Political Economy Scholarship Research Articles

A Chip War Made in Germany? US Techno‐Dependencies, China Chokepoints, and the German Semiconductor Industry

<p>As geo-economic and geopolitical rivalries intensify, the US is weaponizing its power in global semiconductor supply chains to restrict Chinese technological development. To win this chip war against China, the US must compel key foreign firms in Asia and Europe not to supply its adversary with the materials, tools, and know-how needed to make advanced semiconductors. But will these firms agree to follow the US chip embargo and avoid the lucrative Chinese market? This article examines Germany’s “China chokepoint” firms, whose identity and behavior remain critically understudied. Drawing on novel data sets and annual company reports, we show that German firms across three case studies are highly “techno-dependent” on the US. Despite this techno-dependence, German firms have so far sought to circumnavigate US export controls. This constitutes a puzzle because Germany’s semiconductor firms are no more involved in the Chinese market than are firms in Japan and South Korea—which have frequently signaled voluntary compliance or even withdrawn from China in anticipation of harsher US sanctions. To resolve this puzzle, we map out Germany’s semiconductor network and demonstrate that it is tightly articulated with Germany’s auto industry—which is in turn heavily exposed to Chinese markets. We propose that this secondary exposure, through firms’ embeddedness in Germany’s “national production regime,” encourages them to resist the US chip embargo. In this way, we contribute empirical and conceptual insights to international political economy scholarship on firms as geo-economic actors, actively engaged in a protracted and contentious policy process with US authorities.</p>

A Chip War Made in Germany? US Techno‐Dependencies, China Chokepoints, and the German Semiconductor Industry

<p>As geo-economic and geopolitical rivalries intensify, the US is weaponizing its power in global semiconductor supply chains to restrict Chinese technological development. To win this chip war against China, the US must compel key foreign firms in Asia and Europe not to supply its adversary with the materials, tools, and know-how needed to make advanced semiconductors. But will these firms agree to follow the US chip embargo and avoid the lucrative Chinese market? This article examines Germany’s “China chokepoint” firms, whose identity and behavior remain critically understudied. Drawing on novel data sets and annual company reports, we show that German firms across three case studies are highly “techno-dependent” on the US. Despite this techno-dependence, German firms have so far sought to circumnavigate US export controls. This constitutes a puzzle because Germany’s semiconductor firms are no more involved in the Chinese market than are firms in Japan and South Korea—which have frequently signaled voluntary compliance or even withdrawn from China in anticipation of harsher US sanctions. To resolve this puzzle, we map out Germany’s semiconductor network and demonstrate that it is tightly articulated with Germany’s auto industry—which is in turn heavily exposed to Chinese markets. We propose that this secondary exposure, through firms’ embeddedness in Germany’s “national production regime,” encourages them to resist the US chip embargo. In this way, we contribute empirical and conceptual insights to international political economy scholarship on firms as geo-economic actors, actively engaged in a protracted and contentious policy process with US authorities.</p>

Investors as members in transnational sustainable finance initiatives: Collectors, mediators and performers

The last 20 years have seen the emergence and proliferation of transnational sustainable finance initiatives (hereafter: TSFI). From associations like the Principles of Responsible Investment to pledges like the Finance for Biodiversity Pledge, investors have connected with each other and with other kinds of organisations in transnational fora dedicated to sustainable finance. Taking inspiration from political economy scholarship on global corporate networks, we apply a network perspective to the transnational governance of sustainable finance, examining the overlaps between investors’ membership in TSFI. In particular, we aim to identify those investors’ that hold a large number of TSFI membership (collectors), that connect centrally located TSFI with those at the margins (mediators), and that take on active roles within TSFI (performers). Analysing membership data for 30 TSFI, totalling 10.602 observations, at three analytical levels, we identify a group of 21 investors holding core positions in the global network. The majority of these investors are active in asset management and located in Nordic or continental European political economies. The predominance of some of the world’s largest investors in our three member categories suggests that the transnational governance of sustainable finance relies in part on the activities of actors that are associated with harmful financial practices. Nevertheless, the simultaneous presence of publicly owned enterprises on our list of most connected members also indicates the importance of public leadership in the transnational governance of sustainable finance.

