Legal Framework for International Business

III.Processes

Institutionalists argue that institutions create stable expectations, facilitate cooperation and linkages, and help set standards of legitimate behavior. These theorists have also come to focus on questions of rational institutional design and function, and how compliance with international norms – and/or international law – is achieved. In other words, why do states comply with international law? A key argument here is that even without coercion and central enforcement, legal rules and procedures can help shape the structure of international politics by creating incentives for rational self-interested states to engage in sustained cooperation with one another. By fostering iterated interaction, international institutions help states to come to value long-term mutual engagement on issues, allowing them to develop patterns of reciprocity and stable expectations about the behavior of other states.

Institutionalist theory is, at its core, about explaining the creation and maintenance of, and compliance with, more or less formalized rules and institutions in the international system. They may seldom describe them as legal, but much of what they discuss concerns legally created and regulated institutions. This phenomenon occurs across a range of issue areas in international politics. States agree collectively to self-restrain by limiting whaling, or banning trade in endangered species, because, over the long term, they have individual and shared interests in the protection of species and the environment. Similarly, over the long term, states may arguably benefit by removing restrictions on free trade, allowing for the free-flow of goods across borders, even if particular segments of domestic economics are exposed to the painful consequences of this process in the short term.
The rationalist perspective used by institutionalists to understand why states comply with legal obligations in the absence of enforcement mechanisms is not based on formal legal reasoning but rather focuses on how institutions can be designed to encourage states to pursue their own self-interest in ways that facilitate long-term cooperation over time. This of course may also be a concern in international law, yet it is rarely addressed so explicitly in the rationalist, strategic and game-theoretic language and approach that dominates much of the international relations literature on state compliance with international norms and legal obligations.
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