Knill, C. 2005. Introduction: Cross-national policy convergence: concepts, approaches and explanatory factors. Journal of European Public Policy 12, no. 5: 764-774.
"While there is a broad consensus on the definition of convergence as 'the tendency of societies to grow more alike, to develop similarities in structures, processes, and performance' (Kerr 1983: 3), the empirical and theoretical assessment of policy convergence is generally hampered by the use of different, partially overlapping concepts (Tews 2002). Policy convergence is equated with related notions, such as isomorphism, policy transfer or policy diffusion. This terminological variety often coincides with analytical confusion" (3).
The author highlights two concepts, those of policy transfer and policy diffusion. Both of these focus on process and are less concerned with outcome, thus making analysis and conclusion partially complex. On page 5 there is an overview of different kinds of policy convergence.
Saturday, March 21, 2009
Ruggie: At Home Abroad, Abroad at Home
Ruggie, JG. 1995. At home abroad, abroad at home: international liberalisation and domestic stability in the new world economy. Millenium: Journal of International Studies 24, no. 3: 507.
Ruggie presents a brief argument about how Carr and Polanyi, though being polar opposite in much of their thought, agreed about the effect of self-regulating market solutions post WWII. This was termed by Ruggie to be the embedded liberal compromise, where states would protect their domestic policies from external shocks from the market, but would also pursue broadly liberal policies internationally. The success of this system, which promoted fixed exchange rates and autonomous monetary policy, eventually led to the rise of the movement of capital and floating exchange rates.
"In this article, I develop a provisional schematic formulation of this new world economy's key institutional features and consequences. I focus on three sets of issues in particular: the growing role of domestic domains as issues over contention in international economic policy; the denationalization of control over significant decisions regarding production, exchange, and employment; and the growing difficulty experienced by governments in living up to their part of the domestic social compact on which post-war liberalization has hinged" (508).
The Financial Times and the Economist both wrote in late 1990s about how, even while we were experiencing the most robust of capitalist situations, that the reality of welfare capitalism was still quite clear: "These two British publications are among the most irrepressible and articulate advocates anywhere of free markets and free trade. What, then, possessed them to worry about the economic security of workers and sustaining welfare capitalism, and, even more curiously, to suggest that governments have a role to play in achieving those objectives? The answer is surprisingly simple. Both realize that the extraordinary success of post-war international l liberalization has hinged on a domestic social compact between state and society. Both see that this social compact is everywhere fraying; and both fear that if it unravels altogether, so will international liberalization" (523).
"The new world economy that has emerged over the past few decades poses significant challenges to governments because it is disembedded in several key dimensions. The first is in its policy templates: the mental maps of spaces and structures within which policy-makers visualize the basic contours of their world...The second, related source of disembeddedness is the world of policy-making itself. International as well as domestic economic policy targets are increasingly elusive because instrumentalities are no longer as effective. This loss of efficacy, in turn, reflects the fact that the theoretical, conceptual, and statistical bases of policy too often still reflect previous policy templates and the cause-effect relations that pertained in that earlier world. Last, the new world economy is increasingly disembedded from the domestic social compact between state and society on which the political viability of the post-war international economic order has hinged. Policy attitudes towards the new world economy have shifted in the direction of neoliberalism to an extent that is beginning to be of concern even to staunch guardians of market orthodoxies in the leading financial journals of Britain and the United States" (525).
"Constructing a contemporary analogue to the embedded liberalism compromise will be a Herculean task" (525).
Ruggie presents a brief argument about how Carr and Polanyi, though being polar opposite in much of their thought, agreed about the effect of self-regulating market solutions post WWII. This was termed by Ruggie to be the embedded liberal compromise, where states would protect their domestic policies from external shocks from the market, but would also pursue broadly liberal policies internationally. The success of this system, which promoted fixed exchange rates and autonomous monetary policy, eventually led to the rise of the movement of capital and floating exchange rates.
