANSION
(Hass, and Schimitter, 1964)

50. NEOFUNCTIONALISM
AS A COMPOSITE THEORY, NEOFUNCTIONALISM HAS THREE COMPONENTS
• BACKGROUND CONDITIONS
–Neofunctionalism argued that integration was most likely
emerge to first among countries with a certain type of
domestic environment; liberal democratic countries with
advance capitalist economies, differentiated social structures,
and highly pluralistic interest group structures.
–In these societies class conflicts were to be muted, ethnic
rivalries less intense and warfare an obsolescent institution.
–Such countries would have much to gain from an
expansion of capitalism to the regional level.

51. NEOFUNCTIONALISM
AS A COMPOSITE THEORY, NEOFUNCTIONALISM HAS THREE COMPONENTS
• PROCESS CONDITIONS
• PC’s entail dense network of economic
exchange, trade, labor migrations, tourism and
free flows of productive factors.

52. NEOFUNCTIONALISM
AS A COMPOSITE THEORY, NEOFUNCTIONALISM HAS THREE COMPONENTS
• THAT ARE LIKELY TO ENCOURAGE OR DISCOURAGE TASK
EXPANSION CONDITIONS
• This phase involves spillover. Once integration begins in initial
settings (presumably least controversial ones), there are prospects for
expanding cooperative habits into other ares. This process is
labeled spillover.
• Spillover could be purely functional with linkages among different
sectors serving as the transmission belts of integration,( trade might
imply increasing ccordination of monetary policy for example) or it could rely
on tactical linkage among sectors by agent in a bargaining
process.

53. NEOFUNCTIONALISM
NINE VARIABLES FOR ECONOMIC AND POLITICAL UNION
• BACKGROUND CONDITIONS
1. Size of units, 2. Rate of transactions, 3. Pluralism, 4. Elite complimantarity
• PROCESS CONDITIONS
5. Decision-making style 6. Rate of transaction, 7. Adaptability of governments
• CONDITIONS THAT ARE LIKELY TO ENCOURAGE OR
DISCOURAGE TASK EXPANSION (ECONOMIC UNION)
8. Government purposes, 9. Independence of regional institutions.
(Hass, and Schimitter, 1964)

54. NEOFUNCTIONALISM
LAST WORDS ON NEOFUNCTIONALISM
If a group of countries maintains a high degree of
economic and social transactions,
and at the same time shares pluralist domestic
institutions with similar economic size and similar level
of development,
it will have a good chance of achieving political union.

55. INTERGOVERNMENTALISM
• Intergovernmentalism can best be
understood as a series of bargain between
the head of the governments of the leading
states of the region.
• The emphasis of intergovernmentalism on
head of states as central players is a key
difference between it and neofunctionaism.

56. INTERGOVERNMENTALISM
• While neofunctionalism starts with
transnational society and supranational
institutions, liberal intergovernmentalism
places states(central governments, usually
executively) at the center of analysis.
• This is not to say that interest groups are
unimportant. Albeit, crucial to integration are
the process of interest aggregation,
intergovernmental bargaining, and
enforcement of decision.

57. Aware of some of these weaknesses,
intergovernmentalists have sought to expand
their theorical approach.
A liberal Intergovernmental Approach (1993) Andrew
Moravcsik* lays out a two-step process of preference
formation and bargaining which he extends(1998) to a
three-step process;
- preference-formation,
- intergavernmental bargaining
- institutional lock-in of bargains.
*Preferences and Power In the EU, A Liberal Intergovernmental Approach.

58. Aware of some of these weaknesses,
intergovernmentalists have sought to expand
their theorical approach.
The liberal intergovernmental approach provides a more
sophisticated theory of preference formation than
neofunctionalism.
This theory is based in part on the logic of collective
action and the new institutionalism.
But LIA is still vulnerable on several grounds. “What is
the relationship between grand bargains and day-to-day
politics in regional organizations?”

59. As a theory of integration
intergovernmentalism suffers from several
shortcomings.
The theory that focuses only on major interstate (Ge, Fr,
i.e) decisions or “celebrated intergovernmental
bargains; it thus is difficult to test.
Intergovermentalism argues that the “ups” of
integration, that is the big decisions, are the result of
convergence of the preferences of the leading states.

