International Political Economy Literature Research Articles

Does Monetary Aid Catalyse New Business Creation? Analysing the Impact of Global Aid Flows on Formal and Informal Entrepreneurship

AbstractOfficial development aid – monetary transfers to developing countries to promote social and economic development – reached more than $140 billion in 2016. However, traditional forms of government bilateral aid continue to decline, while private aid is rising. Nevertheless, the impact of this aid, including its potential to stimulate economic development through new business formation, remains uncertain. In this study, we examine the impact of three sources of monetary aid flows on formal and informal entrepreneurship. Drawing from the international political economy literature we argue that bilateral aid and private aid are associated with higher levels of informal entrepreneurship, while multilateral aid is accompanied by lower levels. Moreover, we show that bilateral and private aid are linked with lower levels of formal entrepreneurship, while multilateral aid has no impact. The analyses of a panel of 313 observations from 49 countries provide robust support for these arguments.

The Rise of the US Federal Reserve as a World Monetary Authority: Revisiting the Volcker Shock

In the existing International Political Economy literature, the Volcker Shock has been widely regarded as historical significance in the development of international political economy. Three successive waves of IPE have evolved to highlight it respectively, as a subjugation of the US state to pressures of foreign states, to international financial power, and institutional configurations of US financial power. Without close attention to the particular role of the US Federal Reserve, however, these observations obscure the unprecedented process of a new mode of monetary governance. This paper argues that the Volcker Shock ushered in the rise of the US Federal Reserve as a world monetary authority in a way that the inner-making process of autonomous monetary policy became a new way of governing monetary and financial affairs. The Federal Reserve was able to pursue autonomous monetary policy far away from the economic management of the US government and at the same time to discipline banks in international financial markets. The Federal Reserve eventually established itself as a new kind of monetary authority between US government and international financial markets. This paper contributes to the study of international monetary power.

Meeting the world’s demand for safe assets? Macroeconomic policy and the international status of the euro after the crisis

In this article, I engage with the chartalist literature to explore the political foundations of international currencies. Drawing on this literature as well as on recent scholarship on the shortage of safe assets in the world economy, I challenge a prevailing premise of the International Political Economy literature that international currency status needs to be based on conservative macroeconomic policy institutions and practices, which is deemed necessary to maintain foreign confidence in the stability of the real value of the international currency. I contend that international currency status in the post-crisis world economy hinges on the willingness and capacity of the currency provider to adopt accommodating monetary and fiscal policies. First, the central bank needs to offer a backstop to the market for sovereign debt securities by acting as a lender of last resort to the government, whereas fiscal policy expansion is necessary to sufficiently expand the stock of the only securities that can assume the function of genuinely safe assets: sovereign debt. Second, expansionary monetary and fiscal policies enable the international currency issuer to supply safe assets to the rest of the world by running deficits on its trade balance. This article analyses how the European Central Bank’s monetary policy decisions in the wake of the crisis ran against these two prerequisites, constraining the Eurozone to become a large net provider of safe assets in the world economy. By linking these decisions to the creditor and export interests of the Northern Eurozone countries, it disputes the European Central Bank’s ‘neutral stance’ regarding the internationalization of the euro.

The domestic drivers of state finance institutions: evidence from sovereign wealth funds

ABSTRACTSovereign wealth funds – large state-owned investment funds – are key players in international finance, but little is known about their underlying political drivers. Why do some states with surpluses choose to create sovereign wealth funds, while others advocate private finance institutions instead? This article speaks directly to this question by investigating the variation in sovereign wealth fund choices across nations with excess reserves. Thereby it contributes to an emerging stream of social network analysis within the international political economy literature. It develops an argument in least likely cases (i.e. Hong Kong and Singapore) about how the structure of domestic state-society relations – in form of policy networks – explains variation in sovereign wealth fund choices, which benefits some actors over others. By analysing primary archival material and through interviews with former policy-makers, this article opens the black box of policy-making behind the choices of state finance institutions.

Transatlantic investor protection as a threat to democracy: the potency and limits of an emotive frame

A campaign by civil society organizations (CSOs) turned a relatively obscure area of international economic law—investor–state dispute settlement (ISDS)—into the focus of opposition to the Transatlantic Trade and Investment Partnership (TTIP) and later the European Union (EU)–Canada Comprehensive Economic and Trade Agreement (CETA). This article analyses how CSOs impacted on the EU’s position, while highlighting the limitations of their influence. Combining insights from constructivist International Political Economy literature with scholarship emphasizing the importance of emotions in advocacy framing, I contend that CSOs were able to create a polysemic ‘injustice frame’. The characterization of transatlantic ISDS as a threat to democracy and the rule of law aroused anger, while being ambiguous enough to garner widespread support. The ambiguity of CSOs’ advocacy frame and the concreteness of its target, however, were also the frame’s Achilles heel. These aspects provided space for the European Commission to reform a specific element of the agreement and thereby repair the latter’s overall legitimacy. The Commission’s counter-frame emphasized the reform’s democratic credentials by representing TTIP as an opportunity to move ISDS towards a system of ‘public law’. While this reframing failed to satisfy most opposition, it placated pivotal actors and allowed the Commission to move forward.

