Brooks: Interdependent and Domestic Foundations of Policy Change

Brooks, Sarah M. (2005). "Interdependent and Domestic Foundations of Policy Change: The Diffusion of Pension Privatization Around the World". International Studies Quarterly, 49(2), 273-294. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=16719702&site=ehost-live

This article examines the diffusion of pension privatization programs globally. It initially explains why there was such a need for pension reform: increased life expectancy and decreased birth rates have produced a strain on the funding mechanisms that worked historically. Brooks claims that the long-term effects of pension privatization were not known and wonders why policy measures were taken to liberalize pensions in the face of this insecurity (274).

She deploys a statistical method of 59 countries to examine how policy diffusion took place.

Brooks explores some explanations of policy diffusion: globalization requires that countries become more attractive to capital. Also, some argue that IOs have a unique, independent influence on this situation. This can take place either through hard power or soft power. These “downward” pressures on countries may not go very far in explaining why they make neoliberal reforms. The answer may lie in horizontal pressures.

An empirical model is then deployed to examine where the greater driver lies. Her dependent variable is the, “…adoption of some degree of private structural reform to a mandatory national old age pension system,” and is measured as a binary (284).

Her results, “…reveals a significant interdependent logic shaping the decision to privatize national pension systems, while also confirming the importance of domestic political and economic correlates of this deep institutional change” (285). “Peer dynamics thus powerfully shape the risk of privatization among nations in EECA and Latin America, increasing dramatically the risk of adoption as more peers turn to market-orientated pension reforms” (286). Demographics and domestic political institutions are significant while IFI influence is not. “Overall, the empirical model provides evidence of a forceful interdependent logic of domestic policy-making decisions” (289).

Swank: Tax Policy in an Era of Internationalization

Swank, Duane. (2006). "Tax Policy in an Era of Internationalization: Explaining the Spread of Neoliberalism". International Organization, 60(04), 847-882.

This article examines the spread of neo-liberal tax policies throughout the world. “My central argument is that the highly visible 1980s market-conforming tax reform in the United States should be especially important in shaping subsequent tax policies in other polities” (847). “Specifically, I argue that (asymmetric) competition for mobile assets associated with US reforms significantly influences national policy choices in other polities” (848). However, this is mitigated by domestic constraints (cost of implementation verses benefit).

Swank then examines other possible causes of the diffusion of tax policy in many countries. He looks at coercion, emulation, learning, competition and the domestic constraints that mitigate these decisions. He argues that there are different kinds of competition that can take place, and that the diffusion of tax policy can be attributed to asymmetrical competition: the US decreased the tax burden on capital and placed it on labor and other countries had to follow suit in order to remain attractive to the needs of capital.

He also identifies an ideational shift that may help the spread of tax policies. “…a shift to the right at the mass and elite level should significantly increase3 the weight assigned potential benefits and diminish the costs associated with adoption of the US model” (857).

“On the question of diffusion, substantial theory, an abundance of qualitative evidence about the perceptions of national policymakers, and the results presented above indicate that competitive pressures under girded the diffusion of US reforms” (873).

Of interest: "While there is little question that tax poilcy has experienced structural change...the substantial capacity of governments to fund social protection and public goods provision in the capitalist democracies has not been diminished appraciably by the US-driven diffusion of neoliberalism" (876).

Benavot et. al.: Knowledge for the Masses

Benavot, Aaron, Cha, Yun-Kyung, Kamens, David, Meyer, John W., & Wong, Suk-Ying. (1991). "Knowledge for the Masses: World Models and National Curricula, 1920-1986". American Sociological Review, 56(1), 85-100. http://links.jstor.org/sici?sici=0003-1224%28199102%2956%3A1%3C85%3AKFTMWM%3E2.0.CO%3B2-I

This article examines how much of the primary school curriculum has become standardized from a sociological perspective. Old perspectives on this issue constructed the formation of school curriculum as the result of either the, “…functional requirements of society”, or, “…as a reflection of existing power relations in society” (86). This would skew the result more heavily towards a nationally patterned set of distinct curricula.

However, these authors posit that the rise of the standardization of national curricula can be seen a corollary of the rise of, “standardized models of society” (86). This can be seen as an emerging world cultural set of values and structures. “…the same world-wide processes that were involved in the spread of primary education may also have generated similarity in its content” (86).

