Political Geography: Global Focus / Topic: International Political Economy

1. Signaling Virtue or Vulnerability? The Changing Impact of Exchange Rate Regimes on Government Bond Yields

Author:: Zsófia Barta, Lucio Baccaro, and Alison Johnston
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: Do exchange rate regimes affect the conditions under which developed countries borrow? This paper argues that they do, but their impact on yields depends on the prevailing macroeconomic context. When investors regard inflation as the most relevant risk to bond holdings, monetary union has a distinct advantage over floating and fixed exchange rates because of its credible in-built mechanism to control inflation. However, once default is seen as the most relevant risk, exchange rate rigidity becomes a liability due to its constraining effect on governments’ ability to respond to adverse shocks. We test our argument with a moving window panel analysis for twenty-three OECD countries from 1980 to 2017. We find that before the late 2000s, inflation was penalized under floating and (to a lesser extent) fixed exchange rate regimes, but not in countries in monetary union. Since the 2010s, inflation carries no penalty under any exchange rate regime. Variables linked to default risk (debt and entitlement spending) did not affect yields under any exchange rate arrangements until the mid-2000s. Afterwards, countries in monetary union (and to a lesser extent in fixed exchange rate regimes) were significantly penalized for public debt and entitlement spending, whereas countries with floating regimes were not. Our results speak to the literatures on governments’ institutional commitments and “room to move.”
Topic:: International Political Economy, Financial Markets, Bonds, Exchange Rates, and Euro
Political Geography:: Global Focus

2. Restructuring Sovereign Bonds: Holdouts, Haircuts and the Effectiveness of CACs

Author:: Chuck Fang, Julian Schumacher, and Christoph Trebesch
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Sovereign debt crises are difficult to solve. This paper studies the “holdout problem”, meaning the risk that creditors refuse to participate in a debt restructuring. We document a large variation in holdout rates, based on a comprehensive new dataset of 23 bond restructurings with external creditors since 1994. We then study the determinants of holdouts and find that the size of creditor losses (haircuts) is among the best predictors at the bond level. In a restructuring, bonds with higher haircuts see higher holdout rates, and the same is true for small bonds and those issued under foreign law. Collective action clauses (CACs) are effective in reducing holdout risks. However, classic CACs, with bond-by-bond voting, are not sufficient to assure high participation rates. Only the strongest form of CACs, with single-limb aggregate voting, minimizes the holdout problem according to our simulations. The results help to inform theory as well as current policy initiatives on reforming sovereign bond markets.
Topic:: Debt, Economics, International Political Economy, Law, and Credit
Political Geography:: Global Focus

3. Global Environmental, Social and Governance (ESG) Capital Allocation Strategies Between Impact Ambitions and Measurement Challenges

Author:: Sara Lovisolo
Publication Date:: 08-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Responsible investment as a capital allocation strategy has evolved from its ethical and political origins to embrace science-based considerations and outcome-based approaches in the context of the urgent action required in response to climate change and the Sustainable Development Goals. This shift can pose both threats and opportunities to companies seeking to get access to a diversified investor base. The investment environment companies are faced with varies depending on the geographical context and the investment style of investors. In particular, the rise of passive investment – that is the replication of financial indices in the construction of fund portfolios – is an important tool for the integration of sophisticated environmental, social and governance (ESG) factors in investment strategies. The US, Europe, Asia-Pacific and Africa present different levels of maturity and strengths in the space of responsible investment, calling for ad-hoc responses from investee companies. Across all jurisdictions the challenge of effectively measuring the impact of responsible investment is one investors and policymakers alike are still grappling with. Paper prepared in the framework of the IAI-Eni Strategic Partnership, July 2021.
Topic:: Climate Change, International Political Economy, Foreign Direct Investment, and Sustainable Development Goals
Political Geography:: Global Focus

4. Covid-19 and the Danger of Self-sufficiency: How Europe’s Pandemic Resilience was Helped by an Open Economy

Author:: Johan Norberg
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: During the Covid-19 pandemic, Europe has benefitted strongly from being an open economy that can access goods and services from other parts of the world. Paradoxically, some politicians in Europe think that dependence on foreign supplies reduced the resilience of our economy – and argue that Europe now should wean itself off its dependence on other economies. In this Policy Brief, it is argued that self-sufficiency or less economic openness is a dangerous direction of policy. It would make Europe less resilient and less capable of responding to the next emergency. It is key that people, firms and governments can get supplies from other parts of the world. It is diversification, not concentration of production, that will make Europe more resilient when the next emergency hit. We don’t know where the next crisis will come from. Nature will throw nasty surprises at us, and we will make stupid mistakes, some of which will have devastating consequences. What we do know, though, is that we stand a better chance to fight the next emergency if we get richer and improve our technology. The best policy for resilience is one that encourages specialisation and innovation – and, when the emergency hit, allow for people to improvise in search for solutions. For that to happen, we need openness to goods, services and technology from abroad.
Topic:: Health, International Political Economy, Innovation, Economic Cooperation, Pandemic, and COVID-19
Political Geography:: Europe and Global Focus

5. Global Trade Today is Global Value Chains

Author:: David Henig
Publication Date:: 01-2021
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: In the last 25 years global value chains have come to dominate global trade in a way surprisingly little discussed or understood. To meet the policy challenges of today and the future we need to understand the key characteristics of this new global trade and how they came about. The OECD estimate around 70% of total trade takes place in global value chains. Using their definition as where “the different stages of the production process are located across different countries”, and considering both goods and services inputs, this may be an understatement. The example most commonly used is the automotive sector, with 30,000 parts and associated services like satellite navigation going into one car. However there are many others. Modern primary commodity production is optimised by technology developed in other countries, diverse services and goods are frequently combined to create new product offerings, and most international business to consumer transactions are facilitated by leading global platforms. Positively this new globalization has provided consumers with an unprecedented choice of products at affordable prices. More challengingly it has seen governments struggle with the question of how they can best influence modern trade, amid signs of a backlash and simple demands for ‘more domestic manufacturing’. The popular global narrative that feeds such demands is one that has a traditional view of trade as a set of simple primary or manufactured goods transactions. Policymakers must move on from this narrative, making their choices, and explaining them clearly, on the basis of global value chains.
Topic:: International Political Economy, International Trade and Finance, Trade, and Global Value Chains
Political Geography:: Global Focus

6. Risk Shocks and Divergence between the Euro Area and the US in the aftermath of the Great Recession

Author:: Thomas Brand and Fabien Tripier
Publication Date:: 03-2021
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Highly synchronized during the Great Recession of 2008-2009, the Euro area and the US have diverged in the period that followed. To explain this divergence, we provide a structural interpretation of these episodes through the estimation for both economies of a business cycle model with ﬁnancial frictions and risk shocks, measured as the volatility of idiosyncratic uncertainty in the ﬁnancial sector. Our results show that risk shocks have stimulated US growth in the aftermath of the Great Recession and have been the main driver of the double-dip recession in the Euro area. They play a positive role in the Euro area only after 2015. Risk shocks therefore seem well suited to account for the consequences of the sovereign debt crisis in Europe and the subsequent positive eﬀects of unconventional monetary policies, notably the ECB’s Asset Purchase Programme (APP).
Topic:: Debt, Economics, International Political Economy, Global Recession, Finance, Europe Union, Economic Growth, and Risk
Political Geography:: United States, Europe, and Global Focus

7. Information in the First Globalization: News Agencies and Trade

Author:: Pierre Cotterlaz and Etienne Fize
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper documents the effect of information frictions on trade using a historical large-scale improvement in the transmission of news: the emergence of global news agencies. The information available to potential traders became more abundant, was delivered faster and at a cheaper price between countries covered by a news agency. Exploiting differences in the timing of telegraph openings and news agency coverage across pairs of countries, we are able to disentangle the pure effect of information from the effect of a reduction in communication costs. Panel gravity estimates reveal that bilateral trade increased by 30\% more for pairs of countries covered by a news agency and connected by a telegraph than for pairs of countries simply connected by a telegraph.
Topic:: Economics, International Political Economy, Partnerships, Media, News Analysis, and Trade
Political Geography:: Global Focus

8. World Interest Rates and Macroeconomic Adjustments in Developing Commodity Producing Countries

Author:: Vincent Bodart, François Courtoy, and Erica Perego
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: With commodities becoming international financial securities, commodity prices are affected by the international financial cycle. With this evidence in mind, this paper reconsiders the macroeconomic adjustment of developing commodity-exporting countries to changes in world interest rates. We proceed by building a model of a small open economy that produces a non-tradable good and a storable tradable commodity. The difference with standard models of small open economies lies in the endogenous response of commodity prices which -due to commodity storage- adjust to variations in international interest rates. We find that the endogenous response of commodity prices amplifies the reaction of commodity exporting countries to international monetary shocks. This suggests that commodity exporting countries are more vulnerable to unfavourable international monetary disturbances than other small open economies. In particular, because of the existence of the commodity price channel, even those small open commodity-exporting economies that are disconnected from international financial markets can be affected by the international financial cycle.
Topic:: Economics, International Political Economy, Monetary Policy, Finance, Commodities, Interest Rates, Exports, and Price
Political Geography:: Global Focus

9. GARCH Analyses of Risk and Uncertainty in the Theories of the Interest Rate of Keynes and Kalecki

Author:: Hubert Gabrisch
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This study attempts to identify uncertainty in the long-term rate of interest based on the controversial interest rate theories of Keynes and Kalecki. While Keynes stated that the future of the rate of interest is uncertain because it is numerically incalculable, Kalecki was convinced that it could be predicted. The theories are empirically tested using a reduced-form GARCH-in-mean model assigned to six globally leading financial markets. The obtained results support Keynes’s theory – the long-term rate of interest is a nonergodic financial phenomenon. Analyses of the relation between the interest rate and macroeconomic variables without interest uncertainty are thus seriously incomplete.
Topic:: Economics, International Political Economy, Economic Theory, Interest Rates, Macroeconomics, Keynes, Models, and Michał Kalecki
Political Geography:: Global Focus

10. Firm Profits and Government Activity: An Empirical Investigation

Author:: Petar Jolakoski, Branimir Jovanovic, Joana Madjoska, Viktor Stojkoski, and Dragan Tevdovski
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: If firm profits rise to a level far above than what would have been earned in a competitive economy, this might give the firms market power, which might in turn influence the activity of the government. In this paper, we perform a detailed empirical study on the potential effects of firm profits and markups on government size and effectiveness. Using data on 30 European countries for a period of 17 years and an instrumental variables approach, we find that there exists a robust relationship between firm gains and the activity of the state, in the sense that higher firm profits reduce government size and effectiveness. Even in a group of developed countries, such as the European countries, firm power may affect state activity.
Topic:: Development, Economics, Government, International Political Economy, and Profit
Political Geography:: Europe and Global Focus

11. Breaking Through the Digital Ceiling: ICT Skills and Labour Market Opportunities

Author:: David Pichler and Robert Stehrer
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper analyses the impact of ICT-skills on individuals’ labour market mobility patterns, in particular job-to-job, employment- to-unemployment and unemployment-to-employment transitions. Based on the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) and longitudinal EU-SILC data, individuals’ labour market outcomes are examined over the period 2011-2017 in nine EU countries and the UK. Our results indicate that individuals with strong ICT skills have better opportunities and are therefore not only more likely to change jobs more frequently but are also less likely to face unemployment. Furthermore, ICT skills support unemployment exit towards medium and high digital occupations. A certain minimum level of ICT skills also supports unemployment exit towards low digital occupations but seems to make employment in such occupations less likely once this threshold is crossed. Overall, ICT skills have less predictive power for transition towards medium digital occupations. Thus, while ICT skills appear to improve labour market opportunities significantly, it seems that there are still jobs that require relatively few ICT skills.
Topic:: Economics, International Political Economy, Science and Technology, Digital Economy, Labor Market, Information Technology, and Skilled Labor
Political Geography:: Global Focus

12. Exploring ‘Non-Tariff Measures Black Box’: Whose Regulative NTMs on Which Products Improve the Imported Quality?

Author:: Mahdi Ghodsi
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: Regulative non-tariff measures (NTMs), such as technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures, have frequently been imposed to regulate the quality of imported goods when the market fails to address some issues of concern regarding harmful products with low standards. The impact of NTMs on trade values and trade volumes has been extensively modelled and analysed in the literature, while their quality impact has usually been studied using the unit values of imports. In this paper a monopolistic competition framework is presented, in which firms choose both the quality and the price of their exports subject to the compliance costs of NTMs behind the border and a fixed cost of technological change. Using the solutions of this model including NTMs, the quality of products at the six-digit level of the harmonised system (HS) traded globally and bilaterally during the period 1996–2017 is estimated. Using these estimates, the impacts of TBTs and SPS measures on trade values, volume, unit value and quality are estimated. On average and across all global bilateral trade, TBTs restrict imports while improving quality significantly. SPS measures stimulate trade and improve the average imported quality. Then, by estimating the importer-specific impact of NTMs on traded value, quantity, unit value, quality, and quality-adjusted price for each product, the ‘NTM Black Box’ is opened and analysed. This provides evidence of whether the quality of traded goods to an importing country has been upgraded despite the trade restrictiveness of NTMs.
Topic:: Economics, International Political Economy, International Trade and Finance, and Non-Tariff Measures
Political Geography:: Global Focus