"In this article, I develop a provisional schematic formulation of this new world economy's key institutional features and consequences. I focus on three sets of issues in particular: the growing role of domestic domains as issues over contention in international economic policy; the denationalization of control over significant decisions regarding production, exchange, and employment; and the growing difficulty experienced by governments in living up to their part of the domestic social compact on which post-war liberalization has hinged" (508).
The Financial Times and the Economist both wrote in late 1990s about how, even while we were experiencing the most robust of capitalist situations, that the reality of welfare capitalism was still quite clear: "These two British publications are among the most irrepressible and articulate advocates anywhere of free markets and free trade. What, then, possessed them to worry about the economic security of workers and sustaining welfare capitalism, and, even more curiously, to suggest that governments have a role to play in achieving those objectives? The answer is surprisingly simple. Both realize that the extraordinary success of post-war international l liberalization has hinged on a domestic social compact between state and society. Both see that this social compact is everywhere fraying; and both fear that if it unravels altogether, so will international liberalization" (523).
"The new world economy that has emerged over the past few decades poses significant challenges to governments because it is disembedded in several key dimensions. The first is in its policy templates: the mental maps of spaces and structures within which policy-makers visualize the basic contours of their world...The second, related source of disembeddedness is the world of policy-making itself. International as well as domestic economic policy targets are increasingly elusive because instrumentalities are no longer as effective. This loss of efficacy, in turn, reflects the fact that the theoretical, conceptual, and statistical bases of policy too often still reflect previous policy templates and the cause-effect relations that pertained in that earlier world. Last, the new world economy is increasingly disembedded from the domestic social compact between state and society on which the political viability of the post-war international economic order has hinged. Policy attitudes towards the new world economy have shifted in the direction of neoliberalism to an extent that is beginning to be of concern even to staunch guardians of market orthodoxies in the leading financial journals of Britain and the United States" (525).
"Constructing a contemporary analogue to the embedded liberalism compromise will be a Herculean task" (525).
Friday, March 20, 2009
Cao: Convergence, Divergence, and Networks in the Age of Globalization
Cao, X. 2006. Convergence, Divergence, and Networks in the Age of Globalization: A Social Network Analysis Approach to IPE.
"Convergence denotes a process wherein distinctive domestic institutions and economic policies fade away over time, giving away to common economic structures whose efficiency and universality produce super strength in the market...Divergence, on the other hand, refers to persistent and maybe increasing diversity of national policies and institutions among which the efficiency-mandated minimalism is only one of the many varieties" (1).
"Empirical studies following this fashion unsuprisingly leave us with confusion by revealing a mixed picture of convergence-divergence caused by economic forces of globalization...We still have to ask why and how convergence has happened in some countries, in some policy areas (but to different extents), but not others?" (2).
The author explores the convergence-divergence debate by exploring the relationship different countries have with regard to the international system; how are different countries engaged with the global system?
"The empirical findings indicate that proximity in IGO [inter-governmental organizations; number of shared memberships, closer countries are in the 'web' of inter-governmental connections (12)] networks ahs the most consistent converging effect on domestic economic policies. We also find that network position similarly induces convergence through the network of transnational portfolio investment. Trade, the most intensively studied network in international political economy, has no consistent effects on convergence in domestic economic policies. Given the fact that most of the works on convergence-divergence to date use some measure of trade exposure to capture the extent a country is subject to the pressure of globalization, the finding of this research on trade reminds us that the research in this area might have to target some new sources of globalization pressure" (22).
"Convergence denotes a process wherein distinctive domestic institutions and economic policies fade away over time, giving away to common economic structures whose efficiency and universality produce super strength in the market...Divergence, on the other hand, refers to persistent and maybe increasing diversity of national policies and institutions among which the efficiency-mandated minimalism is only one of the many varieties" (1).
"Empirical studies following this fashion unsuprisingly leave us with confusion by revealing a mixed picture of convergence-divergence caused by economic forces of globalization...We still have to ask why and how convergence has happened in some countries, in some policy areas (but to different extents), but not others?" (2).
The author explores the convergence-divergence debate by exploring the relationship different countries have with regard to the international system; how are different countries engaged with the global system?