Between export-led growth and administrative Keynesianism: Italy’s two-tiered growth regime

ABSTRACT Comparative political economy scholarship struggles to categorise Italy’s model of capitalism between a mixed-market economy and a hybrid, stagnant economic system. To enhance our understanding of the Italian political economy, this article employs the analytical framework of growth regimes to study Italy’s regional economic systems. Our analysis indicates that Italy can hardly be defined as a ‘national growth regime’ due to the presence of two diametrically opposed regional growth regimes: Northern regions conform to a manufacturing-based, export-led growth regime supported by competitiveness-enhancing territorial institutions; southern regions conform to a particular variety of the consumption-led growth regime, that is, an administrative Keynesianism regime, which we theorise to typify a regime where growth and employment are systematically dependent on the state’s role of employer of last resort, the state’s consumption-enhancing social policies and economic forbearance of labour and corporate tax regulations. The article suggests that studying regional growth regimes is desirable when marked internal diversity in economic outcomes or productive structures exists across regions within (generally larger) countries, and when subnational governments have powers to develop major own institutions/policies in support of regional growth regimes.

Banks as the new family: the transition from informal to formal borrowing in Turkey

This paper focuses on the impact of social reproduction patterns on borrowing experiences in everyday life, linking two lines of research within feminist and critical International Political Economy (IPE) literature of the everyday, one on social reproduction and debt, and the other on financial subjectivities. Drawing on interviews with women from indebted households in Istanbul, Turkey, it specifically explores how this impact is reflected in the meanings attached to borrowing and the perceptions of what it entails to be a debtor, thereby generating gendered implications. This article reveals that borrowing from family and friends, once seen as an expression of trust and solidarity, is now associated with financial dependence and humiliation, while borrowing from banks is perceived as a means to achieve self-reliance and self-responsibility. However, these meanings contradict women’s self-identifications as debtors, which are framed in moral terms surrounding the structural necessity of incurring credit-debt for social reproduction. This paper contributes to political economy scholarship by addressing how the everyday lives of the indebted are linked to the broader global financial system, mediated by the specific conditions of a Global South context (Turkey) characterized by subordinate financialization, the political use of credit expansion, and a neoliberal/conservative gender regime.

The “EU‐Leash”: Growth Model Resilience and Change in the EU’s Eastern Periphery

Although the EU’s Eastern periphery has been afflicted by a series of crises over the past two decades, the region’s dependent market economies have shown puzzling resilience. Since the global financial crisis, the FDI-led, export-oriented growth models of the Visegrád countries have been reinforced. Meanwhile, the debt-based, consumption-oriented capitalism of the Baltic states has not experienced dramatic shifts either, despite a strengthening of its export component. Scholarly accounts from a comparative political economy perspective explain this resilience as the product of country-specific factors and tend to downplay the role of external influence. Instead, we aim to bridge these approaches with international political economy scholarship by arguing that European integration, in general, and the EU’s transnational regulatory influence, in particular, serves as an external anchoring mechanism for both semi-peripheral growth models. In addition to the region’s structural characteristics, such as deep embeddedness in global value chains, high exposure to trade with the EU, and dependence on external sources of finance, which already limit domestic agency in changing national growth models, we argue that European transnational regulatory integration involves an “EU-leash” that sets the boundaries for domestic economic policies, thereby influencing growth model trajectories. This ensures institutional continuity and prevents sudden and radical changes in semi-peripheral growth models. We demonstrate these mechanisms through two country studies (Estonia and Hungary).

