Geopolitics, National Sovereignty and Trade Policy in Historical Perspective

Brezis, Elise (2026): Geopolitics, National Sovereignty and Trade Policy in Historical Perspective.

Abstract

The historical record of the past 350 years reveals recurrent cycles in the international distribution of power: periods of hegemonic leadership, in which a dominant state shapes the international order, alternate with periods of balance-of-power rivalry, when no single state is preeminent and major powers compete on more equal terms. Trade policy also follows a cyclical pattern, with phases of liberalization giving way to periods of protectionism. This paper examines the relationship between these two cycles, and analyzes how the international power structure changes the optimal trade regime.. It argues that hegemonic periods, such as 1870–1910 and 1945–2015, are more conducive to free trade, because the hegemon provides security guarantees, access to markets, and institutional linkages that reduce the risks of liberalization and increase the benefits of openness. By contrast, during balance-of-power periods, such as 1910–1945 and the period since 2015, intensified rivalry among great powers strengthens nationalism, heightens concerns over sovereignty, and encourages protectionist policies. The paper proposes an explanation for this correlation grounded in theories of national identity and sovereignty. More broadly, it shows that shifts in the structure of the international system affect not only interstate relations but also domestic policy choices. The empirical analysis supports this argument: hegemonic eras are associated with waves of trade liberalization, whereas balance-of-power eras are linked to higher tariffs and a stronger turn toward protectionism.

• Item Type: MPRA Paper
• Language: English
• Keywords: Balance of Power, Geopolitics, Hegemony, National Sovereignty, Trade Policy, Free Trade, Protectionism, Social Identity.
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F40 - General; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and Transmission; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F52 - National Security ; Economic Nationalism; N - Economic History > N4 - Government, War, Law, International Relations, and Regulation; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

