REPUTATIONAL SANCTIONS IN
INTERNATIONAL LAW
Laarni Escresa
2012-2013 Jean Monnet/GGP Fellow
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Introduction
• Main concern of international agreements/ law: how to address
cross-border externalities, spillovers
• To maximize the gains from global cooperation, international
trade and FDI, international institutional arrangements to
facilitate exchange is needed
• Skepticism on role of international law
• No enforcement mechanism, merely coordinate (Goldsmith
and Posner)
• Rely on other mechanisms such as reputation (Guzman)
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Introduction (2)
• But what is reputation and how are reputational sanctions
imposed?
• Research Question: Under what conditions can we expect
reputational sanctions to be binding and effective?
• Identify the mechanisms to operate
• Structure of presentation
• Theory
• Data/ Empirical
• Focus on Human Rights compliance
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Theory
• Reputation in economics is concerned with information
• A way to address informational asymmetry in society
• Unobservable information on a hidden attribute or quality that
is to important in maintaining or fostering relationships:
economic, social
• Results in moral hazard problem – inefficient outcome (effort)
• Results in adverse selection problem – lemons problem,
absence of a market for good quality
• Role of signaling, building up of a good reputation as a way to
address this problem
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Human rights & Reputation
• In this context, a country´s respect for human rights compliance also
serves a functional role (Moore, Petersmann)
• Governments tie their hands in signing human rights agreement signals
that they can exercise restraint in the government´s use of force, of
which it has a monopoly also against property rights, honor contracts.
• Signal that they are good partners for other forms of international
cooperation. Low discount rate.
• Shows quality of institutions: law, courts, law enforcement
• Lower risk and uncertainty of doing business
• HR is considered a component by sovereign risk rating agencies
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Data
I look at relationship between trade and human rights compliance
• Bilateral trade data 1985-2000,
aggregated to 5-year
• Human rights index, 1985 CIRI
– Physical integrity, torture,
disappearance
– Empowerment index:
democratic & political
• Graph
Each node represents a country
Line/ Path – represents trade between
countries
Node color: HR index (physical
integrity index)
High HR
Low HR
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Summary
• Explore theoretically and empirically how reputational
sanctions work in the international community.
– Reputation as informal sanction is enforced through
decentralized actions/ networks
• Human rights compliance and reputational sanction
– HR compliance serve as signal of country´s quality of
institutions and governance
– Examined relationship between HR compliance and trade
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Conclusions
• Preliminary results
– Different relationship with trade for different indeces of HR
(pol, eco). Trade as conduit of reputational sanction works
for economic rights and empowerment rights (but not for
physical integrity index (torture, etc.)
– Global reputation vs local reputation at work?
• Policy implication: To raise HR standards, encourage not just
trade volume but also heterogeneity of trade partners. Channel
is reputation. To weaken the group clustering effect.
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