60. CONSTRUCTIVIST APPROACH TO
NEOFUNCTIONALISM
This is a newer approach to regional integration, but again limited
mostly to Western Europe.
The core of constructivist research program concerns the role of ideas,
norms, and identities as opposed to material factors in the integration
proess.
At bottom, constructivism concern the issue of human consciousness.
(Ruggie 1998)
Human thought, ideas and agency as crucial to the explanation of the
international order. (Onuf, World of Our Making,1989)

61. CONSTRUCTIVIST APPROACH TO
NEOFUNCTIONALISM
The leading constructivist is Jeffrey Checkel. For Checkel norms can
become constitutive of agents, part of who they are, and deeply
internalized.
When this occurs, the overall interpretation changes from one based on
conscious adjustment to changing costs to one based on enactment of
values (a scripted model based on logic of appropriateness rather than
a utilitarian one).
Jo Shaw has elaborated a changing conception of “postnational
constitutionalism” in which citizens rights are not fixed, nor limited to
the territorial containers of the state, bur responsive to transborder
movements and demands that are not easily dealt with the nation-
states.

62. CUSTOMS UNION THEORY
• Free Trade Area (FTA) refers removing of the
tariffs and quotas among the member states.
• Custom Union, in addition to FTA, use
common external tariffs by the members to the
third (non-member) countries.
• Custom union theory is mostly concerned with
the markets for goods.

63. OPTIMAL CURRENCY AREA THEORY
• In the optimal currency area theory, however the focus
is on money, markets for goods and and markets for
production factors(land-labor-capital-
enterpreneurship).
• A currency area is defined as an area in which a
common currency exists or in which exchange rates
are immutably fixed.
• “ Optimality” refers to the ability of an area to achieve
both internal balance(full employment, price stability)
and external balance( payments equilibirium) in the
least costly way, without much interference from
monetary and fiscal policies.

64. FISCAL FEDERALISM THEORY
• Fiscal federalism theory is an offshoot
(branch) of public finance theory that
analyzes the special fiscal problems
arising in federal countries, drawing on
the literature on public goods, taxation
and public dept incidence and various
parts of location theory.

65. THEORETICAL APPROACHES TO INTEGRATION
Political Approaches Economical Approaches
Functionalism Intergover Customs Fiscal
mentalism Union Theory Federalism
Neofunctionalism
Optimal
Currency Area

66. EXPLAINING REGIONAL INTEGRATION
TWO PUZZLES OR QUESTIONS OF REGIONAL INTEGRATION
1.Why have so many 2.What explains when
attempts at integration outsiders seek to become
failed while a few insiders? (Outsiders can
have been crowned become insiders either by
with success? joining an existing
(+EU, +EFTA,-LAFTA) economic union or by
creating their own regional
group)
Implicating the insider --timing of the desicion by
countries in an outsiders countries to
integration process seek integration--
Implicating the outsiders
countries in an
integration process

67. EXPLAINING REGIONAL INTEGRATION
TWO PUZZLES OR/AND QUESTIONS OF REGIONAL INTEGRATION
2. Implicating the outsiders countries in an
1.Implicating the insider
integration process.
countries in an integration
What explains when outsiders seek to become
process.
insiders? (Outsiders can become insiders
Why have so many attempts at
integration failed while a few either by joining an existing economic union
have been crowned with or by creating their own regional group)
success? (+EU, +EFTA,-LAFTA) --timing of the desicion by outsiders countries to
seek integration--
The Condition In Order For Integration to Success
The potential for There must be a
economic gains fullfilment of supply
from markets conditions. These are the
exchange within a conditions under which
region must be political leaders are
significant. willing and able to
Economies should accommodate demands
be strong. for regional institutions at
each step of the
integration process.
Willingless depends on
the payoff integration to
political leaders.
Although willingness of
political leaders may be
unable to supply regional
institutions because of
collective action
problems.
Areas with stronge market pressure
for integration and indisputed
leadership are most likely to
experience successful integration;
”commitment institution” help the
catalyze the process.

