Vulnerability Game And The Creation Of An International Regime, Non-hegemonic System

The puzzle of this paper is how to establish international institution in the non-hegemonic system.The hegemonic stability theory and neo-liberal institionalism are the representatives of international political economy theory which research on international institution. As for hegemonic stability theory, it holds that the international institution can't be established in the non-hegemonic system, but the neo-liberal institutionalism are more optimistically, which maintains the establishment of international institution relies on the recognized common interests not the hegemony. The conclusions of the above two theories don't apply on the reality of East Asia ("10+3") regional cooperation, which enjoys the smooth development of the financial cooperation and the slow development of"10 +3"FTA. Therefore, the explanatory power of the existing international political economy theories is weak.In this regard, this paper assumes that the establishment of international institution will experience the the process of vulnerability game in the non-hegemonic system. As public product, the international institution is supplied by the hegemony in the hegemonic system, which is consensus among international relations scholars; but under the non-hegemonic system, namely the balance of power, the states, especially the major states show more concern on relative gains, and cut down deliberately the "selective incentives" disserved by the public goods'contributor. And the public goods attributes of the international institution, that whoever contributes or not will enjoy the benefits, spur the states' free-rider preferences. Thus, the establishment of international institutions always gets into collective action dilemma under the non-hegemonic system.Then, how to establish the international institution under the non-hegemonic system? During the absence of the international institution, all the states will suffer losses. The longer the absence, the greater the states suffer, the weaker the tolerance of losses, and so the more vulnerability. Vulnerability game becomes the necessary process of the establishment of the international institution under the non-hegemonic system. Vulnerability falls into absolute and relative vulnerability. Absolute vulnerability refers to the absolute loss of state, and the relative vulnerability refers to the comparison of the loss among countries. Absolute vulnerability determines the duration of the game. When the country's loss or expected loss because of lack of public goods in excess of the cost required by the supply of public goods, it will take positive action. Relative vulnerability affects the cost distribution. Generally, the countries with more relative vulnerability always show more positivism and ready to bear more cost.In East Asia, the reason why the"10 +3"FTA lag behind, is that most countries are WTO members and enjoys low tariffs, so that the trade diversion effect of East Asian countries isn't high and the consequent absolute vulnerability of trade not big. It is not surprisingly to see the game last so long; In financial field, the reason why the cooperation develop so fast, such as the already achieved fruits the East Asian foreign exchange reserve and the Asian Bond Fund, is that 1997 East Asian financial crisis demonstrated the absolute vulnerability of national finance. Consequently the time of vulnerability was reduced. Apart from that, Thailand who suffered the financial crisis first and Japan who are the most creditor nation of the East Asian countries played big roles in financial cooperation after the financial crisis.