The Atomizers: Multinational Firms and the Fragmentation of Global Economic Governance

In the first decades following World War II, the world’s industrial powers believed that the global economy should be regulated by institutions that are inclusive, cooperative, and multilateral. In the 21st century, however, most global economic governance is conducted through ad hoc bilateral agreements; this piecemeal approach reduces aggregate welfare, promotes inequality both across and within states, and enables economic nationalism.

The Atomizers provides a new explanation for the decline of multilateralism: multinational firms, a minor economic force in the middle of the 20th century but a dominant one at its end, prefer bilateral economic agreements over multilateral ones because the former provide firms with greater benefits relative to their competitors. As firms expand abroad into new host markets, they form new interest groups—which I call the bilateral lobbies—to petition their home government for greater bilateral integration.

Using a wide range of novel data sources—including bilateral chambers of commerce, text data from oral history interviews with thousands of U.S. diplomats, declassified diplomatic cables, and subnational trade data from the USSR—this book demonstrates that, paradoxically, the globalization of the firm led to the atomization of global economic governance.

For more details, see this draft book proposal.