"The empirical findings indicate that proximity in IGO [inter-governmental organizations; number of shared memberships, closer countries are in the 'web' of inter-governmental connections (12)] networks ahs the most consistent converging effect on domestic economic policies. We also find that network position similarly induces convergence through the network of transnational portfolio investment. Trade, the most intensively studied network in international political economy, has no consistent effects on convergence in domestic economic policies. Given the fact that most of the works on convergence-divergence to date use some measure of trade exposure to capture the extent a country is subject to the pressure of globalization, the finding of this research on trade reminds us that the research in this area might have to target some new sources of globalization pressure" (22).
Wednesday, March 18, 2009
Way: Political Insecurity and the Diffusion of Financial Market Regulation
Way, Christopher R. 2005. Political Insecurity and the Diffusion of Financial Market Regulation. Annals of the American Academy of Political and Social Science 598: 125-144.
"Domestic financial market liberalization--the process of designing a regulatory framework for markets that determine who gets and grants credit and at what prices--has swept the world as part of the spread of neoliberalism over the past three decades. Combining the acute political needs of insecure leaders with the specific dynamics of domestic financial market reform suggests that politically insecure governments will provide surprisingly likely to initiate reforms, proving to be potent agents of diffusion in the right circumstances. My results indicate that the combination of political insecurity, regional trends toward reform and the prominence of IFI policy advice in policy discourse together make a powerful combination encouraging the diffusion of domestic financial market reform" (1).
Standard descriptions for this diffusion have been mostly top down or bottom up.
"I argue that the economic boom associated with financial market liberalization can provide an important source of political strength for insecure governments, meaning that they can have a surprisingly strong attraction to liberalization. Combining the acute political needs of insecure leaders with the specific dynamics of domestic financial market reform suggests that politically insecure governments will prove surprisingly likely to initiate reforms, proving to be potent agents of diffusion in the right circumstances" (2).
"Domestic financial market liberalization--the process of designing a regulatory framework for markets that determine who gets and grants credit and at what prices--has swept the world as part of the spread of neoliberalism over the past three decades. Combining the acute political needs of insecure leaders with the specific dynamics of domestic financial market reform suggests that politically insecure governments will provide surprisingly likely to initiate reforms, proving to be potent agents of diffusion in the right circumstances. My results indicate that the combination of political insecurity, regional trends toward reform and the prominence of IFI policy advice in policy discourse together make a powerful combination encouraging the diffusion of domestic financial market reform" (1).
Standard descriptions for this diffusion have been mostly top down or bottom up.
"I argue that the economic boom associated with financial market liberalization can provide an important source of political strength for insecure governments, meaning that they can have a surprisingly strong attraction to liberalization. Combining the acute political needs of insecure leaders with the specific dynamics of domestic financial market reform suggests that politically insecure governments will prove surprisingly likely to initiate reforms, proving to be potent agents of diffusion in the right circumstances" (2).
Hanson: What happened to fortress Europe?
Hanson, BT. 2003. What happened to fortress Europe?: external trade policy liberalization in the European Union. International Organization 52, no. 01: 55-85.
Many feared that, with the integration of Europe, there would be an inward focus for trade as price incentives would push producers to trade with their European community as tariffs fell. This was refered to as Fortress Europe.
"What is most remarkable about European trade policy in the 1990s is that, despite ominous warnings and theoretical expectations, fortress Europe has not been built. To the contrary, this article shows that since the late 1980s not only have few new trade barriers been erected, but external trade policy in Europe has been significantly liberalized in recent years, even in politically and economically sensitive sectors. This marks a significant departure from the past and occurred at a time when liberalization was least expected" (56).
"I argue that European integration has played a considerable role in the liberalization of European external trade policy by changing the institutional context in which trade policy is made, creating a systematic bias toward liberalization over increased protection" (56).
Many feared that, with the integration of Europe, there would be an inward focus for trade as price incentives would push producers to trade with their European community as tariffs fell. This was refered to as Fortress Europe.
