Publication Year: within 10 Years / Topic: Global Political Economy

1. Chinese companies in Arctic mining are gaming the master plan

Author:: Patrik Andersson, Per Kalvig, and Urik Pram Gad
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: Looking for Chinese state ownership in Arctic extractive projects misses the point, and politically framed rhetoric from Chinese companies may be misleading. Some Western companies downplay their Chinese relations, but Western companies are often reliant on Chinese partners. In Western media, Chinese companies are sometimes discussed as being parts of a well-oiled state machine. They are not, but neither are they left to fight on their own without any support or guidance. Rather, they follow their own business priorities while eagerly seizing opportunities provided through supportive state policy. Interaction and integration with the state varies between different types of companies. The Chinese Communist Party (CCP) has a complex set of levers which make it possible to secure specific strategic investments. The likelihood of state intervention varies depending on the commodity involved as well as geopolitical factors. However, the preferred mode of governance is to issue general policies that encourage companies to contribute to state objectives.
Topic:: Foreign Policy, Business, Global Political Economy, and Mining
Political Geography:: China, Asia, and Arctic

2. Economic Linkages across the Mediterranean: Trends on trade, investments and energy

Author:: Panagiota Manoli
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:: The Mediterranean is of multifaceted importance for the global economy, as it is one of the most highly valued seas globally. However, the region’s growth and economic integration path has often been obstructed by political upheavals and conflicts. This paper focuses on key features of the current regional dynamics in trade, investments and energy as sources of growth in the Mediterranean, with a view to assessing where the region stands today. The Mediterranean’s regional economic linkages manifest two dominant features: on the one hand, there is the marked heterogeneity of the countries’ performance in foreign trade, investment flows and energy (oil and gas) potential; on the other hand, there is the strong north-south element that shapes all intra-regional flows. These features indicate that, despite weak integration at a regional level, opportunities exist to strengthen intra-regional links as the Mediterranean further integrates into the global economy and benefits from long-standing multilateral and cooperative structures across the region.
Topic:: Energy Policy, Global Political Economy, Investment, and Trade
Political Geography:: Mediterranean

3. Capital Account Regulation and National Autonomy: The Political Economy of the New Welfare Economics

Author:: Luiza Peruffo, Pedro Perfeito da Silva, and Andre Moreira Cunha
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: Contexto Internacional
Institution:: Institute of International Relations, Pontifical Catholic University of Rio de Janeiro
Abstract:: The 2007-2009 Global Financial Crisis (GFC) eroded the consensus around the benefits of capital mobility within mainstream economics. Against this background, this paper discusses to what extent the new mainstream position on capital flow management measures, based on the New Welfare Economics, expands the policy space of developing and emerging economies (DEEs). This paper argues that the new position can be classified as an embedded neoliberal one, given that it keeps liberalization as its ultimate goal, while nonetheless accepting to mitigate some of its harmful consequences. After comparing the capital account policies of China and Brazil, this paper concludes that the policy prescriptions of the New Welfare Economics do not lead to higher levels of national autonomy for DEEs and are likewise unable to curb financial instability in these countries.
Topic:: Global Political Economy, Neoliberalism, Autonomy, and Capital
Political Geography:: Global Focus

4. Reducing mobility of SARS-CoV-2 variants to safeguard containment

Author:: Martin Hellwig, Viola Priesemann, and Guntram Wolff
Publication Date:: 05-2021
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: Escape variants can cause new waves of COVID-19 and put vaccination strategies at risk. To prevent or delay the global spread of these waves, virus mobility needs to be minimised through screening and testing strategies, which should also cover vaccinated people. The costs of these strategies are minimal compared to the costs to health, society and economy from another wave.
Topic:: Health, Governance, Global Political Economy, Vaccine, and COVID-19
Political Geography:: Global Focus

5. Monetary Effects of Global Stablecoins

Author:: Dong He
Publication Date:: 06-2021
Content Type:: Journal Article
Journal:: The Cato Journal
Institution:: The Cato Institute
Abstract:: The globalized economy now moves at the speed of electrons — and the future of money is inexorably going digital, too. New forms of digital money, such as central bank digital currencies (CBDCs) and so‐called global stablecoins, are shaping the future of money and payments. CBDCs are a digital form of fiat currency issued by a central bank. Some central banks started exploring CBDCs a few years ago, and those explorations have gathered momentum since Facebook and its partners announced their intention to launch the Libra stablecoin in June 2019. Because the stablecoins issued by large technological companies or platforms (Big Techs) have the potential to be adopted by businesses and households everywhere, they are called “global stablecoins,” or GSCs, in shorthand.
Topic:: Geopolitics, Global Political Economy, Money, Currency, and Trade
Political Geography:: Global Focus

6. Post-American Moments in Global Financial Governance in the New Millennium

Author:: Ilene Grabel
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: It is difficult to find much to celebrate about the current conjuncture, marked as it is by deeply destructive incoherence. The best that can be said is that we are in an interregnum. But I suggest that today’s incoherence also includes productive and even transformative moments. I argue that incoherence in global financial governance should be understood as productive in several respects. It is creating and widening alternative spaces in which some of the values, practices, tools, objectives, and goals associated with embedded liberalism can be rearticulated in a world in which there is no “order,” American-led or otherwise. The silver lining of incoherence is that it creates space for experimentation and innovation unconstrained by an overarching “ism.” Incoherence is creating exits or leakages from noxious national and global policy environments, rendering it less poisonous than it would be in the absence of ideational aperture and contestation, competing policies, institutions, networks, and poles of power. The abdication by the US of its traditional role of global coordination and discipline, as exerted under the post-war embedded liberal or the neoliberal American-led orders, is creating opportunities for more permissive and varied “reembededness” and diverse forms of economic integration. The emerging regime reflects neither your grandmother’s American-led order 1.0 or 2.0. In this morbid post-American interregnum there is no singular “ism” or “alternative order,” a fact that I do not mourn.
Topic:: Governance, Finance, Global Political Economy, and Neoliberalism
Political Geography:: Global Focus and United States of America

7. 5G Technological Leadership

Author:: Hudson Institute
Publication Date:: 12-2020
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: As the promise of the next-generation mobile communications technology becomes clearer, policymakers are increasingly focusing on the technological and policy foundations of 5G leadership. The mobile revolution has already delivered unimagined benefits the world over from innovative apps delivering healthcare services to remote villages in developing countries to the equally innovative development of the “sharing economy” with Uber and Airbnb. 5G promises to go even further. It will not be merely a marginal improvement over the previous generations of cellular standards but will instead bring what many have called the “next industrial revolution.”1 5G will make everything more interconnected and efficient—from financial services to national defense to power grids to basic utilities provided in smart cities. Estimates predict that by 2035 5G will contribute over $13.2 trillion to the global economy.2 Given the importance that 5G will have for the US innovation economy, policymakers have focused on promoting and securing 5G leadership. They have also become concerned about the national security implications of 5G leadership for at least two reasons. First, they are concerned about economic and other vulnerabilities being exploited by potential adversaries via foreign entities manufacturing or owning the underlying physical infrastructure.3 Second, they are concerned about the national security implications of simply falling behind in technological leadership as such.4 In sum, 5G technological leadership matters both for economic growth and for national security. The policy discussion about 5G leadership, though, has been mired in confusion. 5G represents a complex technological and commercial ecosystem, and commentary about 5G leadership has been misdirected by mistaken assumptions. In the interest of promoting policy discussions grounded in the proper technological and economic evidence, this Statement highlights two essential facts that must inform all discussions about 5G leadership: (1) 5G hardware and infrastructure is only one of the many layers of a much larger 5G ecosystem, and (2) patent counting is an unreliable methodology to identify the leading 5G technological innovators.
Topic:: Science and Technology, Communications, Leadership, Global Political Economy, and 5G
Political Geography:: Global Focus