13. The Political Economy of Law Enforcement

Author:: Matías Dewey, Cornelia Woll, and Lucas Ronconi
Publication Date:: 01-2021
Content Type:: Research Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: The legal order is the legitimate foundation of liberal democracy. Its incomplete enforcement of the law can therefore appear dysfunctional, reflecting weak institutions, state capture, and corrupt practices. This paper casts doubt on such categorical assessments by systematically examining the reasons for and intentions behind incomplete enforcement. It argues that law enforcement is part of the political process that is deeply affected by the constellation of actors concerned. Choices over law enforcement produce social order that is analytically distinct from the production of legal norms and their formal implementation. By analyzing different types of partial enforcement, its rationales, and intended effects, we propose an approach that studies law enforcement as an integral part of public policy analysis and of the study of socioeconomic orders.
Topic:: Economics, International Political Economy, Law Enforcement, Law, Police, and Legal Sector
Political Geography:: Europe and Global Focus

14. Business & Peace 2021

Publication Date:: 05-2021
Content Type:: Special Report
Institution:: Institute for Economics & Peace (IEP)
Abstract:: Rather than asking what businesses can do for peace, this study differentiates itself by focusing on what peace can offer businesses. The Institute for Economics & Peace (IEP) sees this as an important, but missing step in business analysis. In order for the private sector to engage with peacebuilding, investors first need to see the benefits of peace to their investment decisions. This work shows that economic performance can be predicted by movements in the same socio-economic developmental factors that affect peacefulness. These conditions are known as Positive Peace. The global economic impact of violence was $14.4 trillion in 2020. This is broadly equivalent to the entire economy of China. If humanity were to reduce violence by ten per cent per annum, the savings of $1.4 trillion would broadly equate to adding an economy the size of Russia’s or Brazil’s every year to the global fold. The burden of violence on an economy is self-evident. However, this report focusses on the converse perspective: countries that improve their underlying conditions, as gauged by IEP’s measures of peace, create the potential for a significant peace dividend for business.
Topic:: Economics, International Political Economy, Business, Peace, and International Business
Political Geography:: Global Focus

15. Social clauses in trade agreements: implications and action points for the private sector in developing countries

Author:: Anna Liz Thomas, Jarrod Suda, and Gaia Grasselli
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Since the 1990s, more free trade agreements have come to include social clauses, which make reference to domestic and international labour standards. As this international legal web continues to grow, so too will the questions and concerns from employers and businesses. This Tradelab report, for the International Organisation of Employers, provides practical guidance for those employers and businesses. It does so by taking the diverse array of actors, the tensions within, and the opportunities set forth by free trade agreements and elaborating upon them using three case studies.
Topic:: International Political Economy, International Trade and Finance, Treaties and Agreements, Labor Issues, Free Trade, Trade, International Business, and Labor Market
Political Geography:: Global Focus

16. Tracing the evolution of service robotics: Insights from a topic modeling approach

Author:: Ingrid Ott, Ivan Savin, and Chris Konop
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Taking robotic patents between 1977 and 2017 and building upon the topic modeling technique, we extract their latent topics, analyze how important these topics are over time, and how they are related to each other looking at how often they are recombined in the same patents. This allows us to differentiate between more and less important technological trends in robotics based on their stage of diffusion and position in the space of knowledge, where some topics appear isolated while others are highly interconnected. Furthermore, we propose a novel approach to match the constructed topics to the IFR classification of service robots based on frequency and exclusivity of words overlapping between them. We identify around 20 topics belonging to service robotics. Our results corroborate earlier findings, but also provide novel insights on the content and stage of development of application areas in service robotics. With this study we contribute to a better understanding of the highly dynamic field of robotics and contribute to new practices of utilizing the topic modeling approach.
Topic:: International Political Economy, Science and Technology, Robotics, and Models
Political Geography:: Global Focus

17. Restraining Ourselves: Helping by Not Hurting

Author:: Nathan Nunn
Publication Date:: 01-2020
Content Type:: Policy Brief
Institution:: Economics for Inclusive Prosperity (EfIP)
Abstract:: In this brief, I discuss the current state of economic development policy, which tends to focus on interventions, usually funded with foreign aid, that are aimed at fixing deficiencies in developing countries. The general perception is that there are inherent problems with less-developed countries that can be fixed by with the help of the Western world. I discuss evidence that shows that the effects of such ‘help’ can be mixed. While foreign aid can improve things, it can also make things worse. In addition, at the same time that this ‘help’ is being offered, the developed West regularly undertakes actions that are harmful to developing countries. Examples include tariffs, antidumping duties, restrictions on international labor mobility, the use of international power and coercion, and tied-aid used for export promotion. Overall, it is unclear whether interactions with the West are, on the whole, helpful or detrimental to developing countries. We may have our largest and most positive effects on alleviating global poverty if we focus on restraining ourselves from actively harming less-developed countries rather than focusing our efforts on fixing them.
Topic:: Development, Economics, International Political Economy, Developing World, and Economic Development
Political Geography:: United States and Global Focus

18. Beyond Compliance and Cooperation? Rethinking Corporate Social Responsibility in Global Value Chains in the Age of COVID-19

Author:: Peter Lund-Thomsen and Jacob Ramirez
Publication Date:: 12-2020
Content Type:: Working Paper
Institution:: Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:: In this article, we explore whether COVID-19 has led to a rethink of the two dominant ways of conceptualizing corporate social responsibility (CSR) in global value chains (GVCs): the compliance and cooperation paradigms. Hence, we examine whether any changes have taken place in the drivers, main features, theoretical underpinnings, and limitations of these two approaches to CSR in GVCs in the light of COVID-19. We contend that COVID-19 has been associated with an expanded version of the compliance paradigm. However, COVID-19 has not directly challenged the cooperation approach as a conceptual model. Instead the partial failure of buyers to act responsibly in relation their purchasing practices and restrictions on international travel have highlighted the limitations of this approach in the age of COVID-19. The conclusion highlights the main findings, research and policy implications of this analysis.
Topic:: International Political Economy, Business, Economic Policy, Pandemic, Global Value Chains, and COVID-19
Political Geography:: Global Focus

19. Making Peace with Climate Adaptation

Author:: Louise Van Schaik, Camilla Born, Elizabeth Sellwood, and Sophie de Bruin
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: Climate change poses risks to poor and rich communities alike, although impacts on the availability and distribution of essential resources such as water, food, energy and land will differ. These changes, combined with other social, political and economic stresses and shocks, can increase tensions within and between states, which, if unmanaged, can lead to violence. Climate-related changes to transboundary waters, food security and trade patterns, sea levels, and Arctic ice, as well as the transition to a low-carbon economy, have profound geopolitical implications. Largescale climate-related migration may also affect the stability of states, and relations between states. Climate action itself may prove destabilizing: (mal)adaptation can disrupt economic and social relations, particularly if implemented without appropriate political economy analysis and risk assessments. In response to analyses linking climate change to security, peace and security actors increasingly realize that interventions to promote peace and stability are more likely to be effective if they incorporate such analyses. At the United Nations, member states have agreed to shift towards a “preventive” approach to conflict risks, grounded in sustainable development. The UN leadership is adjusting institutional structures to better understand and respond to climate-related security risks at all levels, including a newly established climate security mechanism in New York. Many regional intergovernmental institutions have also recognized the links between climate change, peace and security. Some, such as the Intergovernmental Authority on Development in East Africa and the European Union, have incorporated climate-related factors into their conflict early-warning mechanisms. We are only just beginning to understand the realities of adapting to unprecedented climate change, however. Climate-related factors will need to be incorporated systematically into political analysis, risk assessment, and early warning, accompanied by deeper integration of climate-security risk assessment into planning and political engagement in the field. Similarly, more consistent analysis of climate-related security risks must contribute to politically informed, conflict-sensitive adaptation strategies.
Topic:: Conflict Prevention, Climate Change, International Political Economy, Peace, and Sustainability
Political Geography:: Global Focus

20. Globalization Isn’t in Decline: It’s Changing

Author:: Erik van der Marel
Publication Date:: 08-2020
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Globalization isn’t in decline; it is simply changing. Although the COVID-19 crisis has seen a dramatic decline in goods trade, investments and the movement of people, a new type of globalization is emerging. This “new globalization” is based on digital services, research and development, data, ideas, and other intangibles. This development has been going on for a while and has evolved more rapidly after the previous global financial crisis (GFC) in 2008-9. For instance, the GFC caused digital services trade to significantly “de-link” from goods-related services trade. This pattern illustrates that the COVID-19 crisis will likely mark another break in trade patterns and that future growth in globalization will depend crucially on digital trade and cross-border exchange in intangibles.
Topic:: Globalization, International Political Economy, International Trade and Finance, Digital Economy, R&D, Data, and COVID-19
Political Geography:: Global Focus

21. Shifting into Digital Services: Does a Crisis Matter and for Who?

Author:: Erik van der Marel
Publication Date:: 08-2020
Content Type:: Working Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: How do trade patterns change after an external shock such as an economic crisis, and is this shift structural? This paper uses a Difference-in-Difference (DID) approach to investigate whether services trade became more digital after the Global Financial Crisis (GFC) in 2008. It finds that the GFC formed an independent break from the previous period that turned services trade to become more digital – although there are signs that this somewhat already happened before 2008. Software-intense services such as R&D services, information services, computer services and charges for Intellectual Property Rights (IPR) saw on average a 6 percent higher increase in global exports compared to other non-digital sectors post-2008. Countries with higher internet usage and with already comparative advantage in these sectors saw this higher increase in digital trade. More striking is that in particular upper-middle income countries and countries with high manufacturing activity saw the sharpest shift into digital services trade after the GFC. These significant outcomes forecast a direction into which patterns of services trade are likely to turn after the current economic crisis resulting from COVID-19.
Topic:: International Political Economy, International Trade and Finance, Digital Economy, Global Financial Crisis, Exports, and Digital Policy
Political Geography:: Global Focus

22. Unintended and Undesired Consequences: The Impact of OECD Pillar I and II Proposals on Small Open Economies

Author:: Matthias Bauer
Publication Date:: 07-2020
Content Type:: Research Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Corporate tax laws vary significantly between different jurisdictions. Over the past four decades, governments globally competed for business activity by lowering statutory and effective corporate tax rates. Many governments provide special tax incentives for businesses to invest and expand employment. Special economic zones often grant full corporate tax exemptions to stimulate commercial development. Corporate income tax incentives for research and development activities are common across countries’ corporate tax codes reflecting governments’ desire to stimulate innovation and business development. While corporate tax competition is common government practice in the world economy, the OECD currently aims to curb international corporate tax competition. The OECD’s corporate tax reform proposals officially aim to address “corporate tax avoidance” and “unfairness in taxation”. The policy debate is driven by some governments’ motivation to increase revenues from taxes on corporate income. Economic impact assessments of the OECD’s current Pillar I and II proposals are still scarce. Individual governments have so far failed to conduct impact assessments or are hesitant to make their assessments available to the general public. The OECD’s secretariat expects additional tax revenues of 100bn USD annually, which are said to be evenly distributed among the 137 countries comprising the Inclusive Framework. The narrow focus on changes in governments’ revenues and the static nature of the OECD’s analysis is in various respects misleading. This paper highlights that the proposed reforms would shift taxing powers (tax sovereignty) and economic activity away from small open economies to the world’s largest countries, of which most (currently) apply very high statutory corporate tax rates. The implementation of Pillar I and II proposals would pave the way for a global tax redistribution framework transferring financial funds away from governments that embrace free international trade and investment to the many of the world’s worst-performing governments with respect to economic openness, acceptance of the rule of law, corruption, state interventionism, and the recognition of basic human rights (e.g. Argentina, Brazil, China, India, Indonesia and Russia). Conversely, the OECD’s proposed corporate tax reforms would punish the world’s best performing economies with regard to economic freedoms, trade and investment openness and the rule of law (e.g. Estonia, the Czech Republic, Ireland, the Netherlands, Slovakia, Slovenia, Switzerland, including small city and island states, such as Hong Kong, Luxembourg and Singapore). The reforms proposed by the OECD would have a significant impact on how much and where multinational enterprises would have to pay corporate income tax in the future. The proposed measures would therefore impact where large companies produce and invest in the future. Continued tax competition would contribute to a narrowing of international corporate tax rate differentials up to the 12.5% minimum tax threshold level proposed by the OCED. The narrowing of tax rate differentials between today’s high-tax jurisdictions, of which most are very large countries, and today’s low-tax jurisdictions would direct international and domestic investments and investment-induced tax revenues away from small countries. Estimates show that inward FDI in today’s high-tax countries would increase and outward FDI would decrease. In a symmetrical way, inward FDI in today’s low-tax countries would decrease and outward FDI would increase. Overall, the shift in effective taxing powers would undermine small countries’ relative attractiveness to international businesses and, on top of that, would induce domestic businesses to relocate to larger countries with the gravity of larger markets. Contrary to claims made by the OECD, the implementation of Pillar I and II proposals would not improve the global allocation of capital. Global trade and investment flows would still be subject to tax competition and prevalent trade and investment barriers. The OECD’s current proposals would likely incentivise the governments of large countries to maintain long-standing barriers to trade and investment. The economic gravity of large countries may even incentivise large country governments to erect additional barriers that would restrict market access for companies from small open economies. For small open economies that are home to research- and knowledge-intensive multinational companies, the OECD’s proposed tax reforms would undermine future investments in R&D, innovation and business model development, with adverse implications for existing research clusters, education systems and high value-added jobs. Policymakers should reconsider whether taxes on corporate income actually contribute to governments’ overall social and economic policy objectives, such as economic development, redistribution and fairness in taxation. Replacing tax systems that include taxes on corporate income by systems that rely more or exclusively on direct taxes on labour income, capital income and consumption (VAT/sales taxes) would increase transparency about the distributional effects of taxation and significantly improve governments’ tax manoeuvrability in response to citizens’ preferences for fairer taxation. A regime change towards greater use of VAT/sales taxes would also have a positive impact on global capital allocation. Companies would no longer have to pay attention to corporate tax rate differentials, while governments would have additional invectives to embrace foreign trade and investment, materialising in lower barriers to trade and investment and a more efficient allocation of global capital respectively.
Topic:: Government, International Political Economy, Business, Tax Systems, R&D, Corporate Tax, and OECD
Political Geography:: Global Focus