"What is most remarkable about European trade policy in the 1990s is that, despite ominous warnings and theoretical expectations, fortress Europe has not been built. To the contrary, this article shows that since the late 1980s not only have few new trade barriers been erected, but external trade policy in Europe has been significantly liberalized in recent years, even in politically and economically sensitive sectors. This marks a significant departure from the past and occurred at a time when liberalization was least expected" (56).
"I argue that European integration has played a considerable role in the liberalization of European external trade policy by changing the institutional context in which trade policy is made, creating a systematic bias toward liberalization over increased protection" (56).
Cavanagh, Anderson, Serra and Espinosa: Happily ever NAFTA?
Cavanagh, J, and S Anderson. 2002. Happily Ever NAFTA? Foreign Policy 132: 58-60.
The Bad Idea that Failed: Cavanagh and Anderson
"Looking back on its nearly nine years of existence, has NAFTA delivered or disappointed?" (58).
"More than eight years of monitoring reveal that, yes, the accord has boosted investment and trade...And yes, increased international competition may have helped fuel the dramatic rise in labor productivity rates during the 1990s...But workers, communities, and the environment in all three countries have suffered from the agreement's flaws" (58).
"Why have increased trade and investment failed to reduce poverty or raise wages? Part of the answer is that in a globalized marketplace, highly mobile employers have even more power to suppress workers who fight for their faire share of the benefits. And these firms often find allies among governments desperate for foreign investment" (58).
There is no increased spending on the environment. There are wider income gaps. "We argue that strong controls were needed to ensure that trade and investment supported social goals, rather than the narrow interests of large corporations" (59-60).
The Proof is in the Paycheck: Serra and Espinosa
"NAFTA's fundamental objectives as a free trade and investment pact have been achieved" (60). They speculate that this investment spurned on productivity gains in the 90s. They don't agree with claims that NAFTA has harmed the environment, wages or agriculture.
NAFTA cannot be blamed for small farmer poverty in Mexico, as this is a path-dependent problem. NAFTA cannot be blamed for a fall in real Mexican wages b/c the measurement was wrong. NAFTA cannot be blamed for falling environmental spending b/c that was a problem from long ago as well. NAFTA cannot be blamed for rising inequality and the authors argue that "Hard data show that trade liberalization tends to improve income distribution" (62).
Nice Theories, Sad Realities: Cavanagh and Anderson:
NAFTA is not just about trade and investment flows. The evidence you provided was inadequate.
More Accuracy Less Activism: Serra and Espinosa:
No, you're wrong.
The Bad Idea that Failed: Cavanagh and Anderson
"Looking back on its nearly nine years of existence, has NAFTA delivered or disappointed?" (58).
"More than eight years of monitoring reveal that, yes, the accord has boosted investment and trade...And yes, increased international competition may have helped fuel the dramatic rise in labor productivity rates during the 1990s...But workers, communities, and the environment in all three countries have suffered from the agreement's flaws" (58).
"Why have increased trade and investment failed to reduce poverty or raise wages? Part of the answer is that in a globalized marketplace, highly mobile employers have even more power to suppress workers who fight for their faire share of the benefits. And these firms often find allies among governments desperate for foreign investment" (58).
There is no increased spending on the environment. There are wider income gaps. "We argue that strong controls were needed to ensure that trade and investment supported social goals, rather than the narrow interests of large corporations" (59-60).
The Proof is in the Paycheck: Serra and Espinosa
"NAFTA's fundamental objectives as a free trade and investment pact have been achieved" (60). They speculate that this investment spurned on productivity gains in the 90s. They don't agree with claims that NAFTA has harmed the environment, wages or agriculture.
NAFTA cannot be blamed for small farmer poverty in Mexico, as this is a path-dependent problem. NAFTA cannot be blamed for a fall in real Mexican wages b/c the measurement was wrong. NAFTA cannot be blamed for falling environmental spending b/c that was a problem from long ago as well. NAFTA cannot be blamed for rising inequality and the authors argue that "Hard data show that trade liberalization tends to improve income distribution" (62).