Democratic Age, Credibility, And Exchange Rate Policies

The inconsistency between the deeds and words of national governments on their exchange rate policies has long been recognized in the international political economy literature. The political roots of this inconsistency, however, has only begun to be studied despite its strong implication for institutional performances. This paper studies how 'democratic age' affects a government's choice between under- and over-reporting the stability of its exchange rates, the phenomena also known as 'fear of floating' and 'fear of pegging', respectively. Focusing on the incentives and constraints democratic age generates on governments, the paper finds that younger democracies with high (low) policy transparency are more likely to have fear of floating (pegging). This argument is tested on time-series cross-section data covering 73 democracies from 1981 to 2010.

Capital as power and the corporatisation of education

ABSTRACTBuilding on the definition of critical education residing in the crossroads of cultural politics and political economy, this theoretical article offers an inquiry into the intersection between critical education research and the central ritual of contemporary capitalism – capitalisation. This article outlines four current approaches in education research literature to the corporatisation of education. This article argues that the approaches must rely implicitly on one of the two major theories of capitalism: modern neoclassical economics or Marxist political economy, even when the approaches are built on cultural and sociological arguments. Without an explicit engagement with the concept of capital and capitalisation, the approaches risk appearing theoretically weak and reliant on moral assumptions. In this sense, critical education literature would be strengthened by engagement with international political economy (IPE) literature. This article proposes to redress this lacuna in the literature by mobilising Jonathan Nitzan’s and Shimson Bichler’s theory of capital as power to better understand the corporatisation of education.

Federalism matters: evaluating the impact of sub-federal governments in Canadian and American foreign trade policy

/RésumésThis study will argue that federalism in Canada and the United States, especially its institutional form and practice, directly impacts the influence of sub-federal governments in the negotiation and implementation of international trade agreements. In highlighting the durability of domestic federal institutions, it challenges “decline of the state” arguments often found in the international relations and global political economy literature. It also expands traditional studies of federalism beyond questions of centralization/decentralization and the impact of globalization on federal systems. Case studies include the Canada-United States “Buy American” Procurement Agreement, the Canada - European Union Comprehensive Economic and Trade Agreement (CETA) and several international trade disputes involving American states.

The political economy of the euro area's sovereign debt crisis: introduction to the special issue of the Review of International Political Economy

ABSTRACTThis special issue has two main aims: to examine the contribution of political economy analyses of the sovereign debt crisis and to relate these findings to longstanding debates in the sub-disciplines of comparative political economy, international political economy and European economic governance. This introduction begins by reviewing the comparative political economy literature on national financial systems in order to account for the playing out of the crisis. It then examines the international political economy literature on the International Monetary Fund (IMF) and financial (sovereign debt) markets that played such a key role in the unfolding of the sovereign debt crisis. Finally, it outlines longstanding academic debates on the main 'asymmetries’; in European economic governance, and provides a critical overview of the three main policy and institutional reforms adopted by European Union governments in response to the crisis.

Internal Trade Agreements in Canada: Progress, Complexity and Challenges

AbstractDespite criticism of ongoing protectionism, this study argues that Canada's internal trade regime has evolved significantly since the implementation of the original Agreement on Internal Trade (AIT). This includes thirteen formal amendments to the AIT and numerous regional agreements in Western, Central, and Atlantic Canada. Borrowing from the liberal International Political Economy (IPE) literature it argues that existing regional agreements complement and offer a potential framework for broader internal trade reforms at the national level. Of these the New West Partnership Trade Agreement (NWPTA) offers a promising model for Canada's internal market, with revised rules and norms related to negative lists, labour mobility, procurement, and investment and dispute settlement. Ongoing efforts to remove barriers will also be linked to a strengthened Internal Trade Secretariat, confidence-building measures, increased transparency and further reform of technical language.