Emerging market multinationals and international investment agreements

This study investigates the effects of international investment agreements (IIAs) on the internationalization decisions of emerging market multinationals (EMNEs). Drawing on the POLI advantage framework, we argue that bilateral investment treaties (BITs) add to the political and institutional capabilities of EMNEs, enhancing their OLI advantages in host countries. We identify two mechanisms through which BITs facilitate EMNEs’ internationalization: by offsetting political risk and by mitigating the informational asymmetries and transaction costs associated with investing in unfamiliar destinations. We probe the plausibility of our claims with data from an original survey of firms in four emerging economies and a larger sample of bilateral FDI flows from UNCTAD’s FDI/MNEs database. Our findings show a positive association between BITs and FDI from the South, especially in politically unstable and unfamiliar contexts. Apart from adding to the International Business literature on EMNEs, this study contributes to International Political Economy scholarship on FDI by highlighting the growing relevance of South-South IIAs.

The origins of fairness in economic experiments: how evolutionary behavioural economics makes a case for doux commerce

ABSTRACTBehavioural economics works toward more realistic accounts of economic action, which includes efforts to endogenise the ‘social’. In its social strand, behavioural economics is specifically concerned with fair outcomes in interactive economic games, which are explained by reference to social preferences, norms and institutions. While these concepts also matter to scholars in political economy and socioeconomics, behavioural economists seek to go further in specifying their behavioural and evolutionary foundations. This article critically evaluates evolutionary research strategies in the social strand of behavioural economics, which aim to uncover the evolutionary origins of fairness in economic experiments. Representatives of this field offer new support for the classical idea of ‘doux commerce’, or the civilising function of markets, by suggesting that cooperation with strangers in economic exchange fundamentally shaped the course of human evolution. Their explanatory framework is gene-culture coevolution, which covers long timespans of human existence. However, the case for the virtuous effect of markets in human prehistory remains ambiguous: basic concepts, causal mechanisms, and timescales of analysis vary to an extent that it is possible to arrive at very different projections of ‘doux commerce’ into the past. With regard to the present, these fulfil a similar function in naturalising market moralities.

Futurity-led platform capitalism: the regulation of inclusive insurtech platforms

This article investigates international and national regulation of the recent foray by inclusive insurance firms into platform capitalism. It contributes to current debates on the governance of Fintech/insurtech in digital financial inclusion and platform capitalism. Drawing on Global Political Economy scholarship and John Commons’ concept of futurity, I argue that futurity drives the inclusive insurance market mediated by insurtech platforms. This process is performed within the regulatory sandbox, a dedicated legal framework allowing private firms to test innovative products and business models in a small-scale and controlled environment. The article draws on the analysis of legal documents, semi-structured interviews with key international and national insurance supervisors as well as participant observation in online conferences. The analysis offers empirical insights into the complexities of regulatory institutions to deepen our understanding of the global expansion of platform capitalism in inclusive insurance.

The centrality of disablement subjectivation to the reproduction of capitalist social relations: considerations for Critical and Global Political Economy

In the face of a global, mass impairment- and chronic illness-producing event such as the COVID-19 pandemic, the question of how to consider and integrate the politics of disablement within Global Political Economy scholarship and anti-capitalist activism has become ever-more pressing. In this article, I provide a proposal for how to conceptualise the capitalism-specific commonality between people who identify as having impairments, being chronically ill, neurodivergent, D/deaf, experiencing mental distress and who may or may not also identify as disabled people. To this end, in this article I adopt the ‘social model of disability’ and engage with both Moran’s cultural-materialist approach to identity and Autonomist Marxism’s ‘class composition’ thesis. Then, I make the case for the analytic usefulness of the non-identity, relational concept ‘subjects of disablement’ as the technical composition of disability on the basis of which the socio-political identity ‘disabled people’ as the political composition of disability emerges. Acknowledging disablement oppression and exploitation as central and fundamental to the reproduction of capitalist social relations would equip the GPE scholarship embedded within the praxis of dissent and resistance (see Bonfert et al, 2022) to generatively support activist groups’ already-existing efforts and mobilisations against and beyond – what I call – disabling capitalism. The Global Political Economy journal offers the opportunity for the ‘sluice gates’ (Clua-Losada and Moore, 2022: 6) of this interdisciplinary field to be widely opened for, and welcoming of, further explorations of how capitalism cannot be fully understood and ruptured without an analysis of structural disablement.