23. The Tragedy of International Organizations in a World Order in Turmoil

Author:: Jean-Jacques Hallaert
Publication Date:: 07-2020
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: China’s rise and the U.S. response to the perceived threat it represents to its predominance jeopardize the world order and affect international institutions. The paralysis of the WTO and the U.S. withdrawal from the WHO are the most visible examples, but not the only ones. This article presents the case of the International Monetary Fund. Quotas are the cornerstone of IMF governance. They determine each member’s contribution to the institution’s resources and their voting power. As the world evolves, the quota distribution needs to be adjusted. Adjustments in quota shares and thus voting powers have always been politically difficult. However, they were possible. In the early 1990s, members agreed to an increase in the representation of Japan. In the 2000s, they agreed to increase substantially the voting power of emerging economies. In contrast, the 15th General Review of Quotas concluded early 2020, failed to increase and realign quotas. The proximate cause for this was the opposition of the United States to a change in quotas. This paper argues that the U.S. decision was in large part motivated to prevent an increased influence of China. The failure to increase and realign voting powers may have long-lasting consequences. In the absence of a quota increase, the IMF will need to continue to rely on borrowed resources to avoid a drop in its lending capacity. This extension of the “temporary” recourse to borrowed resources undermines the governance of the Fund as voting powers (which are not linked to borrowed resources but only to quotas) are disconnected from member’s total contributions to the Fund and to their economic weight. This may trigger a new legitimacy crisis and provide incentives for countries like China to support the development of new and competing institutions which would better represent their interests and economic weight. Such a development would undermine the complex and fragile international financial architecture.
Topic:: International Organization, International Political Economy, Governance, IMF, and WTO
Political Geography:: United States, China, and Global Focus

24. Learning to Love Trade Again

Author:: Frank Lavin and Oscar Guinea
Publication Date:: 06-2020
Content Type:: Research Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: We are at the moment, the first in seventy-five years, where there is no international consensus in support of trade. Indeed, trade is unloved, unsupported, and even unwanted. There is no shortage of topics in the rhetoric of trade complaints: from the rapid rise of China to Coronavirus as a metaphor for the evils of greater connectivity. Regardless of the validity of these complaints, none of them negate the central truth of trade: countries that engage in trade move ahead, and those that do not, stagnate. Our political leaders disagree. Anti-trade positions are held by leaders across the political spectrum, from Donald Trump to Bernie Sanders. And yet, the public is increasingly warm to the idea of trade. When Gallup asks Americans, “Do you see foreign trade more as an opportunity for economic growth through increased U.S. exports or a threat to the economy from foreign imports?” a record high of 79% see trade as an opportunity, with 18% viewing it as a threat. How did the world arrive at this moment where the benefits of trade are clearly evidenced while trade has become politically toxic? We identify four main factors: (i) U.S. absenteeism from the leadership role; (ii) detachment between trade and security architecture; (iii) no alternative leadership in Europe or elsewhere; and (iv) the cumbersome WTO process. Against this background we put forward five initiatives that will be big enough to count but unobjectionable enough to be adopted. The Big Three. The U.S., EU, and Japan, should establish a consultative body on trade to forge a new approach that allows trade to move ahead in the absence of universal consensus. No harm, no foul. Each of the Big Three should commit to zero tariffs on any item not produced in each particular market. A de minimis strategy. Tariffs should be eliminated on all products where the current tariff is less than 2%. At that level tariffs are simply a nuisance fee. Mind the social costs. Expand the Nairobi Protocols to include health products and green tech. Scrapping import tariffs on medical and green goods would not only encourage additional trade but will also provide health and environmental benefits. Harmonize down. The Big Three should commit that on every tariff line each of the three will be no worse than the next worse. In other words, each of the Big Three will agree to reduce its tariff on every product where it has the highest tariff of the three. These actions will spur the WTO, not undermine it. The measures we propose can be set up on a plurilateral basis that would allow other trading powers to participate. By breaking away from the tyranny of universal consensus, these actions will encourage the trading community – including the WTO – to get back in forward motion. In some respect, convergence between the Big Three is already happening. The EU and Japan signed an FTA that lowers import tariffs between these two economies, while the U.S. and Japan agreed to negotiate a comprehensive FTA. And if China is willing to step up? China should be welcomed into this group if it supports the four initiatives, changing the Big Three to the Big Four.
Topic:: International Political Economy, International Trade and Finance, Global Markets, Trade, and WTO
Political Geography:: United States, Japan, China, Europe, and Global Focus

25. Europe’s Quest for Technology Sovereignty: Opportunities and Pitfalls

Author:: Fredrik Erixon and Matthias Bauer
Publication Date:: 05-2020
Content Type:: Research Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Covid-19 and its broader implications have highlighted the importance of Europe’s digital transformation to ensure Europeans’ social and economic well-being. It provides important new learnings about Europe’s quest for “technology sovereignty”. While the debate about technology sovereignty is timely, the precise meaning of sovereignty or autonomy in the realm of technologies remains ambiguous. It should be noted that the political discussions about European technology sovereignty emerged far before the outbreak of the Coronavirus. The European Commission’s recently updated industrial and digital policy strategies “institutionalised” different notions of sovereignty, reflecting perceptions that more EU action is needed to defend perceived European values and to secure Europe’s industrial competitiveness. Often the political rhetoric reflected perceptions that Europe is losing global economic clout and geopolitical influence. It was said that dependency on technological solutions, often originating abroad, would require a European industrial and regulatory response. Against this background, the Corona crisis provides two important lessons for EU technology policymaking. Firstly, during the crisis digital technologies and solutions made European citizens stronger. Technology kept Europe open for business despite the lock-down by enabling Europeans to work from home, receive essential home deliveries, home schooling, online deliveries and to use online payments, etc. In addition, Europe’s citizens became more sovereign with respect to accessing information and data that helped track and contain the spread of the virus. Secondly, the crisis tested Europe’s resilience and perceived dependency on (foreign) technology solutions. Early developments indicate that Member States’ homemade solutions did not fare better than existing European and international solutions. A few national and EU IT solutions failed while existing European and global solutions, from cloud infrastructure to communications, payments to streaming services, all continued to work well. Politically, however, the crisis could be used to justify more EU or national government interference in Europe’s digital transformation. Indeed, for some the debate about European technology sovereignty is largely about designing prescriptive policies, which paradoxically risk reducing Europeans’ access to the innovative technologies, products and services that helped Europe through the crisis. Policies taken into consideration include new subsidies to politically picked companies, or new rules and obligations for certain online business models. Policy-makers advocating for such policies tend to ignore critical insights from the Covid-19 crisis and failed industrial policy initiatives, including sunk public investments and protracted subsidies for industrial laggards. In a time of economic hardship, the EU and national governments should be wary of spending even more taxpayer money to replicate existing world-class technology solutions, that in most cases are used in combination with local technologies, with “Made in EU” services of inferior quality and reliability. Moreover, due to different levels of economic development and differences in regulatory cultures, prescriptive technology policies would exclude many Member States from utilising existing and new opportunities that arise from digitalisation, slowing down economic renewal and convergence. The EU cannot be considered a monolithic block that thrives on a unique set of prescriptive technology policies. Before the Corona pandemic, initiatives towards European technology sovereignty were mainly pushed by France and Germany, fed by concerns over their companies’ industrial strength in times of growing economic and geopolitical competition. Industrial and technology policies favoured by the EU’s two largest countries will have a disproportionately negative impact on Europe’s smaller open economies, whose companies and citizens could be deprived from cutting-edge technologies, new economic opportunities and partnerships on global markets, undermining these economies’ development and international competitiveness. Any EU-imposed technology protectionism along the lines suggested by some policy-makers in large EU Member States would leave the entire EU worse off. It would disproportionately hurt countries in Europe’s northern, eastern and southern countries more than the large countries whose economies are generally more diverse than Europe’s smaller Member States. It would, however, make sense for the EU to agree on a shared definition of “technology sovereignty”. Different interpretations could cause serious policy inconsistencies, undermining the effectiveness of EU and national economic policies. Anchored in technological openness, technology sovereignty can indeed be a useful ambition to let Europe’s highly diverse economies leapfrog by using existing technologies. To become more sovereign in a global economy, Europeans need to focus on becoming global leaders in economic innovation – not just in regulation. If anchored in mercantilist or protectionist ideas, technological sovereignty would make it harder for many Member States to access modern technologies, adopt new business models and attract foreign investment – with adverse implications on future global competitiveness, economic renewal and economic convergence. Policymaking towards a European technology sovereignty that benefits the greatest number of Europeans – not just a few politically selected “winners” – should aim for a regulatory environment in which technology companies and technology adopters can thrive across EU Member States’ national borders. The European Single Market has deteriorated in recent years and significantly during the crisis. The new von der Leyen Commission has now repeatedly called for a strengthening of the Single Market. Becoming a world leader in innovation requires a real Single Market in which companies can scale up, with as few hurdles as possible, and then compete globally. It should be supplemented by pro-competitive policies and incentives for research and investment. Brussels cannot set the global standards in technology policymaking alone. Europe’s policy-makers should aim for closer market integration and regulatory cooperation with trustworthy international partners such as the G7 or the larger group of the OECD countries. It is in the EU’s self-interest to advocate for a rules-based international order with open markets. International cooperation should be extended beyond trade to include cooperation on technology policies, e.g. artificial intelligence. Regulatory cooperation with allies such as the USA is essential to jointly set global standards that are based on shared values. Both the EU and the US have much more to gain if they prioritise such alignment, to advance a shared vision for a revamped open international trading system, in a world increasingly influenced by regimes with fundamentally different views on state intervention and human rights. Anchored in technological openness, the EU and the US can promote technology sovereignty that allows for development and renewal elsewhere in the world.
Topic:: Industrial Policy, International Political Economy, Science and Technology, Sovereignty, European Union, and COVID-19
Political Geography:: United States, Europe, and Global Focus

