Preface  pp. xi-xii

Preface

By Carla Norrlof

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When I began inquiring about the distribution of benefits from trade, I was first looking at countries’ relative capacity for trade expansion, synergies between import and export growth, and the determinants of commercial bargaining power. After some time, I realized that evaluating countries’ relative propensity for raising imports and exports, and any advantage tied to it, required a parallel assessment of countries’ ability to absorb foreign investment and to invest in other countries. Analyzing commercial gains allocation meant getting to work on the politics of investment and monetary relations, and wading through more data than any scholar without a research assistant could possibly wish for. In the meantime, there was renewed interest in cross-border financial transactions in the economics discipline, a string of unprecedented current account deficits in the United States, euro success, and China's rise. One moment there was talk of America as empire, the next forecasts of American decline. But just how much systemic variation is there between the account of America the indispensable power and America the weak? This led me to consider the structural features at the basis of a country's relative standing in the world and the relationship between these features. Was there a bargaining advantage associated with being the largest power in the world, or was it better to be a free-riding smaller power, as so many scholars surmised? My research not only suggests that the United States benefits from being the most dominant power today, but that it will continue to be the greatest power for the foreseeable future.