Reconfiguring FDI dependency: SMEs as emerging stakeholders in an advanced peripheral export-led growth model

Political economy scholarship on Eastern European countries identifies their export-led growth models as dependent on foreign direct investors (FDI). This paper argues that small and medium enterprises (SMEs) are another important cohort of exporters for at least some of these countries. We attribute the success of exporting SMEs to the rise of new technologies and production processes, which have allowed economic agents from peripheral countries to engage with global value chains and international business-to-business trade directly, rather than via FDI. We empirically draw on an in-depth case study of Serbia, combining macroeconomic analysis and 145 interviews with exporting SMEs. The country made a notable switch from consumption- to export-led growth in the aftermath of the 2008 crisis, despite lagging in FDI attraction. To address this puzzle, we show that internationalization of SMEs became an additional driver of the country’s exports. Then examining how these exporters have internationalized, we find that firm co-location is not a main source of knowledge exchange for them. Instead, they emphasize the importance of drawing upon translocal sources of knowledge exchange for international competitiveness. Using SME owners’ networks abroad, immigration experiences, clients from online platforms, and contacts from outsourcing opportunities has provided them with the knowledge needed to become innovative, and to repurpose the old socialist industrial resources they had at their disposal. Since exporting SMEs and their multi-level agency is an empirically under-researched phenomenon in the region, future studies on peripheral export-led growth models should explore economic and political implications of this growth coalition further.

Fiscal geographies between the crisis and the pandemic

This paper serves as an introduction to the themed issue on “Post-Crisis Fiscal Geographies.” In it, we review the growing body of work on fiscal policy and geography, with particular emphasis on taxation and tax policy. We argue that geographers and other scholars of political economy should pay greater attention to the state’s active capacities, particularly during the long troughs between the crises which tend to receive the bulk of scholarly and popular attention. We situate the three papers that comprise the special issue within the broader literature, closing by suggesting the need to broaden fiscal geographies scholarship beyond tax, as well as raising the possibilities for justice that could arise from closer engagement with fiscal policy.

China reshaping green value chain initiatives: between global and Southern standards

The paper contributes to the growing debate about how China drives change in institutions and norms of global governance. It analyses the case study of China’s approach to transnational voluntary sustainability standards as concrete tools of Western-sponsored green value chain initiatives, between integration and contestation. Engaging international political economy scholarship, the paper shows that China participates in such initiatives by reshaping their focus away from contested market-based approaches to more internationally consensual state-led ones. This stance indicates that China’s reshaping of international norms and institutions conveys claims made by Global South alliances. These alliances are increasingly important for China, not only politically and militarily but also economically and for the success of key initiatives, like the Belt and Road Initiative.

The firm-territory nexus in a fragmented economy: Scales of global value and wealth chain entanglement

Multinational enterprises (MNEs) take advantage of local differences in their global location of assets and activities. Scholarship in economic geography and international political economy associates value-producing entities organized in Global Value Chains (GVCs), and wealth-protecting entities in Global Wealth Chains (GWCs). At the aggregate level, these are often associated with different geographical manifestations, with GVCs centered around “production hubs” and GWCs around “offshore jurisdictions.” This indicates an asymmetrical geography between value and wealth with a low level of entanglement. This does not account, however, for the ways value and wealth are governed within MNEs. We investigate how the firm-territory nexus can be understood across scales and what this implies for the geographical overlap between GVCs and GWCs. While there is seemingly limited entanglement of GVC and GWC activities at the macro scale, at the meso scale there are overlaps and significant entanglement at the micro scale. This implies value and wealth are more geographically aligned than previously thought, and that initiatives aimed at regulating these chains needs to address practices within MNEs rather than targeting arbitrary geographies at the country level.