Nice Theories, Sad Realities: Cavanagh and Anderson:
NAFTA is not just about trade and investment flows. The evidence you provided was inadequate.
More Accuracy Less Activism: Serra and Espinosa:
No, you're wrong.
Subramanian and Wei: The TWO Promotes Trade, Strongly but Unevenly
Subramanian, A, and SJ Wei. 2007. The WTO promotes trade, strongly but unevenly. Journal of International Economics 72, no. 1: 151-175.
"This paper furnishes robust evidence that the GATT/WTO has had a powerful and positive impact on trade. The impact has, however, been uneven. GATT/WTO membership for industrial countries has been associated with a large increase in imports estimated at about 30% of world trade. The same has not been true for developing country members, although those that joined after the Uruguay Round have benefited from increased imports. Similarly, there have been asymmetric effects among sectors, with WTO membership associated with substantially greater imports in sectors where barriers are low. These results are consistent with the history and design of the institution, which presided over significant trade liberalization by the industrial countries except in sectors such as food and clothing; l largely exempted developing countries from the obligations to liberalize under the principle of special and differential treatment; but attempted to redress the latter by imposing greater obligations on developing country members that joined after the Uruguay Round" (1).
They argue that Rose's analysis is incomplete in two distinct ways: firstly, the gravity equation must include country-fixed effects, as earlier identified by Anderson and van Wincoop (2003). Additionally, the study should take into consideration the asymmetric ways in which the WTO has worked to improve trade liberalization post WWII. Making these modifications, they find robust evidence that the WTO improves trade.
Three types of liberalization asymmetries: "...between developed and developing countries; between developing countries that join the WTO before and after the Uruguay Round; and between sectors where the TWO has been effective in bringing down trade barriers and those...where it has been less effective" (3).
Use extended gravity model.
Their DV is different from Rose and is imports instead of total trade, which they "deflate" (8) through the US consumer price index.
"One of our main and robust findings is that industrial country WTO membership is associated with greater trade. In our sample, however, all industrial countries are WTO members. How can we be sure that we are picking up a WTO effect rather than an industrial country effect?" (16-7). They try to minimize this through their covariates, but it's still a possibility.
"There is a separate question of whether industrial country liberalization would have taken place without the GATT/WTO. This paper does not and cannot address this question" (17).
"This paper furnishes robust evidence that the GATT/WTO has had a powerful and positive impact on trade. The impact has, however, been uneven. GATT/WTO membership for industrial countries has been associated with a large increase in imports estimated at about 30% of world trade. The same has not been true for developing country members, although those that joined after the Uruguay Round have benefited from increased imports. Similarly, there have been asymmetric effects among sectors, with WTO membership associated with substantially greater imports in sectors where barriers are low. These results are consistent with the history and design of the institution, which presided over significant trade liberalization by the industrial countries except in sectors such as food and clothing; l largely exempted developing countries from the obligations to liberalize under the principle of special and differential treatment; but attempted to redress the latter by imposing greater obligations on developing country members that joined after the Uruguay Round" (1).
They argue that Rose's analysis is incomplete in two distinct ways: firstly, the gravity equation must include country-fixed effects, as earlier identified by Anderson and van Wincoop (2003). Additionally, the study should take into consideration the asymmetric ways in which the WTO has worked to improve trade liberalization post WWII. Making these modifications, they find robust evidence that the WTO improves trade.
Three types of liberalization asymmetries: "...between developed and developing countries; between developing countries that join the WTO before and after the Uruguay Round; and between sectors where the TWO has been effective in bringing down trade barriers and those...where it has been less effective" (3).
Use extended gravity model.
Their DV is different from Rose and is imports instead of total trade, which they "deflate" (8) through the US consumer price index.
"One of our main and robust findings is that industrial country WTO membership is associated with greater trade. In our sample, however, all industrial countries are WTO members. How can we be sure that we are picking up a WTO effect rather than an industrial country effect?" (16-7). They try to minimize this through their covariates, but it's still a possibility.
"There is a separate question of whether industrial country liberalization would have taken place without the GATT/WTO. This paper does not and cannot address this question" (17).
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