Similarities Attract: Political Regimes and Foreign Direct Investments

According to a well-established and substantively significant finding in the interna-tional political economy literature, democratic host countries are better able to attract foreign direct investment (FDI). However, I show that the supposed association be-tween democracy and FDI disappears once I control for a selection bias in which FDI tends to originate from democratic home countries. I then provide empirical evidence to support a novel claim that it is not democracy by itself but political similarity be-tween the home and host countries that attracts FDI. Additionally, I suggest a causal explanation for why FDI tends to flow between politically similar countries.

Financing Social Reproduction: The Gendered Relations of Debt and Mortgage Finance in Twenty-first-century America

This article addresses a gap in the international political economy (IPE) literature on housing finance by highlighting the ways in which the deepening of mortgage debt is part of a broader attempt to individualise and (re)privatise relations of social reproduction under neoliberalism. While the extension and deepening of debt has been underpinned by policies and discourses that assume the formal equality of individuals, the attempt to erase the gendered subject in the context of ongoing inequalities in paid labour markets, in asset ownership and in the division of unpaid labour has served to reproduce various overlapping social divisions and inequalities. In linking social reproduction to financial markets, the promotion of homeownership in the US has also rendered the social reproduction of present and future generations increasingly insecure. This work contributes to feminist and other critical IPE debates by highlighting the ways in which accumulation in financial markets has been based on the perpetuation of divisions and inequalities between social classes, between men and women and along certain racial and ethnic lines. It also centralises the role of the state in conditioning these processes.

Transnational regulatory capture? An empirical examination of the transnational lobbying of the Basel Committee on Banking Supervision

ABSTRACT Since the global financial crisis, scholars of international political economy (IPE) have increasingly relied on the concept of ‘regulatory capture’ to explain the weakness of regulatory oversight and, hence, regulatory failures. Yet despite the widespread use of the concept of regulatory capture, its precise mechanisms are not well understood. This paper empirically investigates this hypothesis by examining one important institution of global financial governance that has been subjected to intense private sector lobbying at the transnational level: the Basel Committee on Banking Supervision. Using extensive archival material as well as interviews with participants in the generation of the Basel II Capital Accord, I argue that while private sector lobbyists had unprecedented access to the regulatory policymaking process, this access did not always translate into influence. Furthermore, when influence was present, it sometimes had the effect of increasing regulatory stringency, rather than weakening regulation. As such, I argue that our understanding of the process of transnational policy formation would benefit from a more nuanced understanding of the contingency of private sector ‘influence’ over the regulatory process, rather than the extensive, all-or-nothing depiction of regulatory ‘capture’ that currently prevails within the IPE literature.

Private interests and the EU-US dispute on audit regulation: The role of the European accounting profession

ABSTRACT Taking the European audit profession as a case study, our paper explores the role of private actors in transatlantic regulatory relations and transnational regulatory harmonization more generally. In the early twenty-first century, both the US and the EU tightened the regulation of auditors. Due to its extraterritorial effects, the US reform legislation sparked a transatlantic conflict. Seeking mutual recognition of the respective auditor oversight systems, the European Commission endeavored to bring the European regulatory regime closer to the new US model. During the reforms of EU audit regulation, the profession, together with member states, successfully resisted a far-reaching convergence of European regulation to the US model of independent oversight, thus impeding the resolution of the transatlantic conflict. We argue that the profession's defense of the traditional model of European audit regulation results from two intertwined aspects: the profession's interest in keeping a share of power in the regulatory regime and its institutional embeddedness in distinct national and regional regulatory and market structures. In concluding, we discuss the implications of our findings for the relevant international and comparative political economy literature.

Of executive preferences and societal constraints: The domestic politics of the transatlantic GMO dispute1

ABSTRACT When the transatlantic trade dispute over genetically modified organisms came to a boil in the late 1990s and early 2000s it was widely expected to be highly conflictual. The United States was, almost universally, expected to challenge fundamentally the European Union's regulatory system for GMOs before the World Trade Organisation, and was equally universally expected to win the case. The EU was widely, albeit not universally, expected to refuse to comply with the ruling. In keeping with most of the international political economy literature on trade disputes, both of these expectations were rooted in assessments of societal demands for action and resistance. Both expectations, however, were confounded; the US (and its co-complainants) filed a narrow challenge focusing on the EU's failure to apply its own procedures; and the EU, somewhat falteringly, has resumed approvals of GMOs. Applying a two-level game framework, this article argues that this relatively cooperative outcome is explained by the executives of both polities exercising their autonomy to pursue policies closer to the preferences of the other polity than their median domestic constituents would have preferred. This article, therefore, makes the case for taking government preferences and autonomy seriously when analysing the outcomes of trade disputes. Moreover, it emphasises that compliance with international rules engages with on-going internal policy processes and debates.