26. The Role of Trade Policy in Promoting Sustainable Agriculture

Author:: Philipp Lamprecht and Fredrik Erixon
Publication Date:: 01-2020
Content Type:: Research Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: There is now a long history of countries improving sustainability standards in most parts of the economy while at the same time pursuing the ambitions of rules-based international trade and economic integration with other countries. It is not surprising that countries at the vanguard of sustainability also tend to be the countries that are most open to trade. This Report looks closer at the interplay between the formulation of domestic standards and provisions in Free Trade Agreements that either acknowledge domestic standards or establish standards in a direct way. This interplay is crucial for two reasons: first to establish market access arrangements that help to promote sustainability standards, second to provide the policy basis to make standards and possible market access restrictions conducive to basic trade rules. It lays a focus particularly on the growing importance of sustainability standards in international trade agreements, or Free Trade Agreements (FTAs) – in particular for the food sector. Such standards are relevant for all new high-ambition Free Trade Agreements – from the EU-Japan Economic Partnership Agreement to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between eleven trans-pacific nations. The Report considers especially nine modern FTAs. The purpose of the Report is to investigate how governments with high sustainability ambitions approach the issue of trade and sustainability – in particular how they work with, on the one hand, specific provisions in FTAs and, on the other hand, the development of domestic standards and their linkage to trade. The Report also looks directly at how these standards are designed, and what lessons that can be learned for governments that want to raise sustainability ambitions. It puts the results of the analysis in the context of Norwegian ambitions to improve its sustainability standards for food placed on the Norwegian market. The analysis of how trade and sustainability have been made compatible starts with the rules of the World Trade Organisation (WTO). These rules are important in their own right, but they also carry political significance. WTO-rules form the basis of the bilateral free trade agreements that countries sign with each other – and that now make up the main plank of international trade negotiations. In the language of the WTO, basic trade rules serve to protect the principles of national treatment and non-discrimination. Sustainability policies that are grounded on solid evidence and that follow international scientific norms will be compatible with WTO rules. Sustainability policies that confer advantages to domestic producers or that are arbitrary will get a harsh treatment. Consequently, the bilateral free trade deals that the European Union or the European Free Trade Area (EFTA) have concluded with other parts of the world are not just compatible with WTO rules, they rely on these rules as the foundation stone. Moreover, these rules inform governments how they should organise their sustainability policy if they also want the opportunity to take part in modern trade agreements. If countries aren’t willing to play by these rules, they should also accept that they won’t be able to enjoy the benefits of trade agreements. What member countries of the WTO have agreed in past multilateral trade accords are not a blockage of sustainability policy, but they bar countries from pursuing such policies in a way that would lead to unequal application of trade rules – between home and foreign producers, or between different foreign producers. In addition, it is of interest – also to the Norwegian policy discussion – to consider how EU policies are likely to change in the forceable future. The analysis provides a discussion of issues that are likely to remain very high on the agenda of the next European Commission. These include possible improvements in the TSD Chapters of trade agreements in particular with regard to enforcement mechanisms, the engagement of civil society, and climate action. Further policy highlights include a possible introduction of a carbon border tax, as well as the discussions related to due diligence of supply chains, and multilateralism. In terms of conclusions, the Report identifies four main observations that should inform future policy development in Norway: First, there is clearly a case to be made for aligning Norwegian trade policy to EU trade policy when it comes to provisions on trade and sustainability in Free Trade Agreements. Second, there is a substantial body of scientific evidence, risk assessments and international experience of standards in areas that are related to sanitary and phyto-sanitary standards and to environmental standards which any government that want to raise sustainability standards can draw on. Third, many countries struggle to formulate their domestic sustainability standards in a structured way. Arguably, this is a critical point for governments that are considering to introduce higher standards with consequence for market access for foreign producers. To avoid confusion or accusation of standards being a disguised trade restrictions, countries like Norway would have to structure and systematise its standards if the ambitions were to be raised and formed part of market access policy. A first step for a policy that seeks to condition import on the compliance with a stand is to make the standard clear and explicit. Fourth, there are direct and indirect relations between domestic standards and provisions in FTAs. FTAs often deal with policies that cannot be directly formulated in a domestic standard, like some aspects of labour laws. They also deal with other forms of standards that need policy convergence in order to guarantee smooth trade between the contracting parties. Generally, it cannot be said that the EU or other entities use FTAs to “regulate” or to establish the standard. That rather happens bottom-up – through domestic regulations that later get reflected in trade agreements.
Topic:: International Political Economy, International Trade and Finance, Partnerships, Global Markets, Free Trade, Trade, and Sustainability
Political Geography:: Europe and Global Focus

27. Volume 70 Issue 1

Author:: Muhittin Kaplan
Publication Date:: 01-2020
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, International Political Economy, Oil, Political Science, Exchange Rate Policy, Macroeconomics, Currency, R&D, Price, and OECD
Political Geography:: Turkey, Nigeria, and Global Focus

28. Volume 70 Issue 2

Author:: Muhittin Kaplan
Publication Date:: 06-2020
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, International Political Economy, Sustainable Development Goals, Political Science, and Ecology
Political Geography:: Turkey and Global Focus

29. Global giants and local stars: How changes in brand ownership affect competition

Author:: Vanessa Alviarez, Keith Head, and Thierry Mayer
Publication Date:: 11-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We assess the consequences for consumers in 76 countries of multinational acquisitions in beer and spirits. Outcomes depend on how changes in ownership affect markups versus efficiency. We find that owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counterfactual national merger regulation. The US beer price index would have been 4-7% higher without divestitures. Up to 30% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU.
Topic:: Economics, International Political Economy, and Multinational Corporations
Political Geography:: United States, United Kingdom, Latin America, and Global Focus

30. MULTIPRIL: a new database on multilateral price levels and currency misalignments

Author:: Cécile Couharde, Carl Grekou, and Valérie Mignon
Publication Date:: 10-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper describes the new CEPII-MULTIPRIL database on Multilateral Price Levels (MPL) introduced in 2020. The MULTIPRIL database covers a wide sample of 178 countries over the 1990-2018 period, and includes relative price level series computed vis-à-vis two sets of trading partners (177 and the top 30) according to three different trade-weighting schemes. It also contains MPL-based currency misalignments series for 156 countries over the 1991-2018 period. MULTIPRIL offers the potential to improve the coverage and quality of worldwide price-competitiveness comparisons. By focusing on price level data, it usefully complements the EQCHANGE database on equilibrium exchange rates and currency misalignments derived from series in indices. Its multilateral setting provides a more comprehensive picture of relative price levels and currency misalignments compared to existing bilateral measures.
Topic:: Economics, International Political Economy, Exchange Rate Policy, Trade, Database, and Price
Political Geography:: Global Focus

31. Corporate tax avoidance and industry concentration

Author:: Farid Toubal, Mathieu Parenti, and Julien Martin
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper argues that tax avoidance by large corporations has contributed to the 25% increase in concentration among U.S. firms since the mid-1990s. Corporate tax avoidance gives large firms a competitive edge, which translates into larger market shares and an increase in the granularity of the economy. We develop IV and difference-in-differences strategies that show the causal impact of tax avoidance on firm-level sales. Had firms not resorted to tax avoidance in 2017, our results imply that the average industry concentration would have been 8.3% lower, which is around its early 2000 level.
Topic:: Economics, International Political Economy, Markets, Tax Systems, Corporations, Tax Evasion, and Corporate Tax
Political Geography:: United States and Global Focus

32. Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments

Author:: Vincent Vicard, Amélie Guillin, and Anne-Laure Delatte
Publication Date:: 05-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
Topic:: Economics, International Political Economy, International Trade and Finance, Finance, Borders, Investment, and Stock Markets
Political Geography:: Global Focus

33. Cross-border Investments and Uncertainty Firm-level Evidence

Author:: Rafael Cezar, Timothée Gigout, and Fabien Tripier
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper studies the impact of uncertainty on cross-border investments. We build a data-set of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of idiosyncratic investment returns. An increase in uncertainty delays cross-border flows to the affected country. Yet, this average effect hides strong heterogeneity. Firms with low ex-ante performance durably reduce their foreign investments. Meanwhile high-performing firms increase their investments after the initial shock. We interpret these results as the evidence of a cleansing effect of uncertainty shocks among multinational firms in the presence of financial frictions.
Topic:: Economics, International Political Economy, Foreign Direct Investment, Borders, and Investment
Political Geography:: Global Focus

34. Does Birthplace Diversity affect Economic Complexity? Cross-country Evidence

Author:: Dany Bahar, Hillel Rapoport, and Riccardo Turati
Publication Date:: 01-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We empirically investigate the relationship between a country’s economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country’s export basket.
Topic:: Economics, International Political Economy, Multiculturalism, Immigrants, Diversity, and Economic Complexity
Political Geography:: Global Focus

35. Refugees’ Integration into the Austrian Labour Market: Dynamics of Occupational Mobility and Job-Skills Mismatch

Author:: Mahdi Ghodsi and Robert Stehrer
Publication Date:: 10-2020
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: Eight multilateral rounds of negotiations under the General Agreement on Tariffs and Trade (GATT) and international agreements under the World Trade Organisation (WTO) have contributed significantly to the reduction of tariffs among WTO members. However, over the years legitimate reasons for the imposition of non-tariff measures (NTMs) within regulations have triggered their extensive use. Among these measures, technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures allow countries to impose restrictions on the import of low-quality products suspected of harming domestic consumers’ health, plant life or the environment. Such trade policy instruments may lead to higher standards in the import market, in addition to improving market efficiency through information requirements such as mandatory labelling. This paper analyses two types of regulative and standard-like NTMs – TBTs and SPS measures – and the quality improvement of traded products that is driven by their imposition, which might be a general underlying motive for the adoption of such regulations. Based on a model framework involving both the supply and the demand side of trade and using four types of measures of these NTMs, this paper assesses the impact of TBTs and SPS measures on the quality of traded products. A dummy variable measuring the existence of these NTMs and a count variable indicating their stringency are used in the analysis. Moreover, two other variables indicate flows of NTMs imposed in each year and stocks of these NTMs accumulated over years. The results indicate that TBTs and SPS measures do indeed imply a higher quality of traded products, which is also consistent with the model when NTMs enter as a specific trade cost. Stringent TBTs with more regulations imposed in each year (i.e. flows of count TBTs) have the largest impact on the quality of traded products. However, for SPS measures only the existence of a regulation (i.e. the dummy variable on flows of SPS measures) on a traded product has the strongest impact on its quality.
Topic:: Economics, International Political Economy, International Trade and Finance, WTO, Non-Tariff Measures, and GATT
Political Geography:: Europe and Global Focus

36. World Oil Security On A Precipice

Author:: Charles F. Doran
Publication Date:: 06-2020
Content Type:: Research Paper
Institution:: Brown Journal of World Affairs
Abstract:: By attacking a major Saudi oil facility at Abqaiq on 13 September 2019, Iran established a new norm regarding oil security. Now, no oil field, pipeline, refinery, supertanker, or port facility is free from internecine warfare between oil-producing (OPEC) governments. Ironically, in attempting to defend a country from supply interruption, the United States risks worsening the magnitude and scope of that supply interruption rather than preventing its occurrence. In the era of highly accurate drones and missiles, the old oil field motto “all oil comes from a single barrel” has taken on a newly negative connotation. World oil stability rests on a precipice. Both exporters and importers suffer from supply interruption, although perhaps not equally, universally, or simultaneously. Supply interruption may benefit those who have oil to sell through resultant oil price increases if their own exports have not been interrupted. The same cannot be said for buyers who, unless they are energy speculators on the futures market, ardently want to prevent supply interruption and the virtually certain subsequent (though sometimes not lasting) increase in price.
Topic:: Energy Policy, Environment, International Political Economy, Oil, OPEC, and Pipeline
Political Geography:: Saudi Arabia and Global Focus

37. Growth Models and the Footprint of Transnational Capital

Author:: Patrick Kaczmarczyk
Publication Date:: 06-2020
Content Type:: Research Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: The definition of various growth models is the latest innovation of comparative capitalism (CC) research. Yet, the literature has its weaknesses in explaining the dynamics within and the interdependencies between different growth models. I argue that this weakness stems inter alia from an inadequate conceptualization of transnational corporations (TNCs). I provide empirical evidence on the footprint of international capital in the global economy and outline how including TNCs as a unit of analysis can help us to better understand economic outcomes. This leads to several implications for the growth models literature, which I conclude my argument with.
Topic:: Economics, International Political Economy, Global Political Economy, Economic Growth, Transnational Actors, Multinational Corporations, and Macroeconomics
Political Geography:: Global Focus

38. Fostering the Development of the Coffee Global Value Chain

Author:: Dennis Görlich, Aoife Hanley, Wan-Hsin Liu, and Finn Ole Semrau
Publication Date:: 12-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: The overarching aim of the study is to investigate the key factors that determine how and how intensively countries can be integrated into the coffee global value chain (GVC) and thus can better reap the globalization benefits. The empirical analysis shows how the international trade in coffee has developed across regions/countries over the past three decades. It provides evidence-based insights into the key determinants of countries’ GVC integration in the coffee industry. It discusses countries’ functional and product upgrading for their GVC integration. Based on the empirical results obtained, policy implications are derived to support the further development of the coffee GVC. This study serves as a background study for the Coffee Development Report 2020 in preparation by the International Coffee Organisation.
Topic:: International Political Economy, Food, Global Value Chains, Coffee, and Value Chains
Political Geography:: Global Focus

39. Foreign exchange intervention: A new database

Author:: Marcel Fratzscher, Tobias Heidland, Lukas Menkhoff, Lucio Sarno, and Maik Schmeling
Publication Date:: 11-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: We construct a novel database of monthly foreign exchange interventions for 49 countries over up to 22 years. We build on a text classification approach that extracts information about interventions from news articles and calibrate our procedure to data about actual interventions. Our new dataset allows us to document stylized facts about the use of foreign exchange interventions for countries that neither publish their data nor make them available to researchers. Moreover, we show that foreign exchange interventions are used in a complementary way with capital controls and macroprudential regulation.
Topic:: Economics, Foreign Exchange, International Political Economy, Data, and Capital Controls
Political Geography:: Global Focus