References

Akerlof, G.A and R. Kranton. 2010. Identity Economics. Princeton University Press Akerlof, G.A and R. Kranton. 2000. “Economics and Identity”. The Quarterly Journal of Economics. 115 (3):715-753. Amir, R., J. Y. Jin, and M. Troege. 2022. "On the limits of free trade in a Cournot world: When are restrictions on trade beneficial?. Canadian Journal of Economics 55:4, 2036-2057 Adam A. Ambroziak. Review of the Literature on the Theory of Industrial Policy 3-38. No Baldwin, RE. 1989. “The Political Economy of Trade Policy”. Journal of Economic Perspectives 3:4, 119-135. Bar-Siman Tov, Y. 2004. From Conflict Resolution to Reconciliation Oxford University Press. Bhagwati, J. 1989. Is free trade passé after all?. Review of World Economics 125:1, 17-44. Binkley, 1929. “Ten Years of Peace Conference History” The Journal of Modern History 4: 607-29. Christopher J. Boudreaux. 2015. The Evolutionary Effects of Democracy: In the Long Run, We are All Trading?. The International Trade Journal 29:5, 376-396. Brezis, E.S. 2023. “Why was Keynes opposed to reparations and Carthaginian peace?” in G. Corsetti (ed.) Keynes and Economic Consequences of the Peace. Cambridge University Press. Brezis, E.S. 2003. “Mercantilism”, Oxford Encyclopedia of Economic History. Brezis, E.S. and P. Temin. 1999. Elites, Minorities and Economic Growth, eds., North Holland, Elsevier. Brezis, E.S. 1995. "Foreign Capital Flows in the Century of Britain’s Industrial Revolution: New Estimates, Controlled Conjectures", Economic History Review, February, pp.46-67. Brezis, E. S., and Krugman, P. 1997. “Technology and the Life Cycle of Cities”. Journal of Economic Growth, 2(4), 369–383. Brezis, E. S., Krugman P. and D. Tsiddon. 1993. “Leapfrogging in International Competition”, American Economic Review, December, pp.1211-19. Brito, D., and Intriligator, M. 1976. "Strategic Weapons and the Allocation of International Rights," in John V. Gillespie and Dino A. Zinnes, Mathematical Systems in International Relations Research (New York: Praeger). Calvo-Pardo, H. 2009. “Are the antiglobalists right? Gains-from-trade without a Walrasian auctioneer”. Economic Theory 38:3, 561-592. Calleo, D. P. and Rowland, B. M. 1973. America and the World Political Economy Bloomington: Indiana UP. Ciampani, A. and R. Tolomeo. 2015. “The need for an interpretive framework in the history of European Élites.” In National Identities and Transnational European Élites, edited by A. Ciampani and R.Tolomeo, 5-13. Soveria Mannelli: Rubbettino Editore. Cline, R.S. 1980. World Power Trends and US Foreign Policy for the 1980s. Routledge. Coleman, J. S. 1986. “Social Theory, Social Research and a Theory of Action,” American Journal of Sociology 91(6), 1309-1335. Cowling, K. and R. Sugden. 1998. "Strategic Trade Policy Reconsidered: National Rivalry vs Free Trade vs International Cooperation". Kyklos 51:3, 339-357. Gallagher, J. and R. Robinson. 1953. "The Imperialism of Free Trade," Economic History Review, 6. Gilpin, R. 1975. US Power and the Multinational Corporation. Gilpin, R. 1977. "Economic Interdependence and National Security in Historical Perspective," in Klaus Knorr and Frank N. Trager, eds., Economic Issues and National Security (Lawrence: Regents Press of Kansas) Gilpin, R. 1981. War and Change in World Politics (New York: CUP) Gowa, Joanne (1989), “Bipolarity, Multipolarity, and Free Trade,” American Political Science Review, 83(4), 1245–1256. Gowa, Joanne, and Edward D. Mansfield (1993), “Power Politics and International Trade,” American Political Science Review, 87(2), 408–420. Heckscher, E. F. 1965. Mercantilism (2nd edition, ed. E. F. Söderlund). Hirschman, A. 0. 1945. National Power and the Structure of Foreign Trade (Berkeley: Univesity of CP). Ikenberry, G. John (2001), After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order After Major Wars. Princeton: Princeton University Press. Ikenberry, G. John, Michael Mastanduno, and William C. Wohlforth, eds. (2011), International Relations Theory and the Consequences of Unipolarity. Cambridge: Cambridge University Press. Keohane, R. and Nye. 1977. Power and Interdependence: World Politics in Transition (Boston: Little Brown). Keohane, R. 1980. "The Theory of Hegemonic Stability and Changes in International Economic Regimes, 1967-1977," in Ole R. Holsti, Randolph M. Siverson, and Alexander L. George, eds., Change in the International System (Boulder: Westview). Keohane, Robert O. 1984. After Hegemony: Cooperation and Discord in the World Political Economy. Princeton, NJ: Princeton University Press. Keynes, J. M. 1919. The Economic Consequences of the Peace. Kinder, H., and Hilgemann, W. 1964. The Anchor Atlas of World History (New York: Anchor). Kindleberger, C. 1973. The World in Depression, 1929-1939 (Berkeley: UCP). Kindleberger, C. 1975. "The Rise of Free Trade in Western Europe, 1820-1875," Journal of Economic History, XXXV, 20-55. Krauthammer, Charles (1990/1991), “The Unipolar Moment,” Foreign Affairs, 70(1), 23–33 Krasner, Stephen D. 1976. "State Power and the Structure of International Trade," World Politics 28. Krugman, P. 1987. Is free trade passe? Journal of Economic Perspectives, 1(2): 131-144. Lake, D.