The Concept of a World Economic Order

This paper studies the concept of an international economic order, i.e. an institutional arrangement of international rules. Such rules emerge from negative experiences – historical disasters – that inflict severe hardship on people. A taxonomy for rules reducing transaction costs is developed, for instance through decentralization of decisions, property rights, territoriality and the internalization of border-crossing negative externalities and mechanisms for global public goods. Some aspects of the rule system are studied including the process of ceding sovereignty and philosophical thoughts on international rules.