40. On the Heterogeneous Trade and Welfare Effects of GATT/WTO Membership

Author:: Gabriel Felbermayr, Mario Larch, Erdal Yalcin, and Yoto V. Yotov
Publication Date:: 09-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: We build on the latest developments in the structural gravity literature to quantify the partial and general equilibrium effects of GATT/WTO membership on trade and welfare. Using an extensive database covering manufacturing trade for 186 countries over the period 1980-2016, we find that the average impact of GATT/WTO membership on trade among member counties is large, positive, and significant. We contribute to the literature by estimating country-specific estimates and find them to vary widely across the countries in our sample with poorer members benefitting more. Using these estimates, we simulate the general equilibrium effects of GATT/WTO on welfare, which are sizable and heterogeneous across members, and relatively small for non-member countries. We show that countries not experiencing positive trade effects from joining GATT/WTO can still gain in terms of welfare, due to beneficial terms-of-trade effects.
Topic:: International Political Economy, Trade, WTO, and GATT
Political Geography:: Global Focus

41. Corona Politics: The cost of mismanaging pandemics

Author:: Helios Herrera, Maximilian Konradt, Guillermo Ordoñez, and Christoph Trebesch
Publication Date:: 09-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: The Covid-19 pandemic is a major test for governments around the world. We study the political consequences of (mis-)managing the Covid crisis by constructing a highfrequency dataset of government approval for 35 countries. In the first weeks after the outbreak, approval rates for incumbents increase strongly, consistent with a global “rally around the flag” effect. Approval, however, drops again in countries where Covid cases continue to grow. This is especially true for governments that do not implement stringent policies to control the number of infections. Overall, the evidence suggests that loose pandemic policies are politically costly. Governments that placed more weight on health rather than short-term economic outcomes obtained higher approval.
Topic:: Government, Health, International Political Economy, Health Care Policy, Pandemic, and COVID-19
Political Geography:: Global Focus

42. Covid-19 Shocking Global Value Chains

Author:: Peter Eppinger, Gabriel Felbermayr, Oliver Krebs, and Bohdan Kukharsky
Publication Date:: 09-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: In early 2020, the disease Covid-19 caused a drastic lockdown of the Chinese economy. We use a quantitative trade model with input-output linkages to gauge the effects of this adverse supply shock in China on the global economy through international trade and global value chains (GVCs). We find moderate welfare losses in most countries outside of China, while a few countries even gain from the shock due to trade diversion. As a key methodological contribution, we quantify the role of GVCs (in contrast to final goods trade) in transmitting the shock. In a hypothetical world without GVCs, the welfare loss due to the Covid-19 shock in China is reduced by 40% in the median country. In several other countries, the effects are magnified or reversed for several countries. Had the U.S. unilaterally repatriated GVCs, the country would have incurred a substantial welfare loss while its exposure to the shock would have barely changed.
Topic:: International Political Economy, Trade, Pandemic, Global Value Chains, COVID-19, and Supply Chains
Political Geography:: China and Global Focus

43. Institutional design and spatial (in)equality: the Janus face of economic integration

Author:: Ingrid Ott and Susanne Soretz
Publication Date:: 08-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper analyzes within a spatial endogenous growth setting the impact of public policy coordination on agglomeration. Governments in each of the two symmetric regions provide a local public input that becomes globally effective due to integration. Micro-foundation of governmental behavior is based on three different coordination schemes: autarky, full or partial coordination. Scale effects act as agglomeration force and in addition to private capital agglomeration increase the concentration of the public input. Integration promotes dispersion forces with respect to the distribution of physical capital which are based on decreasing private returns. However, within the governments’ decision on the concentration of the public input, increasing integration reinforces agglomeration because it promotes the interregional productive use of the public input. Taking feedback effects between the private and the public sector into account leads to mutual reinforcement, hence agglomeration forces almost always dominate and the spreading equilibrium becomes unstable. If convergence is a separate (additional) political objective, it needs sustained additional political effort.
Topic:: Government, International Political Economy, Economic Growth, Public Policy, Private Sector, and Capital
Political Geography:: Global Focus

44. Endogenous Growth, Skill Obsolescence and Output Hysteresis in a New Keynesian Model with Unemployment

Author:: Wolfgang Lechthaler and Mewael F. Tesfaselassie
Publication Date:: 08-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: We embed human capital-based endogenous growth into a New-Keynesian model with search and matching frictions in the labor market and skill obsolescence from long-term unemployment. The model can account for key features of the Great Recession: a decline in productivity growth, the relative stability of inflation despite a pronounced fall in output (the "missing disinflation puzzle"), and a permanent gap between output and the pre-crisis trend output. In the model, lower aggregate demand raises unemployment and the training costs associated with skill obsolescence. Lower employment hinders learning-by-doing, which slows down human capital accumulation, feeding back into even fewer vacancies than justified by the demand shock alone. These feedback channels mitigate the disinflationary effect of the demand shock while amplifying its contractionary effect on output. The temporary growth slowdown translates into output hysteresis (permanently lower output and labor productivity).
Topic:: International Political Economy, Global Recession, Labor Issues, Economic Growth, Inflation, Keynes, and Capital
Political Geography:: Global Focus

45. Overconfidence and Hygiene Non-compliance in Hospitals

Author:: Katharina Lima de Miranda, Lena Detlefsen, and Michael Stolpe
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Among measures to fight hospital acquired infections, an emerging epidemic in many countries around the world, adoption of appropriate hand hygiene practices by healthcare workers is considered a priority. Despite their simplicity and effectiveness, healthcare workers’ compliance is poor, with most empirical studies finding compliance rates well below 50% in many countries. Management strategies to increase compliance are often based on the notion that non-compliance is a moral hazard problem, characterized by asymmetric information between hospital management and healthcare workers. In this study, we provide empirical evidence that an individual behavioral characteristic, known as overconfidence, induces many healthcare workers to overestimate their hand hygiene compliance and hence to underperform unknowingly and unintentionally.
Topic:: Health, International Political Economy, Health Care Policy, and Hospitals
Political Geography:: Global Focus

46. Reliable Real-time Output Gap Estimates Based on a Modified Hamilton Filter

Author:: Josefine Quast and Maik H. Wolters
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: We propose a simple modification of Hamilton’s (2018) time series filter that yields reliable and economically meaningful real-time output gap estimates. The original filter relies on 8 quarter ahead forecast errors of a simple autoregression of real GDP. While this approach yields a cyclical component that is hardly revised with new incoming data due to the one-sided filtering approach, it does not cover typical business cycle frequencies evenly, but mutes short and amplifies medium length cycles. Further, as the estimated trend contains high frequency noise, it can hardly be interpreted as potential GDP. A simple modification based on the mean of 4 to 12 quarter ahead forecast errors shares the favorable real-time properties of the Hamilton filter, but leads to a much better coverage of typical business cycle frequencies and a smooth estimated trend. Based on output growth and inflation forecasts and a comparison to revised output gap estimates from policy institutions, we find that real-time output gaps based on the modified and the original Hamilton filter are economically much more meaningful measures of the business cycle than those based on other simple statistical trend-cycle decomposition techniques, such as the HP or bandpass filter, and should thus be used preferably.
Topic:: International Political Economy, GDP, and Economic Growth
Political Geography:: Global Focus

47. Higher economic growth in poor countries, lower migration ﬂows to the OECD: Revisiting the migration hump with panel data

Author:: David Benček and Claas Schneiderheinze
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Comparing emigration rates of countries at diﬀerent stages of economic development, an inverse u-shape emerges. Although merely based on cross-sectional evidence, the“migration hump” is widely interpreted as a causal relationship. Therefore, economic progress in developing countries is assumed to increase migration. For policy makers in destination countries that implies a sensitive trade-oﬀ between supporting development and reducing immigration pressures. In this paper we investigate whether the migration hump holds up to more scrutiny, ﬁnding that the cross-sectional pattern is misleading. Using 35 years of data on migration ﬂows to OECD destinations, we successfully reproduce the hump-shape in the cross-section. However, more rigorous ﬁxed eﬀects panel estimations that exploit the variation over time consistently show a negative association between income and emigration. This result is independent of the level of income a country starts out at and thus casts doubt on any causal interpretation of the migration hump.
Topic:: Development, International Political Economy, Migration, Economic Growth, Economic Development, Organisation for Economic Co-operation and Development, and Emigration
Political Geography:: Global Focus

48. Coping with Disasters: Two Centuries of International Official Lending

Author:: Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Official (government-to-government) lending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during disasters such as wars, financial crises and natural catastrophes. We assemble the first comprehensive long-run dataset of official international lending, covering 230,000 loans, grants and guarantees extended by governments, central banks, and multilateral institutions in the period 1790-2015. Historically, wars have been the main catalyst of government-to-government transfers. The scale of official credits granted in and around WW1 and WW2 was particularly large, easily surpassing the scale of total international bailout lending after the 2008 crash. During peacetime, development finance and financial crises are the main drivers of official cross-border finance, with official flows often stepping in when private flows retrench. In line with the predictions of recent theoretical contributions, we find that official lending increases with the degree of economic integration. In crises and disasters, governments help those countries to which they have greater trade and banking exposure, hoping to reduce the collateral damage to their own economies. Since the 2000s, official finance has made a sharp comeback, largely due to the rise of China as an international creditor and the return of central bank cross-border lending in times of stress, this time in the form of swap lines.
Topic:: Debt, International Political Economy, War, History, Financial Crisis, Trade, and Banking
Political Geography:: Global Focus

49. Assessing Asia: Sub-Saharan Africa Global Value Chain Linkages

Author:: Heiwai Tang, Douglas Zhihua Zeng, and Albert Zeufack
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper studies the relationship between Asia’s economic engagements in Africa and individual African nations’ participation in global value chains (GVC) over the past two decades. We find that while overall exports from Africa to Asia are still highly concentrated in resource-intensive sectors, a few African countries have exploited the emerging opportunities to diversify export portfolios through exporting to Asia. Each African nation has a distinct main trade partner in Asia, in contrast to the common view that China has become the dominant trade partner of most African nations. Using a panel data set for 46 African countries over 16 years from 2000 and 2015, we find that exports to Asia are positively correlated with exports to the rest of the world, suggesting that in contrast to trade diversion, trade with Asia complements exports to other countries. Asian economic engagement in the continent is associated with countries’ exports “moving up the value chain”, as measured by the upstreamness index proposed by Antras et al. (2012). However, such process was accompanied by a reduction in the length of their production chains, implying that fewer stages and countries are now involved in the production of exported goods.
Topic:: Development, International Political Economy, Natural Resources, Partnerships, Exports, Trade, Global Value Chains, and Data
Political Geography:: Africa, Asia, and Global Focus

50. Comparative Advantage in (Non-)Routine Production

Author:: Liza Archanskaia, Johannes Van Biesebroeck, and Gerald Willmann
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: We illustrate a new source of comparative advantage that is generated by countries’ different ability to adjust to technological change. Our model introduces substitution of workers in codifiable (routine) tasks with more efficient machines, a process extensively documented in the labor literature, into a canonical 2 × 2 × 2 Heckscher-Ohlin model. Our key hypothesis is that labor reallocation across tasks is subject to frictions, the importance of which varies by country. The arrival of capital-augmenting innovations triggers the movement of workers out of routine tasks, and countries with low labor market frictions become relatively abundant in non-routine labor. In the new equilibrium, more flexible countries specialize in producing goods that use non-routine labor more intensively. We document empirically that the ranking of countries with respect to the routine intensity of their exports is strongly related to labor market institutions and to cultural norms that influence adjustment to technological change, such as risk aversion or long-term orientation. The explanatory power of this mechanism for trade flows is especially strong for intra-EU trade.
Topic:: International Political Economy, Science and Technology, Innovation, Trade, and Trade Policy
Political Geography:: Global Focus and European Union

51. IPR Policies and Membership in Standard Setting Organizations: A Social Network Analysis

Author:: Jiaming Jiang, Rajeev K. Goel, and Xingyuan Zhang
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Whereas technical standards and Standard Setting Organizations (SSOs) are omnipresent and essential to mass production and mass communications, relatively little is formally known about the propensity of firms to belong to certain SSOs. This paper uses a social network analysis technique to empirically analyze the behavior of market participants and their propensities to belong to SSOs. We concentrate our study on standard setting organizations features and their intellectual property rights (IPR) policies such as licensing rules, disclosure requirements, as well as the features of the decision process of standards. Using data on more than 1060 member firms as participants in 28 SSOs, we are able to uniquely graph the membership of firms in SSOs by highlighting some important characteristics. Finally, a multinomial logit regression analysis studies the propensities of firms to belong to four SSOs and member firms’ network communities.
Topic:: International Political Economy, Intellectual Property/Copyright, and Networks
Political Geography:: Global Focus

52. Estimating the prevalence: Properties of the estimator regarding specificity and sensitivity of the underlying test

Author:: Jens Boysen-Hogrefe and Vincent Stamer
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: We provide a calculation tool to assess the properties of a maximumlikelihood (ML) estimator that extrapolates the true prevalence of an infectious disease from a random sample. The tools allow the researcher to correct for the specificity and sensitivity of the underlying medical test, calculate the standard deviation of the estimator and to plan the needed sample size. This document explains the underlying methods of the calculation tools and provides instructions for their proper use. We apply an adaption of the epidemiological SEIR-model to show that ML-estimators from random sampling tests provide a more realistic rate of infection than common approaches.
Topic:: Economics, International Political Economy, and Infectious Diseases
Political Geography:: Global Focus

