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What is the relationship between domestic and international politics in a world of economic interdependence? This article discusses and organizes an emerging body of scholarship, which the authors label the new interdependence approach, addressing how transnational interactions shape domestic institutions and global politics in a world of economic interdependence. This literature makes three important contributions. First, it examines how domestic institutions affect the ability of political actors to construct the rules and norms governing interdependent relations and thus present a source of asymmetric power. Second, it explores how interdependence alters domestic political institutions through processes of diffusion, transgovernmental coordination, and extraterritorial application and in turn how it changes the national institutions mediating internal debates on globalization. Third, it studies the shifting boundaries of political contestation through which substate actors affect decision making in foreign jurisdictions. Given the importance of institutional change to the new interdependence agenda, the authors suggest several instances where historical institutionalist tools might be exploited to address these transnational dynamics, in particular, mechanisms of cross-national sequencing and change strategies of substate actors. As globalization continues, it will be ever more difficult to examine national trajectories of institutional change in isolation from each other. Equally, it will be difficult to understand international institutions without paying attention to the ways in which they both transform and are transformed by domestic institutional politics. While the new interdependence approach does not yet cohere as a single voice, the authors believe that it offers an innovative agenda that holds tremendous promise for both comparative and international relations research as it calls on scholars to reconsider the dynamic nature of globalization for global politics.
