International collaboration leading to economies of scale?

Question

What are some sectors (such as trading, military, bargaining power in diplomacy, technological superiority) in which nations benefit from by collaborating with other nations?

I'm looking for sectors where in if a nation is an ally (diplomatic/trade) with another nation, the average payoff each nation gets is higher than the payoff they would gain individually?

For instance, comparing nations to individuals and one particular sector to chat applications, if one user uses chat app A, and another uses B, they can't communicate. But they can communicate with all friends who use the same chat app. The payoff is directly proportional to the number of friends which use the same application.

Answer 1

There are two different phenomena you may be describing: specialization and network effects.

Specialization

A nation can only produce a certain amount of things. The common example is the "guns or butter" debate, where a nation must balance the production of guns (military goods) or butter (consumer goods). A nation would be most efficient if it could produce only one, but it requires both. By itself, the nation must choose an inefficient solution - producing both guns and butter, but in smaller quantities than it could if it specialized.

However, if there are multiple nations each one can specialize, one producing guns and one producing butter. They can trade their produce, taking advantage of each others' specialization. The result is that both nations will end up with more of both goods than if they had worked alone. For more information, read about comparative advantage.

I have never heard of a purely political phenomenon which benefits from comparative advantage. There are countless economic examples, much of which is aided (or hindered) by public policy. For example, a state could decide to provide incentives to universities to focus on automotive technology. This leads to specialization, as more automotive experts are trained, more firms founded, and more products created or sold. Other nations no longer need to design or produce cars (although some will want to), and everyone benefits from the trade.

Network Externalities

Aside from ordinary trade, some things increase in value as more people use them. This matches your example of the chat app: the more people who use the app, the more value it has for each user.

These are called network externalities (or network effects). These are common in international relations.

Here are a few quick examples. After a few, it should become easy to think of several more:

• International Law: The more nations that agree to be bound by international law, the more value those laws have. For example, one aspect of the Geneva Conventions is the requirement that prisoners of war be treated humanely. If only one or two countries agreed to this, it would have very little value because there would be little assurance that their enemy would be one of the signatories. However, if nearly all of the nations agree to this law, then it becomes significantly more valuable because each nation could reliably be assured that their captured soldiers will be treated well.
• Open Borders and Markets: These kinds of agreements remove borders to people, goods, and capital. The fewer borders there are, the more freely they can move to where they are valuable. So the more signatories to these kinds of deals, the more freely things can move around, and the more value there is.
• Membership in International Organizations: How important would NATO or the UN be if most people choose not to participate? Not very. Membership in international groups increases in value as more people join up.

In all three of these cases, the benefits for each nation increase as the number of participants increases.

Answer 2

Economically: Trade is an engine of growth and so countries will use it as world trade has increased by an average of 7% since 1945, causing economic growth to be high. The theory of comparative advantage also explains that by specialising in goods where countries have a lower opportunity cost, there can be an increase in economic welfare for all countries. Free trade enables countries to specialize in those goods where they have a comparative advantage, to accomplish more with teamwork then by themself. 2. Reducing tariff barriers leads to trade creation. Also, trade creation occurs when consumption switches from high cost producers to low cost producers. The removal of tariffs leads to lower prices for consumers. Also could make use of surplus raw materials since Middle Eastern counties such as Qatar are very rich in reserves of oil but without trade there would be not much benefit in having so much oil.Japan on the other hand has very few raw material without trade, it would be very poor.

"Militarly, a alliance like Nato provides for rationalisation of inventory management by sharing resources spare parts and maintenance activities; bullet the minimum distribution of essential spare parts during the deployment of forces in a theatre of operation. bullet cross service supply between the military branches bullet sharing of supply support between nations bullet An accurate description of the items permits users to readily find equipment, which meets requirements and accomplish replenishment without delay. bullet The use of a common language simplifies the technical dialogue between users. Maximum use of coded data allows language independent communications. bullet The use of computer technology allows the recording, processing, and transmitting of identification and management data through easily accessible databases." www.nato.int/structur/AC/135/ncs_brochure/ncs_brochure_e/chapters/9_advantages_e.htm

It works to create a wall of strength behing the country, and bring in diplomatic power, to swing international disputes and having strength in numbers.