68. EXPLAINING REGIONAL INTEGRATION
TWO PUZZLES OR QUESTIONS OF REGIONAL INTEGRATION
2. Implicating the outsiders countries in an integration
1.Implicating the insider
process.
countries in an integration
What explains when outsiders seek to become insiders?
process.
Why have so many attempts at
(Outsiders can become insiders either by joining an
integration failed while a few existing economic union or by creating their own
have been crowned with regional group) --timing of the desicion by outsiders
success? (+EU, +EFTA,-LAFTA) countries to seek integration--
The Condition In Order For Integration to Success
The potential for There must be a Externalities, Externalities, The supply Integration The external
economic gains fullfilment of supply transaction transaction of and effects of
from markets conditions. These are the costs, and costs, and İntegration. economic integration.
exchange within a conditions under which demand for demand for performans.
region must be political leaders are instutitional integration.
significant. willing and able to changes.
Economies should accommodate demands
Demand for İntegration
be strong. for regional institutions at
on the part of big
each step of the business does not
integration process. automatically translate
Willingless depends on into success.If demand
the payoff integration to is not met by supply, no
political leaders. Economic change will occur.
Although willingness of history
political leaders may be
unable to supply regional
institutions because of Property Transaction Supply conditions are
collective action Rights costs the conditions under
problems. theory which political leaders
Are willing and able to
accommodate demands
Areas with stronge market pressure for for functional integration.
integration and indisputed leadership are most
likely to experience successful integration;
”commitment institution” help the catalyze the Prisoner’s Dilemma Coordination Games
process.

69. 2.What explains when outsiders seek to become insiders? (Outsiders can
become insiders either by joining an existing economic union or by creating
their own regional group)
timing of the desicion by outsiders countries to seek integration
Externalities,transaction Externalities, transaction The supply Integration and The external effects of
costs, and demand for costs, and demand for of integration. Economic performans. integration.
İnstutitional changes. integration.
Affected outsiders can
Demand for pursue two integration
integration on the strategies
part of big
business does not
automatically Supply conditions are
Economic
translate into the conditions under “First “Second
history
success. If demand which political leaders Integrative Integrative
is not met by supply, are willing and able to Response” Respond”
Property Transaction no change will ccur. accommodate demands (Want to (create a new
Rights costs for functional integration. participate) İntegration)
theory But two
problems
Prisoner’s Dilemma Coordination Games
No interest Price of membership
in accepting of a successful union
new members is typically very high
(membership country
should accept so-
called Acquis
communautarie,
for Latin countries
also She must accept
”Washington
Concensus”

70. 2.What explains when outsiders seek to become insiders? (Outsiders can become
insiders either by joining an existing economic union or by creating their own regional group )
timing of the desicion by outsiders countries to seek integration
Externalities,transaction costs, and demand for instutitional changes.
What drives reginol integration process?
These theories are primarily concern with the explaining the evolution of domestic institutional
arrangements , but their logic can be extended to shed light on the dynamics of regional İnstitution-building.
Property Rights Economic Transaction
theory history costs
This theory identify key The economic history Tc’s are the costs of
actors and motives driving school refines the specifying, negotiating,
institutional change. PR’s analysis of the impact of monitoring and
develop to internalize new technologies on enforcing contracts
externalities when the markets and institutions that underlie exchange.
gains of internalization, in by introducing the In other words, They are
the main, results from concept of transaction the costs of capturing
changes in economic costs. the gains from market
values, changes which exchange.
stem from the development
of new technology and the
opening of new markets,
changes to which old
property rights are poorly
attuned.

71. 2.What explains when outsiders seek to become insiders? (Outsiders can become
insiders either by joining an existing economic union or by creating their own regional group )
timing of the desicion by outsiders countries to seek integration
Externalities,transaction costs, and
demand for integration.
Demand for integration on the part of big
business does not automatically translate into
success. If demand is not met by supply, no
change will occur.
As new technologies increase the scope of markets beyond the boundaries of a single state, actors who stand to gain
from wider markets will seek to change and existing governance structure in order to realize these gains to the fullest extend.
What are the potential gains from wider markets?
1. Larger markets help firms achieve economies of scale in production. That is, an increase in production
lowers
the avarage cost of output per unit.
2. Trade is beneficial because it permits countries to exploit their comparative advantage. A comparative
advantage arises when the marginal opportunitycost of producing one good in terms of another good differ
between countries.
3. In addition to these gains from trade, there are specific gains to be had from investing abroad. Investment
abroad bring several advantages for firms. Inclueding several risks too.
- Uncertainty
- Unexpected price hikes, Poor quality goods, tariff change, differing rates of inflation,
- A host country can revert to outright nationalization of foreign asset.
DEMAND FOR INTEGRATION ON THE PART OF BIG BUSINESS DOES NOT AUTOMATICLY TRANSLATE INTO
SUCCESS . IF DEMAND IS NOT MET BY SUPPLY, NO CHANGE WİLL OCCUR.