8. The Intersection of Emergent Technologies and Geopolitics: Implications for Singapore

Author:: Muhammad Faizal and Bin Abdul Rahman
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:: This paper examines how Singapore as a small state will have to navigate a more contested world from a policy-relevant angle. A primary driver of geopolitical contestation today stems from emergent or Fourth Industrial Revolution (4IR) technologies contributing to the redistribution of geopolitical power to the disadvantage of the established western-led international order. Even as Singapore embarks on numerous programmes to invest in and adopt 4IR technologies, it has to consider geopolitics besides technical specifications and budgetary issues. A small state will have to face trade-offs when it engages the competing big powers to preserve its neutrality and balance relations. It is difficult for small states to emulate each other’s strategies in balancing relations with the big powers given their varying levels of risk appetite and technological adoption, as well as their different geostrategic and geo-economic realities. Nevertheless, there are strategic steps that small states such as Singapore can take to defend its national interests better while investing in and adopting 4IR technologies.
Topic:: National Security, Science and Technology, Global Political Economy, and Trade
Political Geography:: Asia and Singapore

9. The Impact of the EAEU-Iran Preferential Trade Agreement

Author:: Amat Adarov and Mahdi Ghodsi
Publication Date:: 05-2020
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: The preferential trade agreement between the Eurasian Economic Union (EAEU) and Iran on mutual trade entered into force in October 2019. In this report we estimate its expected impact at aggregate and sectoral levels using the gravity model of trade based on the global sample of bilateral trade flows at the HS 6-digit level. The analysis suggests that the implementation of the agreement will boost mutual trade for both trading partners, with relatively greater gains expected for the EAEU’s exports to Iran. On aggregate, the total gains in mutual trade are estimated to reach almost USD 46 million, with exports from the EAEU to Iran expected to increase by 9.7%, compared with a rise in exports from Iran to the EAEU of up to 4%. The difference in the impact will also be significant across the five EAEU countries as well as across sectors, with the major export gains expected to accrue in the chemicals and agri-food sectors, especially trade in miscellaneous fruits and vegetables, as well as in the textile, polymer production and metals sectors.
Topic:: Economics, Treaties and Agreements, Global Political Economy, Exports, and Trade
Political Geography:: Iran, Kazakhstan, Armenia, and Belarus

10. Forecasting exchange rates of major currencies with long maturity forward rates

Author:: Zsolt Darvas and Zoltan Schepp
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: This paper presents unprecedented exchange rate forecasting results based upon a new model which approximates the gap between the fundamental equilibrium exchange rate and the actual exchange rate with the long-maturity forward exchange rate.
Topic:: Economics, Governance, Global Political Economy, and Exchange Rate Policy
Political Geography:: Global Focus

11. FDI another day: Russian reliance on European investment

Author:: Marta Dominguez-Jimenez and Niclas Poitiers
Publication Date:: 02-2020
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: Most foreign direct investment into Russia originates in the European Union: European investors own between 55 percent and 75 percent of Russian FDI stock. This points to a Russian dependence on European investment, making the EU paramount for Russian medium-term growth. Even if we consider ‘phantom’ FDI that transits through Europe, the EU remains the primary investor in Russia. Most phantom FDI into Russia is believed to originate from Russia itself and thus is by construction not foreign.
Topic:: Economics, Energy Policy, Foreign Direct Investment, Governance, Sanctions, European Union, and Global Political Economy
Political Geography:: Russia and Europe

12. Unexpected Guests? The Soviet Union and the History of Global Capitalism: An Interview with Oscar Sanchez-Sibony

Author:: Oscar Sanchez-Sibony
Publication Date:: 02-2020
Content Type:: Commentary and Analysis
Institution:: The Toynbee Prize Foundation
Abstract:: Capitalism versus Communism. To many, the latter half of the twentieth history was deeply shaped by the confrontation between these two ideological and socioeconomic systems. When the Soviet Union collapsed in 1991, capitalism's triumph was credited to its valorization of money and protection of markets, among other factors; and, as the story continues, Communists failed, in part, because they suppressed markets and globalization. Yet, how much of this historical picture holds true? To Oscar Sanchez-Sibony, a good deal of Cold War histories are founded on generally held misconceptions about the political economy of the Soviet Union. Not only do they ignore the intense engagements between the Soviets and the world, they often miss the mark by neglecting the larger financial and economic architecture that facilitated such exchanges and economic growth in the Union of Soviet Socialist Republics (USSR). There is a larger story to be told about the rise of global capitalism and the Soviet Union. These are the themes of Red Globalization: The Political Economy of the Soviet Cold War from Stalin to Khrushchev (2014). Making use of archival documents from Russian archives, Sanchez-Sibony provides a rich account of how a young Bolshevik state navigated through the world's economic crises, while seeking favorable trading partners in the West for investments. This interview also ventures into topics and figures such as Depression Stalinism, Anastas Mikoyan, and Soviet-Global South relations. This book provoked much debate, and will be a must-read for years to come for anyone interested in histories of the Soviet Union, global capitalism, and the global Cold War. Oscar Sanchez-Sibony is Assistant Professor of History at the University of Hong Kong, where he teaches and researches subjects in Soviet history, Stalinism, and capitalism. He received his Ph.D. from the University of Chicago under the guidance of Sheila Fitzpatrick. Toynbee Foundation had the pleasure to talk with him about his career and the development of his research.
Topic:: Cold War, Communism, Globalization, History, Capitalism, and Global Political Economy
Political Geography:: Russia and Soviet Union

13. The Impact of COVID-19 on World Economy and China’s Role

Author:: Xu Xiujun
Publication Date:: 07-2020
Content Type:: Working Paper
Abstract:: Recent years have seen more countries to experience “three lows and three highs” problems. The pandemic triggered the exposure of these accumulated risks, leading to a slump in world economic growth. Given the developing trend of world economy amid the ongoing pandemic, the world may face a range of challenges for a long time to go, e.g. insufficient momentum for economic growth, increased resistance for market opening and rising debt risks. As the world economy suffers a major hit, China has been active in providing the international community with the assistance needed to combat the COVID-19 and recover the economy, while China’s economy itself has shown strong resilience and stability. In the long run, the pandemic will not change the sound momentum of China’s economic development; rather, it will provide an opportunity for China to play a significant role in the world economy.
Topic:: Economy, Global Political Economy, and COVID-19
Political Geography:: China and Asia