Neoliberalism and the Rise of the Private Military Industry

In the early 20th century, Georges Clemenceau remarked that war was much too serious a matter to be entrusted to the military. In the early 21st century, it is much too profitable. This turn of history is brought into sharp relief by the wars in Afghanistan and Iraq, where US -led military operations are the first in history to be dependent upon private military contractors. In these conflicts, private military firms deliver a wide profile of services ranging from the relatively banal to armed security, tasks previously and nearly exclusively carried out by state militaries. Many in the popular media have seized upon the term mercenary to describe the for-profit activities of private military firms, but the designation is a misnomer. Today, private military firms are integrated into the operations of the world's most powerful militaries and normalized through their transactions on the free market. The market for private military services is considerable and the degree to which the US military has been privatized is so extensive that the viability of US foreign engagements in Iraq and Afghanistan is contingent upon the availability of contracted labour. But it is not for lack of technical capability or uniformed personnel. Rather, private sources of military labour permit US leaders to sell a politically viable war policy to domestic audiences by maintaining low levels of uniformed troop levels.Military privatization in the first decade of the 21st century has elicited pressing new questions and a growing body of academic literature has emerged to address its historical, conceptual, institutional, ideational, and social dimensions.1 Making sense of a booming industry is a challenge and the pace of private military expansion has outpaced scholarly inquiry, leaving a number of issues unexplored. One such area is the relationship between military privatization and broader ideational patterns informing public policy, specifically, economic neoliberalism. This article aims to correct this deficit by exploring the transformative interactions of US military policy and economic neoliberalism. Indeed, inquiries into private military firms in the 1990s address the privatization question, but privatization and neoliberalism are not interchangeable concepts. Privatization is a single institutional strategy in a broader syndrome of policies that constitute economic neoliberalism. This is an important distinction that has gone unnoticed in much of the literature on military privatization and the rise of the private military industry.In the United States, the effects of military neoliberalism run deep, as the figures below will attest. However, the US did not arrive at this state overnight. Military neoliberalism (or neoliberalization, as will be seen) has been an uneven and improvised process, reflecting the real-world limitations of applied neoliberalism and the evolution of the neoliberal ideational framework itself. As will be discussed, the privatization and reregulation of military contracting did not occur in neat and ordered sequences. Different approaches to privatization coexist in uneven and contradictory ways across the US private military industry. More broadly though, military neoliberalism cuts to the core of the Westphalian state itself, revealing fundamental transformations to the indispensable unit of analysis in the academic field of international relations. By situating evolving US military privatization practices within evolving ideational processes, this article aims to explain the relationship between US military policy and neoliberal economic ideology.The article begins with an overview of the scale and cost of contracting in the two major theatres of the war on terrorism, followed by a brief discussion about the limitations of problem-solving approaches to scholarship on the private military industry. This leads to a discussion about theories from the critical international political economy literature that better explain the transformations wrought by military privatization, specifically the theories of the competition state and especially rollback and rollout neoliberalism. …

Locating the “Everyday” in International Political Economy: That Roar Which Lies on the Other Side of Silence

Everyday Politics of the World Economy. By John M. Hobson, Leonard Seabrooke. Cambridge: Cambridge University Press, 2007. 254 pp., $36.99 paperback (ISBN-13: 978-0-521-70163-1). Transnational Tortillas: Race, Gender, and Shop-Floor Politics in Mexico and the United States. By Carolina Bank Munoz. Ithaca, NY: Cornell University Press, 2008. 216 pp., $18.95 paperback (ISBN-13: 978-0-8014-7422-4). Taking Southeast Asia to Market: Commodities, Nature and People in the Neoliberal Age. By Joseph Nevins, Nancy Lee Peluso. Ithaca, NY: Cornell University Press, 2008. 277 pp., $24.95 paperback (ISBN-13: 978-0-8014-7433-0). The three excellent books reviewed in this essay all, in different ways, challenge conventional understandings of how and what we study within International Political Economy (IPE)—emphasizing the role of everyday social relations, actions, and the perspectives of nonelite groups and actors in the making of the global political economy. Of the three books reviewed here, only one of the books specifically locates itself within the field of IPE and engages specifically with an IPE literature (Hobson and Seabrooke's collection Everyday Politics of the World Economy ). However, the other two books that are written from the perspective of social anthropology (Nevins and Peluso's collection Taking Southeast Asia to Market ) and labor/industrial sociology (Munoz's Transnational Tortillas ) should rightfully be considered within a review essay focussing on the topic of “everyday IPE” in the sense that they are representative of literature that explores the interconnectedness between global processes of neoliberal political and economic governance and the roles that everyday actors perform in both reproducing and resisting these global shifts. Nonetheless, the three books reviewed here have very different aims. Hobson and Seabrooke seek to demonstrate the significance of everyday actors and the everyday sources of political–economic change to an IPE audience more commonly preoccupied with discussions of economic “high politics” (what they label regulatory IPE). By contrast, the collection by Nevins and Peluso is part of an emerging body of literature focussed on “combining the cultural with the political economic” (p. 4) in demonstrating how the deepening reach of capitalist social relations into all aspects of everyday life is an issue that needs to be taken much more seriously by social anthropologists. These two volumes are usefully reviewed side by side because for Nevins and Peluso, the everyday should not be privileged at the expense of an appreciation of the broader structures of …

