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An Assessment of the Rational Actor Model'' AN ASSESSMENT OF THE RATIONAL ACTOR MODEL'' IN INTERNATIONAL COOPERATION. SMALL STATES AS AID DONORS. f"' Being a Doctoral Dissertation Prepared and Presented at the European University Institute B Y LEONCE BEKEMANS European University Library III II 3 0001 0011 8096 9 THESES 338 91 BEK AN ASSESSMENT OF THE RATIONAL ACTOR MODEL IN INTERNATIONAL COOPERATION. SMALL STATES AS AID DONORS. Being a Doctoral Dissertation Prepared and Presented at the European University Institute B Y LEONCE BEKEMANS Do not infest your mind with beating on The strangeness of this business ; at picked leisure Which shall be shortly single, I'll resolve you, Which to you shall seem probable, of every These happened accidents ; till then be cheerful, And think of each thing well. Come hither, spirit. (uilliam Shakespeare, The Tempest, Act V , Scene 1) PREFACE In the course of this study I have benefited from the advice and encouragement of several people without whom I uould not have written this study. I am grateful to Professor Pierre Salmon, my supervisor , for his valuable comments on the original draft and for his con­ structive suggestions for further improvements. The interchange of ideas and information has been very useful. The European University Institute created a stimulating climate for my studies. I should like to take the opportuni­ ty to express my thanks to numerous people at the Badia Fiesolana, in the Department of Economics as well as in the library or in the administration. My stay in Firenze has been a rich experience and never-ending challenge. I am also indebted to people in Brugge. Some gave me precious help to see me through the intricacies of the English language ; others offered me practical help, particularly Johan Michielssens. A special 'thank you' goes to Astrid Hooijberg for having patiently typed successive drafts. Finally, I thank my parents. Indeed, without the benefit of their silent help and encouragement I uould not have finished this long-lasting endeavour. Bcuoge, December 1980 Léonce Bekemans CONTENTS Preface Table of Contents Tables ~ F ioures INTRODUCTION 1 1. Purpose of the Research 1 2. Scope and Organization of the Research 6 CHAPTER I ANALYSIS IN INTERNATIONAL RELATIONS : 11 MODELS AND HYPOTHESES Introduction 11 A. Competing Frameworks and the Study of International 15 Relations 1. The International System : the Classical Model 15 a. Basics of the Classical Model 15 b. 5ome Critiques of the Basic Assumptions 18 2. The International System : the Complex Inter- 23 dependence Model 3. Competing Frameworks in International Relations : 26 An Evaluation B. The Rational Actor Model ; Basic Assumptions 30 of the Analysis 1. General Framework 31 2. Possible Relaxations 32 3. Main Transpositions 34 CHAEIE& 11 ATTEMPTS TO IDENTIFY ' SMALL STATES' : 39 REVIEU OF THE LITERATURE Introduction 39 A. International Economics' Theory 44 B. International Relations’ Theory 48 1. Summary of the Literature 48 a. Objective Power Sources 49 a.1. Military Capability 49 a.2. Population Size 50 a.3. Population-Economic Criterion 52 a.4. Aggregated Criterion 53 Conclusion 54 b. Behavioural Tendencies 55 b.1. Security Perceptions 55 b.2. Other Behavioural Tendencies 58 Conclusion 59 2. Analytical Framework for Foreign Policy Behaviour 59 3. Keohane's Systemic Role Classification 62 a. Definition 62 b. Evaluation 64 Conclusion 67 CHAPTER III THE PUBLIC GOODS THEORY OF MANCUR OLSON i 69 CONTENTS, DEVELOPMENTS AND APPLICATIONS Introduction 69 A. The Collective Goods Theory of Olson î Contents 75 1. Theory Construction 75 a. The Relationship between Groups and the Collective 75 Good b. Olson's Model of Groups or Organizations 77 b.1. General 77 b.2. Specifics ' 78 b.2.a. The Relationship between Group Size and 78 the Provision of Collective Goods b.2.b. Cost-sharing within Small-sized Groups 81 2. Theory Testing 82 B. The Collective Goods Theory of Olson : Critiques and 86 Developments 1. Critiques of Olson's Theory of Groups or Organizations 86 2. Further Development of Olson's Theory of Groups or 88 Organizations a. A Deductive Model of Leadership 88 b. Elaborations of Olson's Collective Goods Theory 90 in International Relations Conclusion 96 CHAPTER IV AN ASSESSMENT OF SOME ELEMENTS OF OLSON *S 97 PUBLIC GOODS APPROACH TO INTERNATIONAL RELATIONS Introduction 97 A. An Assessment of the Public Good Concept 98 1. The Concept of Public Good 98 a. Samuelson's Original Definition 98 b. The Characteristics of a Public Good 99 b.1. Non-Rivalness 99 b.2. Non-Exclusion 102 2. Impure Public Goods 104 3. The Relationship with Other Concepts 108 a. Public Goods and Externalities 109 b. Public Goods and Joint Products 112 c. Public Goods and Economics of Scale 113 B. An Assessment of the Cournot Model of Group