14. How ‘demos’ met ‘cracy’: debt, inequality, money

Author:: Andreas Antoniades and Ugo Panizza
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: The recurrence of ever more destructive economic crises and patterns of pervasive indebtedness and inequality threaten the social fabric of our societies. Our main responses to these trends have been partial, focusing on symptoms rather than causes, often exacerbating rather than improving the underlying socio-economic dynamics. To reflect on these conditions and on ‘what needs to be done’ this paper turns to a similar socio-economic malaise faced by the city-state of Athens in the 6th century BC. Most historical studies dealing with this crisis focus on the comprehensive debt relief policy (seisachteia) implemented by Solon. We argue that this debt relief, although necessary, was the least important of Solon’s reforms. Solon read the problem of debt as a problem of money so he went on to reform the monetary and exchange system. But he did not think that these reforms alone could restore socioeconomic sustainability. For this, a redefinition of what was counted as valuable economic activity and as income had also to take place. And for all these to work, citizens had to be involved more in the commons. Far from only achieving socioeconomic sustainability, these reforms gave rise gradually to the demos that we meet in the golden age of Democracy. It is indeed interesting that Democracy, in its ideal type of the 5th century BC, finds its origin in the way in which a society responded to a major socioeconomic crisis, characterised by pervasive indebtedness and destabilising inequalities. Such a broader historical horizon may help us grasp better the problems, stakes and challenges of our times.
Topic:: Debt, Political Economy, History, Democracy, and Global Political Economy
Political Geography:: Greece and Global Focus

15. Non-Aligned Movement and Its Perspective in International Affairs

Author:: Farid Shafiyev
Publication Date:: 06-2020
Content Type:: Journal Article
Journal:: Caucasus Strategic Perspectives
Institution:: Center of Analysis of International Relations (AIR Center)
Abstract:: The current issue of the Caucasus Strategic Perspectives (CSP) journal entitled “Non-Aligned Movement and Its Perspective in International Affairs” is dedicated to the current dynamics of the NAM, precisely with focus on chairmanship of Azerbaijan within the Movement. The current authors of the CSP Journal analyzed the cooperation perspectives within NAM, and the relevance of NAM, as well as concept of non-alignment in the foreign policies of members states. While analyzing these topics, the authors also reflected their views on the challenges of these factors for the foreign policies of the NAM member states.
Topic:: Regional Cooperation, Global Political Economy, and Political Movements
Political Geography:: Eurasia, Caucasus, and Azerbaijan

16. One Nation, One Language? Domestic Language Diversity, Trade and Welfare

Author:: Tamara Gurevitch, Peter R. Herman, Farid Toubal, and Yoto V. Yotov
Publication Date:: 12-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Using new data on linguistic diversity across and within countries, we examine novel channels though which language affects trade patterns and economic welfare. We find that linguistic similarity within a country accounts for about 10 percent of estimated `home bias', demonstrating the importance of shared languages for domestic integration. To highlight the general equilibrium implications of domestic language proximity, we simulate the repeal of Quebec's Bill 101, which made French an official language in Canada and established fundamental language rights for Frenchspeakers. The analysis demonstrates that domestic language diversity has significant implications for Canada's welfare but also sizable economic consequences that stretch far beyond its borders.
Topic:: Economics, Global Political Economy, Economic Growth, Linguistics, and Trade
Political Geography:: Canada and Quebec

17. Coronavirus Crisis Accelerating Reconsideration of Supply Chains

Author:: Yoshiaki Takayama
Publication Date:: 05-2020
Content Type:: Commentary and Analysis
Institution:: Japan Institute Of International Affairs (JIIA)
Abstract:: Amid the COVID-19 pandemic, international interdependence is changing. The current international political situation, characterized by harsh power politics, and the current state of the international economy, in which states with different values are economically connected, are leading to reconsideration of international supply chains. Understanding international supply chains is extremely important in looking at the prospects for the global political economy. The purpose of this comment is to explore the trends and implications of reconsidering supply chains.
Topic:: Politics, Global Political Economy, COVID-19, and Supply Chains
Political Geography:: Global Focus

18. 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

19. The China Trade Challenge: Phase II

Author:: Committee for Economic Development of the Conference Board
Publication Date:: 07-2020
Content Type:: Special Report
Institution:: The Conference Board
Abstract:: China’s fast-paced economic rise and defiance of globally accepted market rules—along with the growing and yet unknown economic impact of the coronavirus (COVID-19)—are driving the next phase of US-China trade negations to the top of the nation’s post-election agenda. While the Phase I US-China trade deal has eased tension, it also set the stage for discussions on other important economic disputes, including forced technology transfer, cyber theft of intellectual property (IP), industrial policies, state subsidies, and new technology, according to a new Solutions Brief, The China Trade Challenge: Phase II, by the Committee for Economic Development of The Conference Board (CED).
Topic:: Bilateral Relations, Global Markets, Economy, Global Political Economy, and Trade
Political Geography:: China, Asia, North America, and United States of America

20. EU MONITOR: Has the time come for a Czech Regional Policy?

Author:: Vít Havelka
Publication Date:: 01-2020
Content Type:: Special Report
Institution:: Europeum Institute for European Policy
Abstract:: Over the past 5 years, the Czech Republic has experienced unprecedented GDP growth, moving the country from 83% of EU average GDP in 2013 to 91% of the EU average GDP in 2019. At the same time, the Czech wage increased by more than 7% in 2013 in the last three years. This phenomenon is addressed by our Vít Havelka in the latest issue of the EU Monitor. The following decade will likely be determining for the future success of the Czech Republic. The global economy and its supply chains are undergoing a significant shift; Asian states are slowly becoming innovative leaders rather than being a cheap labour pool. Furthermore, the Czech Republic is heavily dependent on the automotive industry3, which is under pressure not only by stricter emission regulation, but also disruptive market change such as autonomous systems, digitalization and electrification. It is likely that old market strategies will prove obsolete as it happened in case of cell phones. Along with the changing global economy, the Czech Republic is nearing to a point where it will not be fully able to rely on the EU Cohesion Policy anymore. The country has reached the threshold of 90% EU ́s average GDP, and if the current economic development remains the same, the Czech Republic will not have access to Cohesion Funds after the coming MFF, and it will receive significantly less money from the EU budget. The problem is that regional disparities within the Czech Republic remain high, especially between the capital city Prague and the rest of the country. Simultaneously, since the EU accession in 2004, the Czech Republic relied mainly on the EU Cohesion Policy in terms of providing funding for regions, supplementing the EU ́s activity only with minor national contributions. As a result, the country does not have a well-developed culture of regional policy that would be nationally funded, and there is not even a discussion in the media about national solidarity with disadvantaged regions. The following paper aims at discussing a possible way forward for the Czech Republic, especially in the context of expected changes in global economy and simultaneous decrease of EU Funding that could help mitigate the impact of economic disruptions. The focus will be laid on possible If the whole automotive left the Czech Republic, Deloitte estimates that the Czech GDP would decrease by 25% and 1,4 million Czechs would lose their reaction to lower income from the EU, as it is presumed that a solid regional policy is crucial in maintaining internal cohesion and contributes to mitigation of economic turbulences.
Topic:: European Union, GDP, Global Political Economy, and Economic Growth
Political Geography:: Europe and Czech Republic