The Global Foreign Exchange Market: An Interpretation of the Bank for International Settlements' Survey of Foreign Exchange and Derivatives Market Activity, 2007

Markets for foreign exchange derivatives are turning over $US 5.5 trillion per day and they are having a critical economic and social impact. But they are little understood in the international relations and international political economy (IPE) literature. This paper introduces the key themes of derivative markets and reports on the results of the most recent Bank for International Settlements' triennial survey of global foreign exchange and derivative markets. As well as reporting the enormous scale of growth of these markets, the paper analyses the trends, especially regarding the declining role of the US dollar and the changing roles of different sorts of financial institutions in global financial markets. Finally, it explores what the data indicate about whether these markets can be characterised as being driven by “speculation”.

Bridging the critical divide: global finance, financialisation and contemporary capitalism

This article is about two distinct frameworks that evaluate why finance matters in contemporary capitalism. The International Political Economy (IPE) literature on global finance analyses the geopolitical dynamics of financial markets where finance matters because it is an integral element of power in the global political economy. The newer literature on financialisation offers an account of present day capitalist dynamics where individuals, firms and the macro-economy are increasingly mediated by new relationships with financial markets. These two frameworks share a common ground: both reject the mainstream orthodoxy of neo-classical economics and positivist methodology. Essentially, the global finance and financialisation frameworks are different sides of the same critical coin. This article offers a sympathetic critique of both the global finance and financialisation bodies of literature. I argue that greater engagement between the literatures would provide new fruitful avenues of research.

The Partisan Origins of Great Power Politics?

Realists have long held the grand strategies of the great powers are largely a function of the international distribution of power. Ascendant states tend to pur sue more ambitious grand strategies in both the core and the periphery, while declining states tend to retrench their strategic commitments. Leaders determine the national based upon assessments of the current balance-of-power and anticipated power trends. Especially in the case of the two dominant great powers of the late nineteenth and twentieth centuries, the United States and Great Britain, domestic politics stop at the water's edge. Kevin Narizny's The Political Economy of Grand Strategy joins a long list of recent books that challenge this realist orthodoxy by positing a central role for unit level variables (Snyder 1991; Rosecrance and Stein 1993; Kupchan 1995; Katzenstein 1996; Lobell 2003; and Haas 2005). Narizny poses three fundamental questions: Why do some great powers aggressively expand their international influence, while others refuse commitments that they could easily protect given their relative power? Why do some states seek control over peripheral territories, while others eschew imperialism? Why do some leaders support internationalist initiatives, while others pursue policies more consistent with Realpolitik? Drawing upon the international political economy (IPE) literature and liberal international relations (IR) theory, Narizny contends the leaders of rising and declining great powers are not neutral arbiters of the national interests, but instead act as agents of domestic coalitional interests. Different sectors?domes tic manufacturers, exporters and outward investors seeking markets in the core or the periphery, and military-colonial interests?have competing economic interests and consequently radically divergent views on international politics. Political parties aggregate those interests and then select candidates whose strate gic beliefs will likely benefit their constituents. As a result, the economic interests that back governing parties largely determine whether great powers pursue expansionist or status-quo policies in the core or the periphery. Narizny tests his coalitional theory of interest aggregation using case studies of US grand strategy from 1865 to 1941 and British grand strategy from 1868 to 1939. The competing economic interests that supported the Democratic and the Republican parties in the US after the Civil War and the Conservative, Liberal, and later Labour parties in Britain after the 1867 Reform Act, in effect, deter mined whether successive US presidents (Andrew Johnson to Franklin Roosevelt) and British prime ministers and cabinets (William Gladstone to Neville Chamber lain) seized or avoided opportunities to expand their respective countries' influence abroad. His analysis purports to shed light on long-standing debates about the revival of British imperialism in the 1880s and 1890s, the United States' shift from westward expansion in North America to the acquisition of ter ritories in the Caribbean, the Pacific Ocean, and East Asia, the creation of the