53. Labor force participation, job search effort and unemployment insurance in the laboratory

Author:: Wolfgang Lechthaler and Patrick Ring
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: How the provision of unemployment benefits affects employment and unemployment is a debated issue. In this paper, we aim at complementing theoretical and empirical contributions to this debate with a laboratory experiment: We simulate a job market with search effort and labor force participation decisions while varying the maximum length of unemployment benefit eligibility. Our results reveal two separable, opposing effects: Individuals within the labor force search with lower effort when unemployment benefits are extended. However, individuals are more likely to participate in the labor force and to actively search for a job. Concerning employment, the second effect dominates so that unemployment benefits raise employment.
Topic:: Economics, International Political Economy, Markets, Labor Issues, Employment, Unemployment, and Job Creation
Political Geography:: Global Focus

54. Does the Belt and Road Initiative stimulate Chinese Exports? The Role of State-Owned Enterprises

Author:: Holger Görg and Haiou Mao
Publication Date:: 02-2020
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper evaluates firms’ exporting responses to BRI and considers their heterogeneity in ownership types, product types, regional origin and trade mode. This is done by analyzing firm-product-destination level customs data from 2011 to 2015 in a gravity model framework. Our empirical results show that aggregate export behavior did not change significantly after BRI. However, ownership matters when evaluating firms’ reactions. SOEs increase their total exporting and average export value (the intensive margin) to BRI countries, while private domestic firms show no reaction to BRI at any margin. Further, our results on regional heterogeneity suggests that “open through the west”, i.e., boosting the development of western regions in China, did not appear to work in the short term. Our findings show clearly the implications of BRI’s impact from a firm level perspective.
Topic:: International Political Economy, Belt and Road Initiative (BRI), Exports, Trade, and Economic Development
Political Geography:: China and Global Focus

55. Silk Road Pathways: The China–Central Asia–West Asia Economic Corridor

Author:: Yu Hongjun
Publication Date:: 09-2020
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: Since the outbreak of 2008 world financial crisis, issues such as lackluster economic growth around the world and lack of progress in regional cooperation have not been resolved. Conservatism, isolationism, racism, populism, and unilateralism are on the march; political and social movements based on opposition to economic globalization are in vogue; and policymakers as much as ordinary people are expressing concern about the future of the world. Based on his observations and thoughts with regards to modern international relations, as well as his commitment towards a common destiny for mankind, Chinese President Xi Jinping proposed the launch of the Silk Road Economic Belt and Twenty-first Century Maritime Silk Road, which together form the globally influential Belt and Road Initiative (BRI).
Topic:: International Political Economy and Geopolitics
Political Geography:: China, Europe, Asia, and Global Focus

56. Completing the Southern Gas Corridor: SGC in a Post-pandemic World

Author:: Akhmed Gumbatov
Publication Date:: 09-2020
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: The global spread of the latest zoonotic virus, commonly known as COVID19, has become an unprecedented calamity for all humankind. By the time this publication goes to press, it is likely that worldwide around 25 million people will have been infected and the number of lives lost will approach the one million mark.
Topic:: Energy Policy, International Political Economy, Natural Resources, Gas, and Pandemic
Political Geography:: Europe, Caucasus, Asia, and Global Focus

57. Coronavirus and Managing Your Organization’s Response

Author:: Anton Korinek
Publication Date:: 03-2020
Content Type:: Policy Brief
Institution:: The Nkafu Policy Institute
Abstract:: Organizations around the world are working through how to respond to the novel coronavirus, posing one of the greatest challenges to leaders in a long time. Do they restrict travel? Doing so would have substantial financial implication, make months of preparation worthless and lower the morale of many stakeholders who enjoy travel. However, travel is what brought the coronavirus to the country in the first place — and what continues to spread it to new communities within the country. What about instituting remote work procedures? In-person meetings and events may be a critical part of an organization’s activities and an important part of the value it offers. Perhaps there are no known cases of the virus in a given community. However, once it does gain a foothold, social distancing is the only way to slow the spread. Carriers of the virus may unwittingly spread it for days before symptoms manifest themselves. Above all, one of the greatest challenges is to balance an organization’s economic concerns with the question of what is ethically the best course of action.
Topic:: Economics, International Political Economy, Pandemic, and COVID-19
Political Geography:: United States and Global Focus

58. Born Out of Necessity: A Debt Standstill for COVID-19

Author:: Patrick Bolton, Lee Buchheit, Pierre-Olivier Gourinchas, Mitu Gulati, Chang-Tai Hsieh, Ugo Panizza, and Beatrice Weder di Mauro
Publication Date:: 04-2020
Content Type:: Policy Brief
Institution:: Economics for Inclusive Prosperity (EfIP)
Abstract:: Rich and poor countries alike are facing an unprecedented economic crisis as they attempt to contain the impact of the COVID-19 pandemic. A downturn of this magnitude can cause tremendous long-term damage, with critical economic linkages between employees, businesses, and banks at risk of disappearing forever. Scores of firms will close permanently unless urgent action is taken. The threat is even more significant for emerging economies, where the economic costs of social distancing are likely to be higher, and where vulnerable small and medium sized enterprises with low cash reserves account for a much larger share of the economy than in rich countries, which can rely on extensive social and economic safety nets. Poor countries, moreover, have far more precarious health-care systems. The funds required to support vulnerable workers and businesses, and to care for COVID-19 patients, could be as high as 10% of their GDP. As a comparison, in the US the rescue measures passed in the last month alone account for at least 10% of GDP, and are likely to increase even more. A number of European countries have commited loans, equity injections and guarantees up to 35% of GDP. The COVID-19 crisis has led to a sudden collapse in capital flows to emerging and developing countries. According to estimates by the Institute of International Finance, non-resident portfolio outflows from emerging market countries amounted to nearly $100 billion over a period of 45 days starting in late February 2020. For comparison, in the three months that followed the explosion of the 2008 global financial crisis, outflows were less than $20 billion.
Topic:: Debt, Economics, International Political Economy, GDP, Business, Macroeconomics, Pandemic, COVID-19, and Credit
Political Geography:: Global Focus

59. From the EMS to the EMU and...to China

Author:: Joseph Halevi
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
Topic:: Economics, International Political Economy, Political Economy, History, and Macroeconomics
Political Geography:: Africa, China, Europe, Asia, Germany, and Global Focus

60. Human Rights from the International Relations

Author:: Alejandro Anaya Muñoz
Publication Date:: 05-2019
Content Type:: Special Report
Institution:: Center for the Opening and Development of Latin America (CADAL)
Abstract:: Human rights are a very important area in contemporary international relations. The doctrine of human rights was concretized after a process of development of more than three centuries after the end of the Second World War and has changed the institutional panorama and the relations between actors at the international level. On the other hand, regardless of its «lack of teeth», the international regime on the subject has transformed the way states relate to international bodies, transnational civil society organizations and other governments.
Topic:: International Relations, Civil Society, Human Rights, International Political Economy, International Affairs, and Norms
Political Geography:: Global Focus

61. The Economic Losses from Ending the WTO Moratorium on Electronic Transmissions

Author:: Hosuk Lee-Makiyama and Badri Narayanan Gopalakrishnan
Publication Date:: 08-2019
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: This paper is co-authored with Badri Narayanan, PhD, Associate Professor at University of Washington, Consultant at McKinsey Global Institute, UN ESCWA, FAO, Commonwealth Secretariat and GTAP Research Centre. Since 1998, the WTO Members have applied a moratorium against tariffs on international electronic transmissions (commonly referred to as the WTO ‘E-Commerce’ Moratorium). However, some WTO Members have recently debated whether the moratorium remains in their economic interest, given the potential revenues that might be generated by imposing tariffs on electronic transmissions. The study examines the impact on India, Indonesia, South Africa and China (and the general case for developing countries) and concludes that imposing such tariffs would be fiscally counter-productive. Putting aside any legal questions, a country that opted out of the moratorium may apply tariffs affecting a wide range of cross-border business activities. Our research shows that if countries ceased to uphold the moratorium and levied import duties on digital goods and services, they would suffer negative economic consequences in the form of higher prices and reduced consumption, which would in turn slow GDP growth and shrink tax revenues. Yet our research indicates that the payoff in tariff revenues would ultimately be minimal relative to the scale of economic damage that would result from import duties on electronic transmissions.
Topic:: Globalization, International Political Economy, International Trade and Finance, Digital Economy, Tariffs, Trade, and WTO
Political Geography:: Europe and Global Focus

62. Volume 69 Issue 1

Author:: Muhittin Kaplan
Publication Date:: 01-2019
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, International Political Economy, Economic Growth, Political Science, and Capital Flows
Political Geography:: Russia, Turkey, and Global Focus

63. Product-Level Trade Elasticities

Author:: Lionel Fontagné, Houssein Guimbard, and Gianluca Orefice
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Trade elasticity is a crucial parameter in evaluating the welfare impacts of trade liberalization. We estimate trade elasticities at the product level (6-digit of the Harmonized System comprising more than 5,000 product categories) by exploiting the variation in bilateral applied tariffs for each product category for the universe of available country pairs. This is done by constructing a panel of bilateral applied tariffs and bilateral trade covering the period 2001 to 2016. We address potential endogeneity issues as well as heteroskedasticity and selection bias due to zero flows. The obtained trade elasticities are centered around -5. We finally highlight the differences in the gains from trade arising from considering heterogeneous rather than average trade elasticities. All product level elasticities are made publicly available for sake of scrutiny and use by other researchers.
Topic:: Economics, International Political Economy, Bilateral Relations, Tariffs, Trade Liberalization, and Trade
Political Geography:: Global Focus

64. Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains

Author:: Ariell Reshef and Gianluca Santoni
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We study the evolution of labor shares in 1995-2014 while taking into account international trade based on value added concepts. On average, the decline in labor shares (starting around 1980) accelerates in 2001-2007, after which labor shares recover somewhat. In contrast, skilled labor shares consistently increase. The acceleration in the decline in labor shares is associated with increased intensity of intermediate input exporting; this manifests in a sharp increase in the foreign component in upstreamness of industries and countries in global value chains (GVCs). China's global integration accounts for much of this. Declines in the price of investment together with capital-skill complementarity can explain both the consistent increase in skilled labor shares and the reversal of trend in overall labor shares. Compared to shares in GDP, labor shares in gross national product (GNP) are higher in countries with positive net FDI positions; the uneven spread of multinational activity contributes to greater inequality through this channel.
Topic:: Economics, International Political Economy, International Trade and Finance, Labor Issues, Trade, Global Value Chains, and Skilled Labor
Political Geography:: China and Global Focus

65. Migrant Inventors and the Technological Advantage of Nations

Author:: Hillel Rapoport, Prithwiraj Choudhury, and Dany Bahar
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
Topic:: Economics, International Political Economy, Migration, Science and Technology, Migrant Workers, and Knowledge Economy
Political Geography:: Global Focus

66. International Business Cycles: Information Matters

Author:: Eleni Iliopulos, Erica Perego, and Thepthida Sopraseuth
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We study the international transmission of shocks when agents form expectations under adaptive learning and imperfect information. To this aim we consider a two-country model featuring financial frictions, nominal rigidities, learning and Home information bias (as a source of information imperfection). We show that the more pronounced the Home information bias, the less agents track the international transmission of shocks, as it would otherwise be the case under rational expectations. The model succeeds in matching the low business cycle synchronization of consumption, while generating a positive output co-movement. In doing so, the model takes the theory closer to the data with respect to the output-consumption co-movement anomaly. The model also exhibits departure from the Uncovered Interest rate Parity.
Topic:: Economics, International Political Economy, International Business, Information Technology, and Informal Economy
Political Geography:: Global Focus

67. Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components

Author:: Guillaume Gaulier, Aude Sztulman, and Deniz Ünal
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: In this article, we examine the dynamics of Global Value Chains (GVCs) since the 2000s. Did it show a marked expansion up to the Great Recession and did GVCs begin a downturn in the 2010s? To better understand the evolution of GVCs at the world level, we use very detailed trade data for 2000 to 2016, which distinguishes different production stages along the GVC. In particular, among intermediate goods, we focus on Parts and Components (P&C) rather than semi-finished products since the manufacture of P&C corresponds to activities more embedded in GVCs. We control, also, for the global business cycle and price effects using an original production stages deflator based on detailed bilateral trade unit-values. This new GVC indicator shows moderate growth over the study period with no trend reversal. In the electronics sector, where GVCs are particularly well-developed, we observe contrasting effects: the share in P&C trade for office machinery and computers has decreased, while it has increased in the case of telecommunications equipment, the flagship IT revolution industry. Also, counts of clients or suppliers by stages of production indicate higher and growing geographical diversity for P&C.
Topic:: Economics, International Political Economy, International Trade and Finance, and Global Value Chains
Political Geography:: Global Focus