21. Capital Flight from South Africa: A Case Study

Author:: Léonce Ndikumana, Karmen Naidoo, and Adam Aboobaker
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: This paper examines the mechanisms, actors, enablers, and the institutional environment that facilitate capital flight from South Africa and the resulting accumulation of private wealth in offshore financial centers. We estimate that from 1970 to 2017, South Africa lost over $300 billion through capital flight, including through overinvoicing of imports and underinvoicing of exports. Net trade misinvoicing amounted to $146 billion over the 1998-2017 period alone. Export underinvoicing appears to be especially rampant in the case of mineral resources such as gold, silver, platinum and diamonds. While capital flight is not a new phenomenon in South Africa, it has accelerated substantially over the past decades, a period marked by aggressive liberalization of the national economy and rapid integration into the global economy. Capital flight is a concern in a country such as South Africa that faces deep financing gaps, high multidimensional poverty, inequality and unemployment. An important challenge faced by South Africa in its quest to tackle capital flight and the associated problems such as tax evasion, base profit shifting, and money laundering is the threat of erosion of the public confidence in state institutions in light of the emerging phenomenon of state capture orchestrated by an intricate network of private ‘enablers’ with deep connections within the state and in the global economy. The adverse effects of capital flight on economic development, state institutions and governance call for urgent attention to prevent even more devastating consequences for the country’s political and social instability.
Topic:: Governance, Global Political Economy, Institutions, Capital Flight, Tax Evasion, Instability, and Money Laundering
Political Geography:: Africa and South Africa

22. India’s Great Slowdown: What Happened? What’s the Way Out?

Author:: Arvind Subramanian and Josh Felman
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: We examine the pattern of growth in the 2010s. Standard explanations cannot account for the long slowdown, followed by a sharp collapse. Our explanation stresses both structural and cyclical factors, with finance as the distinctive, common element. In the immediate aftermath of the Global Financial Crisis (GFC), two key drivers of growth decelerated. Export growth slowed sharply as world trade stagnated, while investment fell victim to a homegrown Balance Sheet crisis, which came in two waves. The first wave—the Twin Balance Sheet crisis, encompassing banks and infrastructure companies—arrived when the infrastructure projects started during India’s investment boom of the mid-2000s began to go sour. The economy nonetheless continued to grow, despite temporary, adverse demonetization and GST shocks, propelled first by income gains from the large fall in international oil prices, then by government spending and a non-bank financial company (NBFC)-led credit boom. This credit boom financed unsustainable real estate inventory accumulation, inflating a bubble that finally burst in 2019. Consequently, consumption too has now sputtered, causing growth to collapse. As a result, India is now facing a Four Balance Sheet challenge—the original two sectors, plus NBFCs and real estate companies—and is trapped in an adverse interest-growth dynamic, in which risk aversion is leading to high interest rates, depressing growth, and generating more risk aversion. Standard remedies are unavailable: monetary policy is stymied by a broken transmission mechanism; large fiscal stimulus will only push up already-high interest rates, worsening the growth dynamic. The traditional structural reform agenda—land and labour market measures—are important for the medium run but will not address the current problems. Addressing the Four Balance Sheet problem decisively will be critical to durably reviving growth. Raising agricultural productivity is also high priority. And even before that, a Data Big Bang is needed to restore trust and enable better policy design.
Topic:: International Trade and Finance, Economy, Global Political Economy, Economic Growth, and Global Financial Crisis
Political Geography:: South Asia and India

23. Collective Reputation in Trade: Evidence from the Chinese Dairy Industry

Author:: Jie Bai, Ludovica Gazze, and Yukun Wang
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: Collective reputation implies an important externality. Among firms trading internationally, quality shocks about one firm’s products could affect the demand of other firms from the same origin country. We study this issue in the context of a large-scale scandal that affected the Chinese dairy industry in 2008. Leveraging rich firm-product level administrative data and official quality inspection reports, we find that the export revenue of contaminated firms dropped by 84% after the scandal, relative to the national industrial trend, and the spillover effect on non-contaminated firms is measured at 64% of the direct effect. Notably, firms deemed innocent by government inspections did not fare any better than noninspected firms. These findings highlight the importance of collective reputation in international trade and the challenges governments might face in signaling quality and restoring trust. Finally, we investigate potential mechanisms that could mediate the strength of the reputation spillover. We find that the spillover effects are smaller in destinations where people have better information about parties involved in the scandal. New firms are more vulnerable to the collective reputation damage than established firms. Supply chain structure matters especially in settings where firms are less vertically integrated and exhibit fragmented upstream-downstream relationships.
Topic:: International Trade and Finance, Markets, Business, Global Political Economy, and Accountability
Political Geography:: China and Asia

24. Putting Global Governance in its Place

Author:: Dani Rodrik
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: In a world economy that is highly integrated, most policies produce effects across the border. This is often believed to be an argument for greater global governance, but the logic requires scrutiny. There remains strong revealed demand for policy and institutional diversity among nations, rooted in differences in historical, cultural, or development trajectories. The canonical case for global governance is based on two set of circumstances. The first occurs when there is global public good (GPG) and the second under “beggar-thy-neighbor” (BTN) policies. However, the world economy is not a global commons, and virtually no economic policy has the nature of a global public good (or bad). And while there are some important BTN policies, much of our current discussions deal with policies that are not true BTNs. The policy failures that exist arise not from weaknesses of global governance, but from distortions of domestic governance. As a general rule, these domestic failures cannot be fixed through international agreements or multilateral cooperation. The paper closes by discussing an alternative model of global governance called “democracy-enhancing global governance.”
Topic:: International Trade and Finance, Governance, Global Political Economy, and Trade Wars
Political Geography:: Global Focus and Global Markets

25. India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications

Author:: Arvind Subramanian
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: India changed its data sources and methodology for estimating real gross domestic product (GDP) for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth. Official estimates place annual average GDP growth between 2011-12 and 2016-17 at about 7 percent. We estimate that actual growth may have been about 4.5 percent with a 95 percent confidence interval of 3.5 - 5.5 percent. The evidence, based on disaggregated data from India and cross-sectional/panel regressions, is robust. Lending further credence to the evidence, part of the overestimation can be related to a key methodological change, which affected the measurement of the formal manufacturing sector. These findings alter our understanding of India’s growth performance after the Global Financial Crisis, from spectacular to solid. Two important policy implications follow: the entire national income accounts estimation should be revisited, harnessing new opportunities created by the Goods and Services Tax to significantly improve it; and restoring growth should be the urgent priority for the new government.
Topic:: GDP, Global Political Economy, Economic Growth, and Global Financial Crisis
Political Geography:: South Asia and India

26. How ETFs Amplify the Global Financial Cycle in Emerging Markets

Author:: Nathan Converse, Eduardo Levy Yeyati, and Tomas Williams
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: Since the early 2000s exchange-traded funds (ETFs) have grown to become an important in- vestment vehicle worldwide. In this paper, we study how their growth affects the sensitivity of international capital flows to the global financial cycle. We combine comprehensive fund- level data on investor flows with a novel identification strategy that controls for unobservable time-varying economic conditions at the investment destination. For dedicated emerging mar- ket funds, we find that the sensitivity of investor flows to global financial conditions for equity (bond) ETFs is 2.5 (2.25) times higher than for equity (bond) mutual funds. In turn, we show that in countries where ETFs hold a larger share of financial assets, total cross-border equity flows and prices are significantly more sensitive to global financial conditions. We conclude that the growing role of ETFs as a channel for international capital flows amplifies the global financial cycle in emerging markets.
Topic:: Emerging Markets, International Trade and Finance, Global Political Economy, Capital Flows, and Mutual Funds
Political Geography:: Global Focus and Global Markets