The authors put forth a number of hypotheses. Increased social development would relate to increased standardization in curriculum as well as more focus on math, natural science and social science. Increasing development would also be seen through an increasing focus on “modern values”.

They deploy a statistical method for exploring these hypotheses. They find that there is a “world-wide trend” that moves countries towards standardization of curriculum. “This striking worldwide trend toward a more integrated notion of society could have a functionalist interpretation, e.g., greater public involvement in and control over social life produced a stronger conception of society as a ‘social system’” (92). Other statistical finding support the view that the standardization process was formed mostly not by national processes but by global processes.

Conclusion: “Functionalist theory suggests that national curricula vary by level of socioeconomic development, increasingly incorporate modern subject matter, and are slow to change” (96). What are the deeper drivers of this standardization? “We have no information on the processes by which this curricular standardization is achieved” (97). “The real surprise of our findings lies not in the unimportance of local influences, but in the relative unimportance of national influences on curricular structure” (98).

Stone: Lending Credibility

Stone, Randall W. (2002). Lending credibility : the International Monetary Fund and the post-communist transition. Princeton, N.J.: Princeton University Press.

Dependent variable: the effect of the institution to elicit control over a recipient country.

The question is whether or not international institutions have the ability to exert control over independent, sovereign countries. Other IR perspectives are concerned whether or not domestic interest groups and issues of distribution will blunt the influence of international institutions. Stone believes that both of these perspectives are partially correct (2).

He then embarks on a project of examining the counterfactual of whether or not IMF policies have had an independent effect on changing the policies of recipient countries. Firstly, he defines the, "effects that IMF intervention is expected to have" (3). Secondly, he advances a statistical methodology to examine to what degree IMF interventions effect policy change. He finds that, if the IMF can not show that they will be able to enforce policy, these policies will not be followed. Thirdly, he attempts to examine his statistical conclusions by looking at case-studies in Eastern Europe in details.

Stone then claims that inflation and GDP growth rates are highly correlated. "The significance of these results is that countries with higher inflation grew more slowly, or declined more rapidly, and attracted less foreign direct investment. Furthermore, it was the poor rather than the relatively wealthy who suffered most from inflation: high inflation caused income inequality to increased" and, "Taming inflation was the most urgent task facing post-Communist countries, because high levels of inflation threatened to derail all other aspects of their reform programs" (7).

Inflation is especially important for Post-Communist countries for the following reasons: inflation, "warps the incentives of firms, preventing industrial restructuring"; "inflation undermines the confidence of international investors"; and; "high inflation leads to a skewed distribution of wealth" (8-9).

"Inflation does not arise primarily because someone benefits from inflation per se; it arises primarily because politicians find it difficult to resist the short-term temptations that lead to inflation" (10). "In principle…the IMF can substitute for entrenched domestic institutions by monitoring compliance with stabilization programs and offering rewards and punishments that tip the balance of incentives in favor of the full-commitment equilibrium" (11). "Under favorable circumstances, a virtuous circle can arise, in which IMF intervention, government policies, and international investment reinforce one another" (11). "The picture becomes somewhat more complex, however, when we consider that the IMF's own credibility is in question" (11). "The conclusions show that the IMF's credibility problem is indeed severe, and consequently the organization's effectiveness is compromised in some of the most important countries. At the same time, this study finds ample evidence that the IMF has exerted significant influence over the economic policies of Post-Communist countries" (12).

Countries that are more interesting to global hegemonic interests can not be expected to be controlled by the conditionality constraints of IMF policies. This is so because they can not be expected to control for inflationary policies when the IMF is a political institution that is controlled by hegemonic institutions. For example, if the US has a direct interest in the Ukraine, it will be less interested in rigorously enforcing issues of conditionality. The argument is that the Ukraine knows that this is the case and will respond in accord.

The credibility of the IMF conditionality is at stake. Stone promotes an agenda that argues that, if IMF conditionality is seen as being credible, i.e., if the sticks are seen as being real and painful, countries will listen to conditionality. However, if the countries do not believe that the conditionality is going to be enforced, they will evade making painful policy changes. Another aspect of his account is that, if a country is sufficiently interesting to global hegemon power and influence, they will also be increasingly able to evade

The remainder of the book is full of case-studies, of which I will not detail here, though they are quite informative.

