International alliance is a form of cooperation between states that are intended to advance strategic goals. They can be categorized as military, political and economic, resource and cultural and are typically established by treaties. They can also be framed as complete constructs such as the European Union or NATO and more limited such as ANZUS.
The nature of alliances has changed since the end of the Cold War. During that period, the United States’ traditional approach to alliance making was reoriented toward addressing specific crises. This new approach created a wide range of new alliances and prompted renewed debates about burden sharing. The idea that states need to pay their fair share has become a major point of contention in the NATO context, as it was during the Cold War.
Whether the question of how to define an alliance is one of burden sharing or cost-sharing, however, has not diminished the need for states to pursue flexible cooperation strategies. In an era of steadily increasing Sino American competition, many countries seek to engage with allies and potential rivals across numerous realms. Such “global swing states,” a term originally coined by GMF and the Center for a New American Security, use their pools of available capital, demographic advantage and strategic territory to expand their clout without giving away exclusive commitments to either the US or China.
In this study, we examine the relationships between the degree of industry globalization, the types of international alliances and stock market performance. We find that the relative proportion of non-joint venture (NJV) alliances is higher in global industries and lower in multidomestic industries. This pattern is consistent with the theory that industry globalization enhances a country’s ability to form international alliances and to assess the performance of foreign markets. We also find that, when NJV alliances exist, there is a greater degree of collaboration between firms in global industries than in multidomestic ones.
About the Author