27. Who Wins in the World Economy and English Football?

Author:: Matt Andrews
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: Globalization has fed significant economic gains across the world. The gains lead some policymakers in developing countries to believe in the potential of ‘catch up’—where they leverage the gains of an open world economy to foster rapid progress and compete with more developed nations. This belief is particularly evident in countries like Rwanda, where policymakers aspire to turn the country into ‘Africa’s Singapore’. This paper asks if such aspiration is realistic: Do developing countries really gain enough from globalization to catch up to more developed countries? The paper examines the world economy as a league in which countries compete for winnings (manifest in higher income and production). Wealthier countries are in the top tiers of this league and poorer countries are in the lower tiers. The paper asks if gains from the last generation of growth have been distributed in such a way to foster ‘catch up’ by lower tier countries, and if we see these countries ‘catching up’ by moving into higher tiers. This analysis of the world economy is compared with a study of English football, where over 90 clubs play in an multi-tier league system. Prominent examples of ‘catch up’ in this system include Leicester City’s rise from the third tier in 2008 to become first tier champion in 2015. The paper asks if such ‘catch up’ is common in English football, given the way winnings are distributed, and if ‘catch up’ is more common in this context than in the world economy more generally.
Topic:: Globalization, Developing World, Global Political Economy, and Economic Growth
Political Geography:: Africa and Rwanda

28. The Global Impact of Brexit Uncertainty

Author:: Tarek A. Hassan, Laurence van Lent, Stephan Hollander, and Ahmed Tahoun
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the share of discussions in quarterly earnings conference calls on costs, benefits, and risks associated with the UK’s intention to leave the EU. Using this approach, we identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate the effects of these different kinds of Brexit exposure on firm-level outcomes. We find that concerns about Brexit-related uncertainty extend far beyond British or even European firms. US and international firms most exposed to Brexit uncertainty have lost a substantial fraction of their market value and have reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects of Brexit (the first moment), should it come to pass. Most prominently, firms expect difficulties resulting from regulatory divergence, reduced labor mobility, trade access, and the costs of adjusting their operations post-Brexit. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet had significant effects on firm actions.
Topic:: Economics, Political Economy, Regional Cooperation, Brexit, Global Political Economy, and Economic Policy
Political Geography:: Britain, United States, United Kingdom, Europe, and European Union

29. The Political Economy of Europe since 1945: A Kaleckian perspective

Author:: Joseph Halevi
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper analyzes the early stages of the formation of the Common Market. The period covered runs from the end of WW2 to 1959, which is the year in which the European Payments Union ceased to operate. The essay begins by highlighting the differences between the prewar political economy of Europe and the new dimensions and institutions brought in by the United States after 1945. It focuses on the marginalization of Britain and on the relaunching of French great power ambitions and how the latter determined, in a very problematical way, the European complexion of France. Because of France’s imperial aspirations, France, not West Germany, emerged as the politically crisis prone country of Europe acting as a factor of instability thereby jeopardizing the process of European integration, Among the large European nations, Germany and Italy appear, for opposite economic reasons, as the countries most focused on furthering integration. Germany expressed the strongest form of neomercantilism while Italy the weakest.
Topic:: Economics, Political Economy, Global Political Economy, World War II, and Common Market
Political Geography:: United States, Europe, Germany, and Global Focus

30. Technological Disruption in the Global Economy

Author:: Commission on Global Economic Transformation
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Technology has become the most powerful disruptive force in our economy. It bears on the future of work, competition, market power, and national security, and it binds the other major areas of our commission’s investigation: macroeconomics and finance, globalization, and climate change. In essence, technological progress propels global economic transformation. Our gathering on February 6, 2019 brought economists together with leading voices from academia, labor, private industry, and the nonprofit/NGO sector. We heard from industry leaders with deep roots and history in the Silicon Valley technology revolution, academics who have also spent time in the policy arena, and from individuals who are already considering new models and approaches to digital rights and the future of work. Our discussion was by no means exhaustive or conclusive, but we attempted to harness the group’s collective wisdom to address some of the most vexing questions of our day. This document is intended to inform our commissioners as they develop CGET’s final report and to share our timely conversation with policymakers and the general public. Fomenting multidisciplinary, critical discourse is one of the most important responsibilities of this initiative, and we sincerely thank the staff at the Institute for New Economic Thinking (INET), our dedicated commissioners, and our outside thought leaders for helping us to promote this dialogue.
Topic:: Economics, Science and Technology, Global Markets, Digital Economy, Global Political Economy, and Macroeconomics
Political Geography:: United States and Global Focus

31. Lost in Deflation: Why Italy’s woes are a warning to the whole Eurozone

Author:: Servaas Storm
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Using macroeconomic data for 1960-2018, this paper analyzes the origins of the crisis of the ‘post-Maastricht Treaty order of Italian capitalism’. After 1992, Italy did more than most other Eurozone members to satisfy EMU conditions in terms of self-imposed fiscal consolidation, structural reform and real wage restraint—and the country was undeniably successful in bringing down inflation, moderating wages, running primary fiscal surpluses, reducing unemployment and raising the profit share. But its adherence to the EMU rulebook asphyxiated Italy’s domestic demand and exports—and resulted not just in economic stagnation and a generalized productivity slowdown, but in relative and absolute decline in many major dimensions of economic activity. Italy’s chronic shortage of demand has clear sources: (a) perpetual fiscal austerity; (b) permanent real wage restraint; and (c) a lack of technological competitiveness which, in combination with an overvalued euro, weakens the ability of Italian firms to maintain their global market shares in the face of increasing competition of low-wage countries. These three causes lower capacity utilization, reduce firm profitability and hurt investment, innovation and diversification. The EMU rulebook thus locks the Italian economy into economic decline and impoverishment. The analysis points to the need to end austerity and devise public investment and industrial policies to improve Italy’s ‘technological competitiveness’ and stop the structural divergence between the Italian economy and France/Germany. The issue is not just to revive demand in the short run (which is easy), but to create a self-reinforcing process of investment-led and innovation-driven process of long-run growth (which is difficult).
Topic:: Economics, Capitalism, Global Political Economy, Macroeconomics, and Eurozone
Political Geography:: Europe and Italy

32. The Evolution and Current Status of De Facto Stare Decisis in International Trade and Investment Tribunals: How to Understand the Present by Looking into the Past

Author:: Chanya Punyakumpol
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Is there a doctrine of 'stare decisis' in international trade and international investment law? From a positive law perspective, the answer is a definite no. However, as many scholars have observed, in practice, there has been a strong level of deference from the Appellate Body to its previous rulings, but less so from investment tribunals. Using social network analysis to assess actual citations from the Appellate Body Reports and investment arbitrations from the inception to the current time, this paper examines the evolution and 'status quo' of citation networks in international trade and international investment arbitrations. It asks, not only whether there is a 'de facto' rule of precedent in the two regimes, but also when it occurs and how the development links with the institutional design of dispute settlement. The results show how the doctrine of 'stare decisis' diverges in international trade and international investment, as well as the importance of institutional design in shaping and constraining the behaviors of tribunals.
Topic:: Economics, Globalization, International Trade and Finance, Law, Finance, and Global Political Economy
Political Geography:: Global Focus

33. Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment

Author:: Ricardo Perez Truglia, Matias Giaccobasso, Guillermo Cruces, Rodrigo Ceni, and Marcelo Bergolo
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms react to audits in this way. We conducted a large-scale field experiment in collaboration with Uruguay’s tax authority to address this question. We sent letters to 20,440 small- and medium-sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process, based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds.
Topic:: Economics, Global Political Economy, Tax Systems, Economic Policy, and Macroeconomics
Political Geography:: United States, Argentina, and Global Focus