68. Luck like the Irish: How emigration can be good for the Western Balkans

Author:: Alida Vračić
Publication Date:: 03-2019
Content Type:: Special Report
Institution:: European Council on Foreign Relations (ECFR)
Abstract:: Western Balkans governments have failed to tap the potential of their vast diaspora – six million strong – around the world. This diaspora possesses the networks, skills, and assets that Western Balkans countries need to develop and to prosper in an age of fierce economic competition. Ireland’s experience sets the standard: today’s “Global Irish” population is a networked diaspora that champions Irish interests throughout the world and has made critical contributions to Ireland’s economic miracle. To follow in Irish footsteps, the Western Balkans urgently needs to gather data, including carrying out comprehensive labour force surveys, to understand the diaspora properly and learn how best to communicate with it. The EU must help. It should introduce circular migration programmes so that educated Western Balkans citizens in EU member states return to their home countries fully equippedto make an even greater contribution than they could have done before leaving
Topic:: International Political Economy and Brexit
Political Geography:: Global Focus

69. Strength In Numbers

Author:: Wendy Cutler
Publication Date:: 03-2019
Content Type:: Special Report
Institution:: Asia Society
Abstract:: Tensions in U.S.-China economic and trade relations have steadily increased over the past year, leading to the imposition of tariffs and counter-tariffs impacting nearly USD $400 billion in two-way trade. At the time of writing, a negotiated solution has yet to materialize, but the two sides have continued to make progress, with a deal seemingly imminent. At the heart of the conflict are challenges posed by China’s state-led economic model, including excessive and under-reported industrial subsidies and other financial assistance, operation of state-owned enterprises (SOEs), opaque regulatory measures that advantage domestic producers, forced technology transfer, and centrally directed strategic guidance
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

70. Contested Spaces A Renewed Approach to Southeast Asia

Author:: Patrick M. Cronin
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Center for a New American Security (CNAS)
Abstract:: As the competition between the United States and China to shape the course of the 21st century intensifies, Southeast Asia has become a contested space. A region where geopolitical orientations remain fluid, Southeast Asia lies at the front line of Beijing’s expanding diplomatic influence, economic leverage, and military capability. At stake is whether countries across the region can retain their economic sovereignty and freedom of decision, and whether governance in the region will broadly trend toward greater freedom and openness, or the opposite.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

71. Understanding China's AI Strategy

Author:: Gregory Allen
Publication Date:: 02-2019
Content Type:: Special Report
Institution:: Center for a New American Security (CNAS)
Abstract:: n the second half of 2018, I traveled to China on four separate trips to attend major diplomatic, military, and private-sector conferences focusing on Artificial Intelligence (AI). During these trips, I participated in a series of meetings with high-ranking Chinese officials in China’s Ministry of Foreign Affairs, leaders of China’s military AI research organizations, government think tank experts, and corporate executives at Chinese AI companies. From these discussions – as well as my ongoing work analyzing China’s AI industry, policies, reports, and programs – I have arrived at a number of key judgments about Chinese leadership’s views, strategies, and prospects for AI as it applies to China’s economy and national security. Of course, China’s leadership in this area is a large population with diversity in its views, and any effort to generalize is inherently presumptuous and essentially guaranteed to oversimplify. However, the distance is large between prevailing views in American commentary on China’s AI efforts and what I have come to believe are the facts. I hope by stating my takeaways directly, this report will advance the assessment of this issue and be of benefit to the wider U.S. policymaking community.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

72. Financial Networks of Mass Destruction

Author:: Elizabeth Rosenberg and Neil Bhatiya
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Center for a New American Security (CNAS)
Abstract:: The international community has long prioritized reducing the risk of weapons of mass destruction proliferation, whether from state actors such as North Korea and Iran, or from non-state actors, particularly criminals and transnational terrorist networks. Despite this concern, however, there remains a significant blind spot: the efforts to prevent the financing of WMD proliferation are only in their infancy. The legal framework to prevent the financing of proliferation is weak, and implementation across the world is spotty. These weaknesses derive from one overwhelming fact: The international community has not prioritized financial controls to fight proliferation. Very few countries have demonstrated the political will to put further emphasis on this threat to international peace and security.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

73. Navigating the Energy Transition

Author:: David Koranyi
Publication Date:: 01-2019
Content Type:: Policy Brief
Institution:: Atlantic Council
Abstract:: As energy markets and technologies rapidly change, international oil companies (IOCs) are facing a set of interconnected challenges that will fundamentally affect their business models. From changes in the supply and demand picture, to shifts in how energy is produced and consumed, to public pressure to decrease greenhouse gas footprints, companies have a wide range of issues to consider as they decide how to prepare for an unpredictable future. In a new issue brief, “Navigating the Energy Transition: International Oil Company Diversification Strategies,” Global Energy Center Senior Fellow David Koranyi provides a macro picture of select IOC’s strategic (re)thinking and explores some of the strategies IOCs have undertaken to diversify their portfolios and prepare for the unfolding energy transition.
Topic:: International Relations, International Political Economy, and International Affairs
Political Geography:: Global Focus

74. Cyberattack: What Goes Around, Comes Around

Author:: Ken Barker
Publication Date:: 06-2019
Content Type:: Policy Brief
Institution:: Canadian Global Affairs Institute (CGAI)
Abstract:: The Canadian government is now openly discussing the possibility of making cyberweapons part of its official national defence strategy. The new development was revealed in a recent government white paper, entitled “Strong, Secure, and Engaged” (SSE), which outlined defence policy across a wide range of activities. Specifically, the paper discusses working toward a “more assertive posture in the cyber domain by hardening our defences, and by conducting active cyber operations against potential adversaries in the context of government-authorized military missions” with an explicit commitment to developing cyberattack capabilities. This direction not only opens up new possibilities for Canadian defence, it could also represent significant new risks. Without good answers to the difficult questions this new direction could raise, the country could be headed down a very precarious path.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

75. Searching for a Middle-Power Role in a New World Order

Author:: Eugene Lang
Publication Date:: 06-2019
Content Type:: Policy Brief
Institution:: Canadian Global Affairs Institute (CGAI)
Abstract:: The “America First” agenda will persist well beyond the life of the Trump administration. Washington no longer “has Canada’s back”. We are living in a new age of great power rivalry. Populism poses a major challenge to the rules-based international order. Adult supervision in global politics is in short supply. These are some of the themes that surfaced during a recent CGAI conference titled What Role for Canada on the Global Stage? Implied, if unstated, was that Canada is adrift internationally on these waters, in search of a role in a new world order of which most Canadians seem unaware. The question remained: How should Canada respond to these new global currents in a way befitting a middle power entering the third decade of the 21st century?
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

76. Overcoming ‘Boom and Bust’? Analyzing National Shipbuilding Plans in Canada and Australia

Author:: Jeff Collins
Publication Date:: 01-2019
Content Type:: Policy Brief
Institution:: Canadian Global Affairs Institute (CGAI)
Abstract:: While both Canada and Australia share similar constitutional frameworks and imperial histories, they are also no stranger to procurement challenges. Cost overruns, delays, regionalism, and protracted intellectual property disputes have all been part of major defence acquisition projects in recent decades. This Policy Paper analyzes the largest and most expensive procurement projects undertaken by either country, Canada’s $73 billion (estimated) National Shipbuilding Strategy (NSS), launched in 2010, and Australia’s A$90 billion Naval Shipbuilding Plan (NSP), launched in 2017. Each project represents an attempt to implement a rational, multi-decade approach to naval acquisition. Driven by a desire to overcome previous boom-and-bust cycles, the NSS and NSP aim to create a sustainable shipbuilding sector capable of meeting the immediate and future naval demands of Ottawa and Canberra. Neither country has attempted a shipbuilding plan on this scale before.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

77. The Arctic is Warming and Turning Red: Implications for Canada and Russia in an Evolving Polar Region

Author:: Ron Wallace
Publication Date:: 01-2019
Content Type:: Policy Brief
Institution:: Canadian Global Affairs Institute (CGAI)
Abstract:: Following the collapse of the Soviet Union, Canada and the Russian Federation have pursued significantly different strategies for economic development and security in their respective circumpolar regions. These policies have resulted in very different northern strategic outcomes. While Canada and its circumpolar neighbours (Denmark, Finland, Iceland, Sweden, Norway and the United States) have advanced their polar resource claims through the UN, Russia has taken additional bold steps to secure its polar resources. Events since 2000 have demonstrated a fierce Russian political resolve to secure its economic independence from the West and to achieve a prominent place on the world geopolitical stage. In a steadily warming Arctic, Russia has recognized the potential economic and strategic significance of its Northern Sea Route and is now the foremost military and shipping leader in the circumpolar region. Russia continues to accelerate its efforts to re-open abandoned former Soviet Siberian military bases and to construct new operational bases. The largest Russian military build-up in the polar region since 1991 provides an indication that, consistent with its geopolitical aspirations, Russia is prepared to assert and defend its Arctic resources and sea routes. This accelerating Russian presence and military capability, paralleled by certain Chinese initiatives (China increasingly views itself as a near-Arctic state) have occasioned not just re-evaluations, but a reinvigoration of certain Arctic defence postures among circumpolar allies in NATO.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

78. Emerging Trends in India-U.S Oil and Gas Engagement

Author:: Sujata Ashwarya
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: East-West Center
Abstract:: Oil and gas trade is emerging as a new area of engagement between India and the United States against the backdrop of increasingly complementary interests. The emergence of the United States as the world’s top oil and gas producer in the last few years dovetails perfectly with India’s energy-deficient status and growing demand. With high rates of economic growth and over 17 percent of the world’s population, India’s energy consumption growth is largely fed by foreign imports of fossil fuels.
Topic:: International Political Economy
Political Geography:: Global Focus

79. Strong Leadership And Effective Partnerships For Successful Municipal FTTP Projects

Author:: Jennifer Terry
Publication Date:: 11-2019
Content Type:: Policy Brief
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Access to affordable, high-speed Internet is essential for individuals, businesses, and government to function effectively in the 21st century. Many U.S. and European communities lack access to affordable, high-speed Internet. Communities have tried to address this issue by building municipally-owned fiber networks or by engaging the private sector in municipal efforts to expand access to affordable, high-speed Internet.
Topic:: International Political Economy, Science and Technology, and International Affairs
Political Geography:: Global Focus

80. Achieving Political Inclusion

Author:: GMF
Publication Date:: 10-2019
Content Type:: Policy Brief
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Democracies are facing serious stresses at this time. We believe that by making political practice in our democracies more inclusive, we will also make our democracies more robust and enduring, and better showcase this political system which is well suited to organize stable, peaceful and lawful societies for our world on the move. In this reader, we introduce themes for action and share perspectives of diverse political actors and activists in the German Marshall Fund of the United States (GMF) network. We look toward democratic practice where the full involvement of citizens increases the total amount of power available in our societies, rather than zero sum approaches to democratic practice where power is considered to be limited and the temptation is therefore to monopolize and to withhold it.
Topic:: Gender Issues, International Political Economy, and Income Inequality
Political Geography:: Global Focus

81. The Decline of Employment Protection and the Rise of Precarious Work

Author:: Anne Marie Brady
Publication Date:: 09-2019
Content Type:: Special Report
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: By 1989, the employment landscape in the United States and Europe had changed significantly from the immediate post-Second World War decades. Between 1960 and 1973, the unemployment rate as a percentage of the total labor force averaged two percent or below in Western Europe’s big economies and 4.8 percent in the United States, but between 1990 and 1995, the average unemployment rate in the United States was 6.4 percent and between 7 and 10.7 percent in Germany, France, and the United Kindgom.1
Topic:: International Political Economy, Employment, and Income Inequality
Political Geography:: Global Focus

82. HKS Faculty Research Working Paper Series

Author:: David Deming
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: Science, Technology, Engineering, and Math (STEM) jobs are a key contributor to economic growth and national competitiveness. Yet STEM workers are perceived to be in short supply. This paper shows that the “STEM shortage” phenomenon is explained by technological change, which introduces new job skills and makes old ones obsolete. We find that the initially high economic return to applied STEM degrees declines by more than 50 percent in the first decade of working life. This coincides with a rapid exit of college graduates from STEM occupations. Using detailed job vacancy data, we show that STEM jobs change especially quickly over time, leading to flatter age-earnings profiles as the skills of older cohorts became obsolete. Our findings highlight the importance of technology-specific skills in explaining life-cycle returns to education, and show that STEM jobs are the leading edge of technology diffusion in the labor market.
Topic:: International Organization, International Political Economy, Science and Technology, and Labor Issues
Political Geography:: Global Focus

83. The Intergenerational Effects of Parental Incarceration

Author:: Will Dobbie
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: We estimate the causal effects of parental incarceration on children’s short- and long-run outcomes using administrative data from Sweden. Our empirical strategy exploits exogenous variation in parental incarceration from the random assignment of criminal defendants to judges with different incarceration tendencies. We find that the incarceration of a parent in childhood leads to a significant increase in teen crime and significant decreases in educational attainment and adult employment. The effects are concentrated among children from the most disadvantaged families, where criminal convictions increase by 10 percentage points, high school graduation decreases by 25 percentage points, and employment at age 25 decreases by 29 percentage points. In contrast, there are no detectable effects among children from more advantaged families. These results suggest that the incarceration of parents with young children may significantly increase the intergenerational persistence of poverty and criminal behavior, even in affluent countries with extensive social safety nets.
Topic:: International Political Economy, International Affairs, and Prisons/Penal Systems
Political Geography:: Global Focus

