Formal essays on international economic relations: From conflict to cooperation

This dissertation examines international economic relations using theoretical approaches. One of the main theses of this dissertation is that interdependence and complementarity in international economic relations among states mitigate conflict and promote cooperation regardless of the international regime type, anarchic or highly institutionalized. Conflict is likely to be mitigated by economic interdependence among states even in an anarchic system.;The first essay analyzes links between economic interdependence and the existence and stability of optimal resource allocations under anarchy. The main findings are as follows: (1) When economic goods from two states are substitutable for each other, any changes in endowments or technologies from both states affect the resource allocation between the military sector and the economic sector. (2) When economic goods from two states are complementary to each other, the essential factor that affects a state's resource allocation is its own maximum military level of production out of its resource endowment. (3) When both states have the same resource endowments and production technologies, the optimal allocations in the case of substitutes are the same as those in the case of complements.;The second essay formalizes the foreign investors' investment decision in economic reform projects of developing countries with political instability. A model is developed to link the complementarity among projects to the investment responses under various information structures. It shows that for given parameter values, two main factors dampen FDI flows into developing countries: (1) the combined effect of private information and the possibility of foregone positive spillover; and (2) the combined effect of the existence of multiple equilibria due to complementarity and the coordination failure arising from pessimistic expectations.;The third essay analyzes the role of the GATT dispute settlement procedures (DSPs) in collecting and disseminating information under uncertainty. It shows that the GATT rule of free trade can indeed increase the welfare of countries in a perfect information world. But, in the asymmetric and imperfect information world, such multilateral retaliation can actually decrease the welfare level because it gives rise to the frequent use of nontariff barriers and periodic trade wars.