34. A World Dividing: The International Implications of the Sino-American Rift

Author:: Chas W. Freeman Jr.
Publication Date:: 11-2019
Content Type:: Policy Brief
Institution:: Quincy Institute for Responsible Statecraft
Abstract:: The Trump administration has declared economic war on China. The United States has raised taxes on Chinese imports to levels not seen since the Smoot–Hawley tariffs of the Great Depression. Over the course of this year, Chinese imports of American goods have decreased by 26.4 percent, while China’s exports to the United States are down 10.7 percent. Washington has embargoed exports to China of a constantly expanding list of high-tech manufactures. It seeks to block Chinese telecommunications companies from third-country markets. The United States has mounted a vigorous campaign to persuade other countries to reject Chinese investments in their infrastructure, notably in the case of 5G telecommunications networks.
Topic:: International Trade and Finance, Global Political Economy, Trade Wars, International Community, and Exports
Political Geography:: United States, China, Asia, and Global Focus

35. The Birth of the Modern Chinese Banking Industry: Ri Sheng Chang

Author:: Vivid Lam, Oenone Kubie, and Christopher McKenna
Publication Date:: 11-2019
Content Type:: Case Study
Institution:: Oxford Centre for Global History
Abstract:: Pingyao (平遥) is a remote place for a tourist attraction. Located in the centre of Shanxi province, it is some 380 miles from Beijing and further from Shanghai or Hong Kong where the tourists tend to congregate. Yet, despite the isolation, come they do to Pingyao. The nearest airport to Pingyao is in Tiayuan, over one hundred kilometres away, so most visitors arrive by coach or by train; along the poorly paved streets and past the decaying houses until they arrive in the middle of the city. Here the tourists disembark from their coaches and their trains and find themselves transported to the days of the Qing dynasty emperors, surrounded by imperial architecture. The tourists wander slowly towards West Street. This is the home of the most popular attraction: the headquarters of Ri Sheng Chang (日昇), a late Qing company which revolutionised Chinese banking, now a museum and an increasingly busy tourist attraction. This is the story of how it came to be and how the little city in a small province in China rose to prominence, became the financial centre of the world’s largest economy, fell to obscurity and, now, rises again.
Topic:: Development, International Trade and Finance, History, Capitalism, and Global Political Economy
Political Geography:: China and Asia

36. Counting the Cost of Financial Warfare: Recalibrating Sanctions Policy to Preserve U.S. Financial Hegemony

Author:: Enea Gjoza
Publication Date:: 11-2019
Content Type:: Policy Brief
Institution:: Defense Priorities
Abstract:: The American economy, dollar, and banking system create unparalleled power for the U.S. in the global financial system. This power provides disproportionate influence over the world’s key economic and financial institutions, regulatory authority over major foreign companies and banks, and allows borrowing on favorable terms and in dollars, enabling long-term deficit spending.
Topic:: Economics, International Trade and Finance, Hegemony, Sanctions, Finance, and Global Political Economy
Political Geography:: United States

37. Dealing with the Offshore Economy

Author:: Alan Riley
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Atlantic Council
Abstract:: Given that offshore tax havens are largely located in small, independent states or self-governing territories, it could be assumed that they have little connection to OECD states and major financial centers such as London and New York. This is not the case. The so-called tax havens are in fact part of a much larger network of financial and corporate services that depends on lawyers, accountants, and bankers located in major Western cities. Only one part of the havens’ business actually involves providing lower tax rates to individual foreign account holders
Topic:: International Affairs and Global Political Economy
Political Geography:: Global Focus

38. Learning from Success in Climate-Informed Decision-Making: Case Studies Across the Three Regions

Author:: Zena Grecni
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: East-West Center
Abstract:: A network of sustained assessment specialists created within the National Oceanic and Atmospheric Administration’s Regional Integrated Sciences and Assessments (NOAA RISA) program present five case studies of successful local responses to climate change that are supported by scientific information. Based in three regions—the U.S. Pacific Islands, the South Central United States, and the Rocky Mountain West—the case studies in this report feature local managers who are providing and applying climate information, with valuable outcomes, across a range of geographic scales and sectors. They include improving local climate-adaptation efforts in San Angelo, Texas, enhancing the resilience of iconic coastal ecosystems on Hawai‘i Island, managing water in the Colorado River Conservation District, increasing conservation resilience in the southern Great Plains, and using El Niño forecasts to plan for drought in the Pacific Islands. The case studies provide new insights, which are summarized as five practical lessons for anyone seeking to better integrate climate considerations into decision-making.
Topic:: Environment, International Affairs, and Global Political Economy
Political Geography:: Global Focus

39. Transatlantic Sanctions Policy : From the 1982 Soviet Gas Pipeline Episode to Today

Author:: Richard Nephew
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Center on Global Energy Policy (CGEP), Columbia University
Abstract:: Though many commentators have suggested that the Trump administration’s approach with respect to sanctions threats against Europe is “unprecedented,” the relative comity in US-European sanctions policymaking in recent years may be the aberration. The United States and Europe have often disagreed about whether, when, and how to impose sanctions against even common adversaries and in order to resolve mutually recognized problems. One of the most serious examples of this occurred in 1982 when the United States and its European allies broke sharply over the US decision to impose sanctions on the Soviet Union over the crackdown on the Solidarity Movement in Poland. The crisis that emerged tested the NATO Alliance, European governments, and the Reagan administration. This paper reviews the 1982 example and then sets some lessons from it against the current US-European relationship. It offers an assessment not only of the changing political, economic, and social factors that have contributed to greater compliance with US sanctions dictates on the part of Europe over the last few years, but also the relatively brittle nature of this cooperation. It underscores that, though the United States may be in a relatively predominant economic position at present, this situation may not and likely will not persist indefinitely. From this perspective, it concludes with three recommendations for how to modify current US sanctions practice in order to help manage partner concerns and avoid future crises. Adopting a process more akin to the Federal Register notice procedure for new sanctions programs. There is a yawning need for more consultation in advance of US sanctions decisions that could have major market moving and alliance shaking potential. It is not necessary, nor would it be prudent, to have a process that required public scrutiny of individual or entity asset freeze scenarios, but for other, more broad sanctions initiatives, it would help to avoid unintended consequences and ensure a more comprehensive debate. Exceptions could also be made to this rule in the event of a legitimate emergency. Establishing an independent commission to evaluate US sanctions policies and challenges. Congress should set up an independent, bipartisan commission to examine the issue of US sanctions policy now and for the next twenty-five years. Its assignment would be to evaluate how sanctions have been used in the recent past, the international operating environment for sanctions now, and the dimensions of the sanctions policy challenge in the future. Improving congressional oversight of the sanctions process. Congress should also require evaluation reports for individual sanctions regimes as a standard part of the executive branch’s use of the International Emergency Economic Powers Act (IEEPA). Of course, similar requirements ought to be considered a standard part of congressionally mandated sanctions as well.
Topic:: Foreign Policy, Sanctions, and Global Political Economy
Political Geography:: United States and Europe