Does flexibility promote the implementation of civil war cease-fire agreements?

Abstract Transition from war to peace often leads to new challenges. Conflict scholars suggest that these challenges lead groups to be unable to commit credibly and suggest mechanisms for decreasing the fear of being the victim, and increasing the costs, of reneging. However, international law and international political economy scholars debate the utility of making agreements flexible. This paper argues that provisions intended to increase the flexibility of agreements are detrimental to implementation because they operate under the assumption that groups are in a repeated game, and because they can lead to an even more severe commitment problem. Using a newly collected dataset on civil war cease-fire agreements, duration analyses suggest agreements with more flexibility-enhancing provisions exhibit a higher likelihood of violations. Although provisions calling for third-party enforcement – a mechanism for reducing fear and increasing costs – seem to decrease the likelihood of violations, this effect disappears when flexibility-enhancing provisions are considered.

Africa in IPE theorization: exclusion, oversight, and Eurocentrism in the field’s past and future

In January 2021, the largest free trade area in the world measured by number of participating countries came into effect. This African Continental Free Trade Area (AfCFTA), which links 54 countries and 1.3 billion people, is designed to foster rapid economic growth and pull tens of millions of people out of poverty. Despite the fact that this project raises issues central to International Political Economy (IPE) scholarship, major journals in the field including Review of International Political Economy (RIPE) have given it negligible attention. The paper begins by asking why the AfCFTA has remained at best, marginal, and at worst, absent in the IPE literature. Drawing on the critical and postcolonial literature in the field to address this question, the paper identifies IPE’s Eurocentrism as the root cause of the discipline’s oversight of the continent. After uncovering the implications and costs of this oversight, the paper discusses the insights that emerge from a close consideration of the AfCFTA, including the Pan-African ideology which undergirds the project and insights that contribute to the literature on regionalism. Highlighting the implications of both the AfCFTA and the analysis, the paper additionally discusses the promises and challenges in the future trajectory of the field.

Publication trends in political economy scholarship 2011–2020

Publication trends in political economy scholarship 2011–2020

The advance of the state and the renewal of industrial policy in the age of strategic competition

Many developing countries have recently adopted a swathe of development strategies ranging from extremely selective to non-discretionary, functional policies – some if not all of which constitute what we may term ‘industrial policy’. The collection provides an overview on the state of the art about new industrial policy and the place of politics in contemporary analysis of state intervention in the global political economy. This introduction revisits the importance of state-backed economic policies not simply as a reaction to the limitations of market reforms implemented in the 1980s and 1990s, but as a radically new development strategy moving on to the twenty-first century. The task of the paper is two-fold: first, it maps out the lessons from East Asian industrial policy and demonstrates how a new generation of political economy scholars have brought in a more political approach to industrialisation; and second, it synthesises the political economy literature to build a framework that incorporates new aspects of industrial policy, notably on the significance of economic linkages and rent management as a way of addressing global value chains.

Recentring industrial policy paradigm within IPE and development studies

The article makes the case for a distinctive intellectual tradition of the industrial policy paradigm to examine state strategies in the twenty-first century. Specifically, it outlines three key lessons for political economy scholarship: first, it points to the need to study complementary institutions and the longer-term horizon in political cycles; second, it notes that scholars must seek innovative methodologies in examining sectoral development; and, third, it calls for a rethinking of state capacity in the new phase of globalisation, marked by strategic competition and neo-mercantilism. In so doing, the article opens a new research agenda for the next generation of scholars focussed on how industrial policy might help – or fail – to promote the creation of new comparative advantages and the advancement of internationally competitive firms and sectors, and, importantly, to deliver better quality of life for citizens in most of the Global South.

How Far Does the Diverse Economies Approach Take Us?

How Far Does the Diverse Economies Approach Take Us?