84. Measuring Bias in Consumer Lending

Author:: Will Dobbie
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: This paper tests for bias in consumer lending using administrative data from a high-cost lender in the United Kingdom. We motivate our analysis using a new principal-agent model of bias, which predicts that profits should be higher for the most illiquid loan applicants at the margin if loan examiners are biased. We identify the profitability of marginal applicants using the quasi-random assignment of loan examiners. Consistent with our model, we find significant bias against immigrant and older applicants when using the firm’s preferred measure of long-run profits, but not when using the short-run measure used to evaluate examiner performance. Keywords: Discrimination, Consumer Credit
Topic:: Debt, International Political Economy, and International Affairs
Political Geography:: Global Focus

85. Why I Cry at Work: Drone War Burnout

Author:: Allegra Harpootlian
Publication Date:: 09-2019
Content Type:: Commentary and Analysis
Institution:: Foreign Policy In Focus
Abstract:: America’s drone wars have gotten deadlier under Trump, but the Trump-first news cycle makes highlighting the human cost extremely difficult.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

86. How the Judiciary is Chipping Away at the War on Terror

Author:: Harry Blain
Publication Date:: 10-2019
Content Type:: Commentary and Analysis
Institution:: Foreign Policy In Focus
Abstract:: Lower courts are slowly but steadily eroding the legal basis for some of the most reactionary war on terror policies.
Topic:: International Law, International Political Economy, and International Affairs
Political Geography:: Global Focus

87. The NBA’s China Fiasco Shows What Businesses Really Value

Author:: Brian Wakamo
Publication Date:: 09-2019
Content Type:: Commentary and Analysis
Institution:: Foreign Policy Research Institute
Abstract:: Companies willingly censor or condemn free speech to retain market share in authoritarian countries. Just ask Daryl Morey
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

88. How to Displace the Great Replacement

Author:: John Feffer
Publication Date:: 09-2019
Content Type:: Commentary and Analysis
Institution:: Foreign Policy In Focus
Abstract:: The far right is on a roll. Just a few years ago, liberals and conservatives would have considered its recent political victories a nightmare scenario. Right-wing extremists have won elections in the United States, Brazil, Hungary, India, and Poland. They pushed through the Brexit referendum in the United Kingdom. In the most recent European Parliament elections, far-right parties captured the most votes in France, Italy, the United Kingdom, and Hungary.
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

89. Don’t Forget: Nuclear Weapons Are an Existential Threat, Too

Author:: Olivia Alperstein
Publication Date:: 09-2019
Content Type:: Commentary and Analysis
Institution:: Foreign Policy In Focus
Abstract:: A new study shows just how bad a nuclear war could get. We need a plan to eliminate this risk permanently
Topic:: Climate Change, International Political Economy, and International Affairs
Political Geography:: Global Focus

90. Five years after Maidan: Toward a Greater Eurasia?

Author:: LSE Ideas
Publication Date:: 05-2019
Content Type:: Commentary and Analysis
Institution:: LSE IDEAS
Abstract:: This report, building on a workshop held at LSE IDEAS in December 2018 and supported by the Horizon 2020 UPTAKE and Global Challenges Research Fund COMPASS projects, brings together some of the UK’s foremost scholars on Russia, the EU and the post-Soviet space to evaluate the challenges and opportunities facing Russia’s 'Greater Eurasia’ foreign policy concept.
Topic:: International Relations, International Political Economy, and International Affairs
Political Geography:: Global Focus

91. Ireland-UK Relations and Northern Ireland after Brexit

Author:: LSE Ideas
Publication Date:: 01-2019
Content Type:: Commentary and Analysis
Institution:: LSE IDEAS
Abstract:: This report explores the impact of Brexit from an Irish perspective, explaining Europe’s role in improving Ireland-UK relations since 1970s and outlining the threat posed by Brexit to the political settlement in Northern Ireland. In April 2019, LSE IDEAS produced a second edition of this report, containing a new contribution from Michael Burleigh, important updates from Paul Gillespie and Adrian Guelke, and a refreshed introduction from Michael Cox.
Topic:: International Political Economy, International Affairs, and Brexit
Political Geography:: Ireland and Global Focus

92. China in the 2020s: a more difficult decade?

Author:: George Magnus
Publication Date:: 10-2019
Content Type:: Commentary and Analysis
Institution:: LSE IDEAS
Abstract:: The conventional narrative is that China is, or will, by 2030, be the largest economy in the world. Based on commonly held expectations historically about prewar Germany, the USSR and Japan, greater humility would not go amiss. It is not preordained that past economic trends will continue, especially in view of a much compromised outlook for both China and the rest of the world in the 2020s
Topic:: International Political Economy and International Affairs
Political Geography:: China and Global Focus

93. Refining Britain's Economic Diplomacy

Author:: Linda Yueh
Publication Date:: 01-2019
Content Type:: Commentary and Analysis
Institution:: LSE IDEAS
Abstract:: The EU referendum has thrown up many questions around globalisation as well as how to reposition Britain in the world after Brexit. The UK government’s professed intent to leave the European Union and negotiate its own free trade agreements means that Britain would be setting its own trade policies for the first time since 1973, and would need to explicitly set out the aims of British trade and associated foreign investment policies for the first time in four decades. With this in mind, clearly defining the UK’s economic diplomacy is crucial. Current global and domestic conditions are politically challenging. However, this offers an opportunity for the UK to take a lead in setting a helpful direction for the rest of the world, and ensuring that trade and investment policies benefit all in society.
Topic:: International Political Economy
Political Geography:: Global Focus

94. Behavioral Insights as a New Generation of Public Service Delivery

Author:: Robert Gawłowski
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Polish Political Science Association (PPSA)
Abstract:: For many years behavioral insights has been on the top of political agenda. The aim of this article it to examine how the most innovative countries use this public management tool into public administration realm. In pursuit of this, behavioral insights units have been research in six countries. In conclusion author figure out that there is still a huge room for development and looking a new strategy to implement nudging in a larger scale.
Topic:: International Political Economy, International Affairs, and Public Opinion
Political Geography:: Global Focus

95. A Vision of the State’s Political System in the Political Thought of the National Party between 1928 and 1939

Author:: Aneta Dawidowicz
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Polish Political Science Association (PPSA)
Abstract:: Views of the National Party (1928–1939) merit special attention, given both the Party’s prominent role in the political life of interwar Poland and the interesting combination of various elements derived from diverse ideological trends within the Party’s programme. The ideological legacy of the National Party reflected, to a large extent, the key constituents of the National Democracy’s political thought, such as nationalism, representation of all social classes, national integrity and the concept of the nation-state. The National Party underwent major evolution and was subject to internal divisions which makes the image of its political thought much more complex. Based on an analysis of the National Party’s political thought, several conclusions can be formulated. The National Party developed its own views regarding political systems. These were, to a large extent, determined by their own system of values based on the national idea. The National Party’s political system projections were mainly inspired by (1) the successes of the “new type” states; (2) pressure from totalitarian systems; and (3) the influence of the economic and spiritual crisis. The National Party leaders wanted to make the political system more efficient. Nonetheless, views in favor of directly imitating any foreign political systems could hardly be found in the Party’s political thought. The National Party’s ideologists and journalists invariably stated that there was no pre-defined political system, but its form had to be adjusted to the specificity and unique character of a given national body. Although inspiration was drawn from external political systems, the Party’s political thought did not lose its independence.
Topic:: International Political Economy and Geopolitics
Political Geography:: Global Focus

96. Activities of the Catholic Church in Poland Against Pedophilia in 2018

Author:: Kamila Rezmer-Płotka
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Polish Political Science Association (PPSA)
Abstract:: The aim of the article is to determine the type of activities undertaken by the Catholic Church towards clergymen committing sexual offenses, and more specifically: pedophilia. The research problem is a question: what actions does the Catholic Church take against pedophilia? In order to realize a research project, it was first determined how the offense is defined in the doctrine of church criminal law. Then, there was made an analysis of the activities undertaken by the hierarchs of the Catholic Church. On its basis, a typology of the forms of the Church’s influence at various levels was reconstructed in the field of both preventive and sanctioning actions against the clergy. In the article there was adopted a time restriction covering only 2018. It can be described as a breakthrough, first of all due to the verdict that was made in Poznań (MS, 2018), the accusations that appeared at the end of the year against the deceased chaplain of Solidarity, Fr. Henryk Jankowski and initiatives taken by both citizens and politicians, such as the first anti-clerical happening of Baby Shoes Remember in Poland or the creation of a pedophile map. In the cinemas, a movie entitled “Kler” showed up. It moved the topic of pedophilia in the Church. Results: the Catholic Church in Poland, apart from symbolic activities, i.e. oral and written declarations, assurances, and prayers, undertakes also substantial actions, such as personal changes, cooperation with the state or the meetings of hierarchs centered around pedophilia
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

97. A New Method to Calculate Power of International Actors

Author:: Abdullah Metin Durmuş
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Polish Political Science Association (PPSA)
Abstract:: This article is based on the idea that it is necessary to develop a quantitative method to calculate power of international actors, which will enable scholars to analyse international conflicts. The Global Potential Power Distribution Chart, which is calculated based on three main characteristics of international actors, namely population, territory and economic power, shows “potential power of states and international organisations”. It may be called “Durmuş Scale of Power (DSoP)”. The chart is a comprehensive indicator with considerable accuracy and 100 % objectivity. In this article, potential powers of international actors have been calculated for years 1987, 2004 and 2015, which gives a clear overview of the potential power distribution (balance of power) of the World regarding states and as well as international organisations. Potential military powers of some states and international organisation in year 2015 have also been calculated. This research proves by means of a contemporary approach applied and a quantitative method developed that, the World is multipolar since 2004, and China is, potentially, the most powerful state of the World since 2015. The method introduced in this article were sufficient enough to explain the effects of the enlargement of NATO and EU, EU after BREXIT, reform of the Security Council of the United Nations and instrumental enough to provide a peaceful understanding for the self-determination issue of Kosova. There are three conclusions to this research: 1) The method “Durmuş Scale of Power” is calculated is reliable because everybody with a scientific calculator or a computer can easily calculate potential power of a state provided that he or she has reliable data for territory, population and GDP. 2) “Global Potential Power Distribution Chart” is a comprehensive Chart which shows “balance of power” at a specific year. It enables us to compare power of states and international organisations in different years. 3) It is convenient to use “Durmuş Scale of Power” while analysing issues of international relations
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

98. About Women in Conflicts and Wars: Theories of Violence and Collective Memory

Author:: Inga B. Kuźma and Edyta Pietrzak
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Polish Political Science Association (PPSA)
Abstract:: The article deals with the subject of relations between theories of violence and the category of collective memory in relation to women’s war stories. The text introduces the issue of war and conflict, understanding the theory of violence, the category of collective memory and female war narratives, as well as the ways of their political interpretation. The interpretation is crucial because of method used in the research, meaning hermeneutics, but also because of the, presented here, perspective of polyphony
Topic:: International Political Economy and International Affairs
Political Geography:: Global Focus

99. Five Reasons Why the Focus on Trade Deficits Is Misleading

Author:: Robert Z. Lawrence
Publication Date:: 03-2018
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: President Trump has asserted that trade balances are a key measure of a nation’s commercial success and that large US trade deficits prove that past trade approaches have been flawed. But trade deficits are not in fact a good measure of how well a country is doing with respect to its trade policies. Many of the assumptions on which the administration’s beliefs rest are not supported by the evidence. This Policy Brief argues that trade deficits are not necessarily bad, do not necessarily cost jobs or reduce growth, and are not a measure of whether foreign trade policies or agreements with other countries are fair or unfair. Efforts to use trade policy and agreements to reduce either bilateral or overall trade deficits are also unlikely to produce the effects the administration claims they will and instead lead to friction with US trading partners, harming the people the policies claim to help
Topic:: International Political Economy
Political Geography:: Global Focus

100. China Needs Better Credit Data to Help Consumers

Author:: Martin Chorzempa
Publication Date:: 02-2018
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: Formidable barriers stand between the modern financial system and the hundreds of millions of Chinese citizens still using costly informal credit. For many, the financial data that could be used to give them a credit score that would lead to a fair priced loan exist but are not being used. This analysis finds that the most difficult barriers cutting these data off from their potential use for greater financial inclusion are the legal and political restrictions on data sharing and use, economic and competitive concerns from data holders, and the technical difficulty of integrating disparate systems. Policies that encourage coordination between public authorities and private actors in finance and technology can go a long way towards making these data available and driving access to credit in China. This shift would not only help borrowers: It would also encourage the needed economic rebalancing towards consumption, increase competition in the financial sector, raise efficiency through better credit allocation, and contribute to sustainable economic growth and social welfare.
Topic:: International Political Economy
Political Geography:: Global Focus

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COLUMBIA UNIVERSITY PRESS