An Economic Approach : Why Do We Need International Law?


To understand the economic approach in international law, firstly we need to understand what is international law and why we need international law? What is the economic approach in economic approach in international law? The term international law was coined by the English Philosopher “Jermey Bentham” (1748-1832).

According to Bentham, the classical definition of international law is “it is a collection of rules governing relations between states.”

According to the modern international law, there are two vital elements omits in this definition i.e., individual and international organisation. International law is not simply collection of rules to governing relations between states, but it provides normative guidelines as well as methods, mechanism and common conceptual language to sovereign states.[1] We need international law to establish peace and maintain relations between sovereign states all over the world and the chances of war reduced among the states in the world.  International law consist some international organization like International Court of Justice and Security Council etc.


The first seminar on law and economics held in Beijing in 1988. Richard Posner published his famous book “Economic Analysis of Law in 1973”, it focused on international trade laws of microeconomics, normative economics, game theory or theory of public. The economic analysis of legal issue in respect of government regulations of international trade are based on traditional theory. Many were books published on economics and law. China introduced economics and law 20 years ago.[2] The concept of approach to analyse international law is a new development in international law. The historians Robert van Horn and Philip Mirowski described the developments in their book “The Rice of the Chicago School of Economics.”


The economic approach to public international law assume that states are rational self-interested to use the international laws in order to address international externalities and other benefits of international law. This economic approach also stressed that there is no external enforcement body such as world government exists. International law is self-enforcing and violation of international law results retaliate or other ways to responding.[3] The main role or objective of international law is to “regulate affairs of subject”.

The recent economic crisis needs to assess the legal rules and institution at international level that affects the economic globalization. Global economic independence has increase income inequality in developed and developing countries. Many legal scholars analyse from the structure of the international legal system to impact of the transitional economic activity and exploring the economic effect of particular institution forms of transactional rule making among sovereign states. The international law and economics widely associated with “new institutional economics” with focus on transaction cost economics, firm theory, comparative institutional analysis, game theory, rational choice theory and public choice theory.[4] These are the basis of economic approach in international law.

We need international law in economic approach due to globalisation. It is the main cause for which we need international law. The global economy increasing interconnectedness but it has created many problems. These problems include global inequality, unequal economic development and global poverty etc. Economic approach helps us to understand international law by outlining the analogy between the international market and traditional market for goods. There are three important international law topics i.e., the allocation prescriptive jurisdiction, the law of treaties, and the competences of international organization.

International economic law deals with the regulation economic affairs between the two or more states. International economic law is increasingly deal with regulation of trader from different countries. As we know, every country is dependent on each other for many things like food, clothes, medicines etc. The export and import between the countries at international level govern by treaties which came under international law or govern by international law. Recently, during the COVID – 19 situations, India had to supply Hydrochloroquine medicine to other countries for the trial of treatment of this pandemic. The economic analysis is different at international and domestic level in many situation where as both are same in many situation. Economics approach has also impact on “International Humanitarian Law” and “International Environmental Law”, International Humanitarian Laws aims to restrict the use of force in the wars or military conflicts.

The traditional international law does not apply on civil war. But in 1991, the violation of international humanitarian law was founded within the territory of Yugoslavia and Rwanda civil war of 1994. After that ICTY and ICTR setup by UN and declared that this civil war constituted threats for international peace and security. We understand this legality of international tribunals by the economic analysis of international humanitarian laws. In 20th Century, the international protection of environmental put global protection instead of global economic integration. But, there is no environmental organisation. Economic scholar pointed out that the lacking of a global environmental organisation would results two negative effects by their economic analysis on environmental laws. [5]

So, these are the main objective of economic approach or analysis in the need of international law.

This article is authored by Nishu Singh, Second-Year, BBA. LL.B student at Jagannath Institute of Management and Science (JIMS)

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