Goldstein, et. al.: Intstitutions in International Relations

Goldstein, Judith L., Rivers, Douglas, & Tomz, Michael. (2007). Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade (Vol. 61, 37-67): Cambridge Journals Online.

This article attempts to right a wrong. The wrong is the absences of a statistical link between membership in an international institution like the GATT and a decreased level of tariffs. See Milner 2005 and Rose 2004.

Goldstein et. al. deploy a statistical method that attempts to show that, while there is not a direct correlation between GATT membership and decreased trade tariffs, there is an important statistical connection if you broaden the circle of GATT members to measure the degree to which countries are embedded in the international system through agreements, etc.

The authors accomplish this by looking at two factors: institutional standing and institutional embeddedness (38). Standing is seen as being distinct from formal group membership, as some international agreements, “give rights and obligations not only to formal members, but also to territories and groups that never signed the agreement” (39). Goldstein et. al. also looks at member nations who are in negotiation with different international agreements, but who have not accented to full membership. “In summary, these nonmember participants received the core rights of the GATT/WTO, that is, access to other markets on MFN terms, and they reciprocated that right to other members of the organization” (42).

They then use a statistical method that standardized their country data using the gravity model of trade. Their results show that other examinations of this problem were too myopically focused on official, formal GATT/WTO membership while ignoring other variables that would affect country participation. When those additional variables are considered, statistical models will show a causal connection.

The table that sums up the whole project in a 3x3 format is Table 3. This shows the trade interaction between three groups of countries: formal member nations, nonmember participant nations, and non-participant nations. It shows a reduction in trade as the relationships move further away from the trade interactions of formal members and nonmember participants, dropping off whenever there is a trade interaction with non-participants. A table of countries and whether or not their participation is not included with the study, which would be helpful. An additional interesting table is Table 4, which shows the decreasing efficacy of subsequent trade negotiations in increasing trade.

Milner and Kubota: Why the Move to Free Trade?

Milner, HV, and K Kubota. 2005. Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries. International Organization 59, no. 01: 107-143.  

This article traces two global trends that emerged out of the 1970’s and attempts to casually link them using statistical methods. The first trend that is highlighted is the increase in democracy. The second trend that she highlights is the global reduction in tariffs. Her dependent variable is the later, and independent the former.

She initially looks at alternative explanations for changing economic policies. Some focus on economic crises. Others talk about external, ideational pressure emanating from hegemonic forces. Finally, and oddly multicolliniar with her second example, some examine the rise of neoliberal policies as being a force that contributes to decreases in tariffs. She rejects these as being sufficient to explain the global decrease in trade tariffs. For her, this change is accounted for by the increase in global democracy.

Firstly, she makes a causal claim about her variables and tries to construct a qualitative argument for why they are connected. She claims that democracies are better than autocracies at freeing governance from selective interest groups (113). She also claims that the “selectorate”, the group of people that legitimize and support the rule of a politician, changes sufficiently in a democracy. The selectorate in a democracy will be interested in more free trade because this will benefit the whole population. In an autocratic regime, the selectorate will be a small interest group and they will be more interested in promoting protectionist measures (115-7).

“Democratization will thus enfranchise a new group of voters with preferences for lower levels of protectionism” (116).

“In sum, in developing countries where autocratic governments depend on support from a small selectorate and thus are not responsive to the overall population, the governments can employ extensive protectionism. Democratization, however, may break down the old coalition supporting protectionism, and can thus lead to change in the status quo” (117).

She goes on to deploy a (relatively) large-n study of 179 countries, Polity IV democracy numbers and relatively weak tariff numbers (by her own omission – p. 122). She finds, through OLS analysis, that there is a correlation between levels of democratization and decreased tariffs. This, she concludes, links up with her qualitative account of how democracy causes reductions in tariffs.

A critique of this paper could go something like this: the causation that she highlights is not very strong, though it clearly does exist. However, this weak causation does not at all mean that her qualitative story is legitimate. The drivers of the linkage between democracy and reduced tariffs could be one of many things, and this research project does little to promote a humble approach to understanding why a slight quantitative correlation may be present.

It is really interesting that there is some correlation between her independent and dependent variables. However, her case is weakly made and her qualitative story is full of holes.