72. 2.What explains when outsiders seek to become insiders? (Outsiders can become
insiders either by joining an existing economic union or by creating their own regional group )
timing of the desicion by outsiders countries to seek integration
The supply of integration.
Supply conditions are the conditions
under which political leaders are
willing and able to accommodate
demands for functional integration.
Willingness depends greatly on the payoff integration to political leaders.
Why sacrifice national sovereignty and pay the price of membership in a
regional group if the economy is growing relatively fast and voters are
thus content?
Willengness brought about by economic difficulties, however, is no
guarantee of successful integration. Willing leaders may still find it
impossible to supply integration because of collective action problems.

73. The collective action problem is that neither state can choose its best policy without
knowing what the other intends to do, but there is no obvious point at which to coordinate.
TWO TYPES OF COLLECTIVE – ACTION DILEMMA
Prisoner’s Dilemma* Coordination Games**
y1 y2 R L
x1 3/3 1/4 R 1,1 -1,-1
Strategy Drivers
x2 4/1 2/2 L -1,-1 1,1
This game is the standart representation of Theproblem in PD is that in pursuing its self-
externalities interest, each state imposes cost on the other
where in the pursuit of their own private gains independent of the other’s policy, whereas in
actors impose costs on each other the coordination game each imposes costs or
independently of each other’s action. benefits on the other contingent upon the
other’s policy.
* Duncan Snidal
Arthur Stein ** Y. Varoufakis

74. CREATION OF ORIGINAL UNION
Demand and supply Demand and supply
condition are met condition are not met
Success
Failure
Perceptible negative No perceptible
external effect on negative external
outsiders
effects on outsiders No external effect
Willingness to pay Unwillingness to pay
membership price; membership price;
and union accepts Or rejected by union
new members
No integrative
First integrative Second integrative No integrative response
response; joining response; creation response
of union of counter-union
-A union may no interest
-price of membership highly cost
Demand and supply Demand and supply
condition are met condition are not met
Success Failure

75. The prisoner's dilemma was originally formulated by mathematician
Albert W. Tucker and has since become the classic example of a
"non-zero sum" game in economics, political science, evolutionary
biology, and of course game theory.
A "zero sum" game is simply a win-lose game such as tic-tac-toe.
For every winner, there's a loser. If I win, you lose. Non-zero sum
games allow for cooperation. There are moves that benefit both
players, and this is what makes these games interesting.

76. In the prisoner's dilemma, you and Albert are picked up by the
police and interrogated in separate cells without a chance to
communicate with each other. For the purpose of this game, it
makes no difference whether or not you or Albert actually
committed the crime. You are both told the same thing:
If you both confess, you will both get four years in prison.
If neither of you confesses, the police will be able to pin part of
the crime on you, and you'll both get two years.
If one of you confesses but the other doesn't, the confessor will
make a deal with the police and will go free while the other one
goes to jail for five years.

77. At first glance the correct strategy appears obvious. No
matter what Albert does, you'll be better off "defecting"
(confessing). Maddeningly, Albert realizes this as well, so
you both end up getting four years. Ironically, if you had
both "cooperated" (refused to confess), you would both
be much better off.
And so the game becomes much more complicated than it
first appeared. If you play repeatedly, the goal is to figure
out Albert's strategy and use it to minimize your total jail
time. Albert will be doing the same. Remember, the object
of the game is not to screw Albert over. The object is to
minimize your jail time. If this means ruthlessly exploiting
Albert's generosity, then do so. If this means helping
Albert out by cooperating, then do so.

78. To make this game more fun, I've given Albert several different
strategies that were inspired by a chapter in Carl Sagan's book,
Billions And Billions:
The Golden Rule - "Do unto* others as you would have them do
unto you." Albert always cooperates (doesn't confess). It's quite
easy to take advantage of this innocent "turn the cheek" strategy.
The Brazen Rule - "Do unto others as they do unto you." Albert
begins with a cautious defection (he confesses), but after that he
does whatever you did last. A similar strategy which begins with
cooperation is usually called "tit-for-tat."
The Brazen Rule 3 - Almost the same as the Brazen Rule. The
exception is that Albert is a little more forgiving. If you defect
(confess), Albert will forgive you about once every three times and
cooperate the next time anyway.
* ..e, ye kadar

79. The Iron Rule - "Do unto others as you wish, before they do it
unto you." Albert always defects. Both of you tend to
accumulate a large prison sentence.
??? - Albert decides randomly which of the above four
strategies to use, and you have to figure out for yourself which
one he's chosen. Albert does not randomly choose "confess" or
"don't confess." Instead, he randomly chooses one of the above
strategies and sticks with that one strategy until you change his
strategy to something else.