40. China and economic sanctions: Where does Washington have leverage?

Author:: Richard Nephew
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Center on Global Energy Policy (CGEP), Columbia University
Abstract:: Though historically China has been a sanctions recipient, with only a few isolated incidents of using sanctions in return, this situation is likely going to change in the years to come. China’s global economic position — as well as its ambitions to serve as not only a global power, but also potentially the leading international power — will push it to consider means of exerting international leverage. The United States has shown vividly in the last 30 years that sanctions are one means to this end, and Chinese scholars are demonstrating increasing facility with sanctions doctrine. China’s increasing assertiveness in economic sanctions will allow it to not only hit back directly against the United States with retaliatory measures, but also to develop independent rationales to apply sanctions in pursuit of Chinese policy objectives. China may begin using sanctions as an affirmative instrument of policy. The United States is vulnerable to disruptions in U.S.-Chinese economic ties. The U.S. reliance on Chinese financing, especially for U.S. national debt, and Chinese economic growth in areas where the U.S. typically excels demonstrate China’s capacity to target the U.S. To combat this potential emerging threat, the United States should seek first to negotiate with China on ways to avoid conflict. But, given the likelihood of competition nonetheless, the United States should also add sanctions development to its crisis management process, and increase intelligence and analytical capabilities that focus directly on Chinese sanctions doctrine and practice.
Topic:: Diplomacy, Sanctions, and Global Political Economy
Political Geography:: United States, China, Asia, and North America

41. In Dire Straits? Implications of US-Iran Tensions for the Global Oil Market

Author:: Ilan Goldenberg, Jessica Schwed, and Kaleigh Thomas
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Center on Global Energy Policy (CGEP), Columbia University
Abstract:: In recent months, Iran has responded to rising tensions with the United States—particularly the US launch of the “maximum pressure” campaign against Iran—by attacking oil tankers and infrastructure in the Persian Gulf region around the Strait of Hormuz (the Strait). These actions have been designed to signal to the United States, the Gulf states, and the international community that the American strategy of strangling Iran economically will not be cost-free, and to Saudi Arabia in particular that it is highly vulnerable to Iranian retaliation. As the Strait of Hormuz is one of the world’s most critical energy chokepoints, the implications of Iran’s efforts merit close scrutiny and analysis. This study was designed to examine three scenarios for military conflict between Iran and the United States and assess the potential impacts on global oil prices—as one specific representation of the immediate economic impact of conflict—as well as broader strategic implications. The three scenarios are: Increasing US-Iran tensions that ultimately lead to a new “Tanker War” scenario similar to the conflict of the 1980s, in which Iran attacks potentially hundreds of ships in the Persian Gulf and Gulf of Oman over a prolonged period while also launching missiles at Gulf oil infrastructure. An escalation of tensions between Iran and the United States in which Iran significantly increases the scope and severity of missile attacks directed at major oil and energy infrastructure in Saudi Arabia and the UAE. A major conflict between Iran and the United States that includes damage to Gulf oil infrastructure and a temporary closure of the Strait of Hormuz. Its main conclusions are: The risk of a major military confrontation between the United States and Iran has increased in recent months but still remains relatively low, as neither the United States nor Iran wants war. That said, the September 14, 2019, attack on the Abqaiq and Khurais facilities was a strategic game changer and shows that the biggest risk is a prolonged, low-intensity military conflict. The fact that Iran was willing to conduct such an attack was a surprise to most analysts and to the US government and its Gulf partners. The level of accuracy it showed in the strike demonstrated a technical proficiency the US government and outside analysts did not believe Iran had. In the more moderate and likely conflict scenarios, increasing tensions between the United States and Iran are unlikely to dramatically affect global oil prices. The most profound costs in the more likely scenarios are not energy-related but security-related. Even in the less escalatory scenarios, the United States would be forced into long-term deployments of a large number of air and naval assets that would need to remain in the Middle East for years at a cost of billions of dollars. Such deployments would take away resources that would otherwise be dedicated to managing great power competition with China and Russia. In the more extreme conflict scenarios, major loss of life and an even bigger and longer-term American military deployment would be expected. In the lower likelihood scenario of a major military confrontation between the United States and Iran, global oil prices would be dramatically affected, though price impacts would not be prolonged. All assumptions about the potential impacts on oil prices are based on the supposition that the United States protects global shipping lanes, but that theory deserves further scrutiny. For more than a generation, the United States has viewed securing global shipping lanes that are critical for commerce and energy as a core vital interest. But given the isolationist tendencies in the United States and President Donald Trump’s attitude that America should stop underwriting the defense of its allies, it is conceivable he may choose not to respond in the types of scenarios described in this paper or demand that countries most dependent on oil trade from the Gulf—most notably China—step up instead. Another wild card for oil prices in a major crisis scenario would be President Trump’s unpredictable policies regarding the Strategic Petroleum Reserve. Typically, an administration would be expected to coordinate an international response with the International Energy Agency (IEA) to release the SPR of a number of countries, but this cannot be assumed in the current administration. Though these conclusions are to some extent comforting, the authors acknowledge that a key issue with any analysis of this situation is the unpredictability of the United States. In the present moment, neither US adversaries nor partners know quite what to expect—and, for that matter, neither does the US government or its observers.
Topic:: Foreign Policy, Energy Policy, Oil, and Global Political Economy
Political Geography:: United States, China, Iran, Middle East, and Asia

42. Emerging Countries in Global Financial Standard Setting: Explaining Relative Resilience and Its Implications

Author:: Andrew Walter
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: This special report explores the role of emerging-country members in the Basel process, a key aspect of global financial standard setting. It argues that this process has been significantly more politically resilient than adjacent aspects of global economic governance, in part because major emerging countries have perceived continuing “intra-club” benefits from participation within it. Most important among these are learning benefits for key actors within these countries, including incumbent political leaders. Although some emerging countries perceive growing influence over the international financial standard-setting process, many implicitly accept limited influence in return for learning benefits, which are valuable because of the complexity of contemporary financial systems and the sustained policy challenges it creates for advanced and emerging countries alike. The importance of learning benefits also differentiates the Basel process from other international economic organizations in which agenda control and influence over outcomes are more important for emerging-country governments. This helps to explain the relative resilience of the Basel process in the context of continued influence asymmetries and the wider fragmentation of global economic governance. The report also considers some reforms that could further improve the position of emerging countries in the process and bolster its perceived legitimacy among them.
Topic:: International Trade and Finance, Financial Markets, Global Political Economy, and Emerging States
Political Geography:: Africa, Europe, Asia, South America, Australia, North America, and Global Focus

43. Survival of the International Monetary Fund and Global Economic Cooperation

Author:: Edwin M. Truman
Publication Date:: 04-2019
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The International Monetary Fund (IMF)—a quota-based institution—faces a test of its survival as the linchpin of the global financial safety net. Its roughly $1.4 trillion in total financial resources is scheduled to begin to shrink in 2020. In 2015, IMF members committed to strengthening IMF financial resources in the 15th General Review of Quotas, which will end in December 2019. Over the past 25 years, the United States has led the way for a gradual redistribution of IMF quota shares toward faster-growing emerging-market and developing countries. Any significant redistribution of quota shares requires an increase in total quotas. Because of its share of votes in the IMF, the United States must agree to any change in quotas. The Trump administration, however, has signaled that it favors no such change. If the United States does not reverse its stance, IMF members will lose an opportunity to strengthen the institution at a time of global financial uncertainty. Truman says the United States could still change its position and recommends how other member countries should press it to do so.
Topic:: International Trade and Finance, Politics, International Monetary Fund, Global Political Economy, Donald Trump, and Economic Cooperation
Political Geography:: North America, Global Focus, and United States of America