(1983), "International Economic Structures and American Foreign Economic Policy, 1887-1934," World Politics, 35: 517-543. Lampton, D. 2006. “The Faces of Chinese Power” Foreign Affairs 86(1) Lawson, Fred H. 1983, "Hegemony and the Structure of international trade reassessed: a view from Arabia," International Organization, vol. 37, p.317-339. Layne, Christopher (1993), “The Unipolar Illusion: Why New Great Powers Will Rise,” International Security, 17(4), 5–51. Lemyre, L. and P. Smith. 1985. “Intergroup discrimination and self-esteem in the minimal group paradigm” Journal of Personality and Social Psychology 49: 660-670. MacDonagh, Oliver 1962, "The Anti-Imperialism of Free Trade," Economic History Review, 2d series, 14. MacEwan, A. 1978. "The Development of the Crisis in the World Economy," in B. Steinberg et al, eds., US Capitalism in Crisis New York: Union for Radical Political Economists. Malmgren, H. 1970. "Coming Trade Wars? Neo-Mercantilism and Foreign Policy," Foreign Policy, 115-143. Mantoux, E. 1946. The Carthaginian Peace: or the Economic Consequences of Mr. Keynes. New York: Oxford University Press Mathew, W. M. 1968. "The Imperialism of Free Trade: Peru, 1820-70," Economic History Review, 2d series, 21. Metzl J. 2019. Dying of Whiteness: How the Politics of Racial Resentment is Killing America's Heartland. Hachette Mearsheimer, John J. (2001), The Tragedy of Great Power Politics. New York: Norton. Moore, R. J. 1964-5. "Imperialism and 'Free Trade' Policy in India, 1853-4," Economic History Review, 2d series, 17. Monteiro, Nuno P. (2014), Theory of Unipolar Politics. Cambridge: Cambridge University Press. Hans Morgenthau. 1948. Politics Among Nations Ngono Fouda. R. 2012. “Protectionism & Free Trade: A Country‘s Glory or Doom?. International Journal of Trade, Economics and Finance 351-355. Oakes, PJ and JC Turner. 1989. “Social Categorisation and Intergroup behavior” European Journal of Social Psychology 10: 295-301. Olson, Mancur and Richard Zeckhauser, 1966. An Economic Theory of Alliances. Santa Monica, CA: RAND Corporation, Organsky, A. F. K., 1968. World Politics New York: Knopf. Platt, D. C. M. 1968. "The Imperialism of Free Trade: Some Reservations," Economic History Review, 2d series, 21. Platt, D. C. M. 1973. "Further Objections to an 'Imperialism of Free Trade,' 1830-1860," Economic History Review, 2d series, 26. Pompeo Della Posta. 2021. "An analysis of the current backlash of economic globalization in a model with heterogeneous agents". Metroeconomica 72:1, 101-120. Rowland, B.M. 1976. Balance of Power or Hegemony: The Interwar Monetary System - New York: New York University Press. Sai-wing Ho. P. 2015. “External Economies in Trade and Development: Contrasting Arguments for Industry Promotion Under Alternative Analytical Frameworks”. OEconomia :5-3, 363-396. Salvatore, D. 1992. “Recent trends in U.S. protectionism”. Open Economies Review 3:3, 307-321. Skidelsky. 1976. “Balance of Power or Hegemony” in The Interwar Monetary System - edited by B. M. Rowland. New York: New York University Press. Spencer, B.J. and James A. Brander. Strategic Trade Policy 13173-13180. Smith, A. 1937. The Wealth of Nations (New York: Modern Press). Snidal, Duncan (1985), “The Limits of Hegemonic Stability Theory,” International Organization, 39(4), 579–614. Stein, Arthur A. 1984. “The Hegemon’s Dilemma: Great Britain, the United States, and the International Economic Order.” International Organization 38, no. 2: 355–386. Tajfel, H. and J. Turner. 1979. “An Integrative theory of inter-group conflict” in WG Austin and S Worchel (eds), The Social Psychology of Intergroup Relations. Monterey, Brooks. Tajfel, H. (1974), “Social Identity and Intergroup Behaviour,” Social Science Information, 13(2), 65–93. Taussig, F. (1892). The Tariff History of the United States New York: Capricorn Books, 1964 edition. Temin, P. 1997. “Is it Kosher to Talk about Culture?” The Journal of Economic History, 57 (2): 267-287 Veblen, T. 1899. The Theory of the Leisure Class. New York: Macmillan. Viner, J. 1930. "English Theories of Foregn Trade Before Adam Smith," Journal of Political Economy, XXXVIII, 239- 310 and 404-57. Viner, J. 1955. Studies in the Theory of International Trade (London: Allen and Unwin). Viotti, P. and Kauppi. M. 1987. International Relations Theory (New York: MacMillan). Wallerstein, I. 1980. The Modern World System, vol.2: Mercantilism and the Consolidation of the European World Economy, 1670-1750 New York: Academic Press. Weede, E. 1994. “Constraints, states, and wars.” European Journal of Political Research 26:2,171-192. Waltz, Kenneth N. (1979), Theory of International Politics. Reading, MA: Addison-Wesley. Whitman, M. v. N. 1975. "Leadership without Hegemony," Foreign Policy, no. 20. Wilson, C. 1949. "Treasure and Trade Balances: the Mercantilist Problem" Economic History Review, 2. Wohlforth, William C. (1999), “The Stability of a Unipolar World,” International Security, 24(1), 5–41. Zirgulis, A. and T. Hashimoto. 2023. “Trade Theory Vs Reality: The Banana Trade War”. The International Trade Journal 37:5, 502-518.