from Part II - Withdrawal
Published online by Cambridge University Press: 29 June 2025
Chapter 4 outlines and tests our argument about the consequences of IO withdrawal for exiting states. We argue that there should be negative reputational and cooperative consequences for withdrawing states because IOs operate as hand-tying, credible commitment devices. International actors might regard withdrawal as backing out of a commitment and a signal that decouples the state from a self-chosen “in-group.” Thus, international actors – such as market analysts and other states – may reduce their trust that a withdrawing state will follow through on other commitments. As evidence, we document that withdrawal is associated with worsened perceptions of political risk and investor confidence. We document how the negative reputational consequences vary based on states’ and IOs’ preexisting reputations. We also show that withdrawal reduces the chance of being elected to the UNSC as a non-permanent member and makes states less likely to sign future treaties with the exiting state. We expect the material consequences of withdrawal to be limited due to strategic selection, substitution, and potential gains. We test these arguments on economic IOs because they represent more than half of all IOs and they can be evaluated consistently. We find that withdrawing states on average suffer limited material consequences.
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