44. The Aid Effectiveness Agenda: Past experiences and future prospects

Author:: Erik Lundsgaarde and Lars Engberg-Pedersen
Publication Date:: 06-2019
Content Type:: Special Report
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: The 2005 Paris Declaration on Aid Effectiveness provided an important framework for encouraging donor and partner countries to adapt aid management practices to make development cooperation more effective. The agenda it advanced has since lost visibility, even among aid providers that were once its strongest advocates. This DIIS report, written by Senior Researcher Erik Lundsgaarde and Senior Researcher Lars Engberg-Pedersen, indicates that there are several explanations for the declining attention to Paris Declaration principles. Implementation of the agenda was challenging from the outset due to different starting points among countries, the tension between a universal approach and the need to adapt cooperation approaches to varied contexts, and the tradeoffs involved in implementing prescriptions such as increasing partner ownership, strengthening donor coordination, and improving results management. In spite of these challenges, the authors argue that core ideas from the Paris Declaration remain valid today. In particular, the importance of fostering partner ownership and measuring results has not faded. Improving the consistency of how donors pursue these objectives in practice is essential in carrying lessons from decades of development cooperation experience forward.
Topic:: Development, Diplomacy, Environment, International Organization, Treaties and Agreements, Natural Resources, and Global Political Economy
Political Geography:: Global Focus

45. Denmark's China Challenge

Author:: Luke Patey
Publication Date:: 10-2019
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: A common refrain in Denmark is that China is too far away to be a threat to Danish economic, foreign and security policy interests. This is no longer the case. Danish policy-makers acknowledge that China’s rise as a global superpower presents Denmark with new challenges. However, transforming this strategic thinking into practice is no simple task. Recommendations Intensify cooperation between the Ministries of Defense and Foreign Affairs to ensure Denmark’s initiatives in foreign policy, security and economic relations with China are more closely integrated. Beware of the bilateral. Beijing’s new assertive foreign policy and US-China strategic competition require that Denmark leverage its interests increasingly through the EU, NATO and other multilateral bodies. Assess the economic vulnerabilities of Danish industries in China and diversify trade and investment across Asia’s emerging markets and developed economies in the G7/EU.
Topic:: Security, Foreign Policy, Defense Policy, Power Politics, Bilateral Relations, Cybersecurity, and Global Political Economy
Political Geography:: China, Europe, Asia, and Denmark

46. EU Pressure on Niger to Stop Migrants is Reshaping Cross-Border Economies: From migrants to drugs, gold, and rare animals

Author:: Hans Lucht and Luca Raineri
Publication Date:: 12-2019
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: Though the four-by-fours with migrants still leave regularly for Libya, there’s little doubt that EU driven anti-migration efforts in the Agadez region of Niger has been a blow to the local cross-border economy. POLICY RECOMMENDATIONS ■ EU interventions in Niger have had an unintended negative effect on the safety of migrants. It’s therefore important to maintain focus on rescue missions in the desert. ■ Europe must ensure that conflict and context sensitivity remain paramount as well as promoting alternative development opportunities and good governance. ■ National, local and traditional authorities should continue to avoid conflicts linked to natural resources, including gold, uranium, pasturelands and water, by promoting transparency and participatory decision-making.
Topic:: International Relations, Development, Migration, Poverty, Border Control, European Union, Inequality, Fragile States, and Global Political Economy
Political Geography:: Africa, Libya, North Africa, and Niger

47. Changing Perspectives in Political Economy

Author:: Renate Mayntz
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: The history of a research field called political economy dates back to the eighteenth century, giving rise to a variety of disciplinary approaches, and experienced a renaissance as a mul- tidisciplinary field after the Second World War, combining economic, political science, and sociological approaches. The divergence between economic globalization and the nation- ally restricted scope of economic policy directs interest to the relationship between politics and the economy. A quantitative analysis of the articles published in two dedicated political economy journals shows major trends of the developing research field. The relationship between politics and economy is interpreted rather widely, and research is largely focused on Western capitalist nations. In conclusion, two avenues for further research in the field are briefly discussed.
Topic:: Political Economy, Regional Cooperation, Capitalism, and Global Political Economy
Political Geography:: Europe, Germany, Central Europe, and Western Europe

48. A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens

Author:: Sébastien Laffitte and Farid Toubal
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Using public macro-level data on activities of multinationals, we document that U.S. firms geographically disconnect sales and production to avoid paying corporate taxes. We revisit both theoretically and empirically the location determinants of foreign platforms and show that market access motives are far less relevant when considering tax havens. We characterize these countries and shed light on the attractiveness of different tax havens for specific sectors of activity. Our quantification shows that profit shifting by foreign sales platforms in tax havens amounts to about $80bn in 2013. Our findings contribute to the recent policy debate on the reform of international taxation.
Topic:: Economics, International Political Economy, Global Political Economy, Multinational Corporations, Tax Systems, and Corporate Tax
Political Geography:: United States

49. Busier than Ever? A Data-Driven Assessment and Forecast of WTO Caseload

Author:: Joost Pauwelyn and Weiwei Zhangb
Publication Date:: 04-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Conventional wisdom has it that, in recent years, the legalized mechanism of dispute settlement before the World Trade Organization (WTO) has been “busier than ever”, “a victim of its own success”. This paper uses count data to assess the WTO’s current caseload and examines how it has evolved since the WTO’s creation in 1995. We also forecast panel and Appellate Body (AB) caseload ten years from now using different scenarios. WTO dispute settlement does, indeed, currently experience a peak in terms of the total number of cases pending before panels and the AB (as of 30 April 2018, respectively, 18 and 8). However, this is not due to an increase in new cases filed (new consultation requests markedly reduced, from a high of 50 in 1997 to “only” 17 in 2017), but rather because pending cases take much longer to conclude as they have become more complex and are often delayed for lack of human resources. In addition, fewer cases filed get formally settled (from 20% in the first five years of the WTO to almost zero after 2014), appeal rates remain very high (on average 68%), and the share of follow-up disputes over compliance (DSU Art. 21.5) has markedly increased, all three factors leading to more (pending) caseload without actually more (new) cases filed, or more panel or AB reports issued (the number of reports produced per year has actually gone down, dropping from a peak of 26 panel reports and 13 AB reports in 2000, to “only” 13 panel reports and 6 Appellate Body reports in 2017).
Topic:: Economics, International Trade and Finance, World Trade Organization, and Global Political Economy
Political Geography:: Switzerland and Global Focus

50. Customs unions in international law: from concept to practice

Author:: Michal Ovádek and Ines Willemynsa
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Relative to the study of free trade agreements, customs unions (CUs) have been neglected in international law scholarship, despite the fact that by no means do they constitute a recent phenomenon. The present article aims to fill this gap by conducting a scoping analysis of the concept of customs union and identifying key issues in CU designs. The article problematizes what is understood by the concept of CU and what is entailed by the foremost definition of CUs, found in Article XXIV of the General Agreement on Tariffs and Trade (GATT). It further investigates how recurrent design issues are resolved in practice by different CUs considering the inherent tension between the enactment of common rules and institutions and state sovereignty. We find variety in the historical, economic and legal conceptualizations of CUs, flexibility and lacunas in Article XXIV GATT, and diversity of CU designs along with a discernible concern for the legal arrangements’ impact on state sovereignty.
Topic:: Economics, International Trade and Finance, Global Political Economy, and Unions
Political Geography:: Global Focus

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COLUMBIA UNIVERSITY PRESS