Behaviour 114 for Public Good Allocation 1. Introduction 114 2. Graphic Representation of a Non-Cooperative Cournot 117 Equilibrium and a Cooperative Pareto Equilibrium a. The Cournot Equilibrium 117 b. The Lindahl Equilibrium 120 c. A Comparison of the Cournot Equilibrium and 121 the Lindahl Equilibrium C. An Assessment of the Public Good Concept in 124 International Cooperation Introduction 124 1. A Classification of International Goods and 127 the Relationship with International Arrangements 2. The Importance of Side-effects in International 137 Cooperation 3. The Relevance of a Public Goods Perspective in 141 International Relations Conclusion 146 CHAPTER V THEORETICAL QUALIFICATIONS OF A PUBLIC GOODS 148 APPROACH TO INTERNATIONAL RELATIONS Introduction 148 A. A Reaction Process Model : A Qualification of Olson's 149 Public Goods Model Introduction 149 1. The Independent Adjustment Process 150 a. Assumptions 150 b. A Public Good Reaction Function for One Country 151 c. The Reaction Process between Two Countries 157 2. The Determinants of the Reaction Curve 158 3. Equilibrium Conditions for Public Good Output 161 Conclusion 168 B. An International Cooperation Model : A Re-statement 170 of Ruggie's Model Introduction 170 1. Ruggie's Model of International Collaboration 171 2. Re-statement of the International Cooperation Model 174 Conclusion 179 CHAPTER VI THE PHENOMENON OF INTERNATIONAL DEVELOPMENT 181 AID Introduction 181 A. The History of the Phenomenon of International 184 Development Aid 1. Idealism of the Immediate Postwar Period 184 2. The Truman Doctrine : Content and Effects 186 3. The First Development Decade 188 a. The Decolonization Process 188 b. Financial Aid as the Principal Need 189 c. Preference for Bilateral Aid 191 4. The Second Development Decade 192 a. The Changed International Environment of Development 192 Cooperation b. Global Responses 193 c. Search for a Coherent Basis of Development Cooperation 195 B. General Characteristics of the Aid Performance of the 197 Development Assistance Committee 1. The Development Assistance Committee 197 2. Methodology 199 3. Main Characteristics of the Period 1963-1977 201 a. The Flow of Financial Resources 202 b. The Flow of Official Development Assistance 203 4. Aid in Perspective * 206 a. The Real Value of'Aid 206 b. Aid Floys and CNP 207 c. Aid in Relation to Budgetary Expenditures 208 Conclusion 211 CHAPTER VII THE RATIONAL ACTOR APPROACH IN THE AREA 213 OF DEVELOPMENT COOPERATION Introduction 213 A. The Nature of the International Good of Development Aid 214 1. Rationale for Development Aid 214 a. The Altruistic Motive of Aid Allocation 214 b. The Foreign Policy Motive of Aid Allocation 217 b.1. U.S. Foreign Aid Objectives 218 b.2. European Foreign Aid Objectives 220 c. The Mixed Nature of the International Good 221 of Development Aid 2. Bilateral versus Multilateral Development Aid 224 B. Empirical Assessment of the Models 234 1. Olson's Public Goods Model 234 2. Ruggie's International Cooperation Model 239 Conclusion 243 C. Re-assessment of the Aid Performance of DAC Countries 244 1. Relevance of Genuine Development Assistance 244 a. Aid Share to Lou-income Countries 245 b. Aid-tying Status 248 c. A Composite Index of Aid Performance 250 2. The Changing Relations uith Developing Countries 253 a. Political Commitments 253 b. Economic Progress of some Developing Countries 256 c. The Relationship between Trade and Aid Volume 257 Conclusion 261 3. The Impact of Large Donors 263 4. The Aid-giving Capacity 269 a. Aid and GNP Growth 269 b. Aid and GNP per capita 270 Conclusion 274 CONCLUSION TABLES T able II-1 Major Sources of Foreign Policy 60 Table IV-1 Typology of Public Goods (non-rivalness) 100 Table IV-2 Typology of Public Goods (non-exclusion) 103 Table IV-3 Relation between Categories of International 136 Goods and International Arrangements Table V-1 Equilibrium Conditions for Public Good Output 167 Table 1/1 — 1 The Flow of Financial Resources to Developing 202 Countries and Multilateral Agencies (DAC Countries) Table 1/1-2 DAC ODA Volume in Real Terms 204 Table 1/1-3 Increases in ODA at Current and Real Prices 207 (1970-1977) Table VI-4 Aid and Other Public Sector Expenditures 209 (1973) T able VII-1 Net Flows of Multilateral and Bilateral 226 Development Assistance to Less Developed Countries and Multilateral Agencies (DAC Countries) Table VII-2 Net Flows of the DAC Members' Total Official 228 Assistance to Developing Countries and Multilateral Agencies Table V11 — 3 Net Flows of the DAC Members* Bilateral and 229 Multilateral Development Assistance to Developing Countries and Multilateral Agencies T able VII-4 An Empirical Test of Olson's Model (1963-1965) 236 Table VI1-5 An Empirical Test of Olson's Model (1975-1977) 237 Development Assistance Correlations 238
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