(Page 1 of 38) - Hegemony`s Effect on Interstate Trade: Leveling the Playing Field - or the Rich Get Richer While the Poor Get Poorer? authored by Sacko, David. and Jungblut, Bernadette.

Hegemony’s Effect on Interstate Trade:

Leveling the Playing Field--or the Rich Get Richer While the Poor Get

Poorer?

David H. Sacko

The United States Air Force Academy

David.## email not listed ##

Bernadette M.E. Jungblut

University of Central Florida

## email not listed ##

Paper to be Presented at the Annual Meeting of the American Political Science Association,

Chicago, Illinois, 2 – 5 September 2004.

ABSTRACT: This paper examines the impact of hegemonic governance on interstate trade. Whether and
how hegemonic leadership affects the international political economy have lately received scant attention in
the political science and economics literatures. This is unfortunate, given the potential explanatory power
of this rich theoretical perspective. This paper has three (3) components. First, we review the theoretical
arguments and earlier empirical investigations linking hegemonic leadership to international economic
stability. Although the majority of previous studies tend to find some support for the hypothesis that
hegemony is not a necessary condition for financial stability and hence, increased international trade, these
examinations leave many important questions unanswered or at best, with ambiguous answers. To address
these questions, we develop a more complete theoretical argument explaining how hegemony affects
interstate trade – at the systemic, major power sub-systemic, and dyadic levels of analysis. We hypothesize
that strong hegemony increases trade across the system, among major powers, and also within nation-state
pairs where the hegemon—the state with the ability, the will, and the acceptance of other states to assume
leadership—has strategic interests. Finally, we use comprehensive, multidimensional indicators (from
Sacko 2003) to conduct a much improved assessment of the effects of both the “hegemonic power” and
“hegemonic interest” of the United Kingdom (1816-1945) and the United States (1946-1992) on interstate
trade. We find that hegemonic governance does not statistically significantly affect aggregate world trade.
Hegemonic governance, however, is statistically significantly and positively related to both major power
sub-systemic trade – and to trade within dyads strategically relevant to the hegemon.

“The views expressed in this article are those of the authors and do not necessarily reflect the official

policy or position of the Air Force, the Department of Defense, or the U.S. Government.”