Exchange Rate Volatility and Democratization in Emerging Market Countries

We examine some of the consequences of financial globalization for democratization in emerging market economies by focusing on the currency markets of four Asian countries at different stages of democratic development. Using political data of various kinds—including a new events data series—and the Markov regime switching model from empirical macroeconomics, we show that in young and incipient democracies politics continuously causes changes in the probability of experiencing two different currency market equilibria: a high volatility "contagion" regime and a low volatility "fundamentals" regime. The kind of political events that affect currency market equilibration varies cross-nationally depending on the degree to which the polity of a country is democratic and its policymaking transparent. The results help us better gauge how and the extent to which democratization is compatible with financial globalization.     

欧元汇率波动对我国出口影响的实证分析

我国对欧元区国家的出口由欧元启动时的224.3亿美元增长到2004年的810.6亿美元,随着欧元的逐步稳定,欧元也已成为我国贸易的主要结算货币之一。本文借鉴“引力模型”,以同一时期,欧元对多个国家货币的汇率波动程度为研究对象,考察欧元汇率波动对我国出口的影响。实证结果表明,欧元名义汇率波动总体上对我国出口并没有阻碍作用,这为我国的汇率制度改革留下了很大的调整空间。     

Struggles of identity in the age of globalisation

Abstract

This article explores the intricate interrelationships between discourses on, struggles of, identity and the multiple processes associated with increasing globalisation in the modern age. Globalisation is often exclusively associated with worldwide economic integration and the emergence of a borderless global market. However, globalisation also involves sweeping changes on the social, cultural and political terrains. Globalisation furthermore entails apparently contradictory processes of, among other things, homogenisation and universalisation on the one hand and localisation and differensiation on the other. Various analysts point out that the often contradictory processes of globalisation have led to wide-ranging changes in the processes of identity formation that have, in turn, resulted not only in a flourishing of discourses on identity, but also in struggles of identity involving various minority and marginalised groups. Apart from exploring various definitions of identity, discourses and struggles of identity are discussed on five levels, namely the individual, subnational, national, supranational and global levels. Attention is given to the role of the media, information and communication technologies in these struggles and the implications for policy-making within the media and communications sector. The far-reaching implications for Africa, South Africa in particular, are also considered.     

The Effect of Security Alliances on Exchange-Rate Regime Choices

Because an exchange-rate arrangement by nature involves more than one country and because it has various economic and political implications, it is affected inevitably by interstate political relations. Most previous research explains the exchange-rate regime choice as a function of individual country attributes, ignoring the role of interstate political relations and the anchor-currency choice. In this paper, I examine how security alliances influence a country's choices over the flexible-fixed regime and the anchor currency. Alliances increase the ex ante attractiveness of pegging to one's ally, because security ties can reduce concerns over relative gains, motivate active collaboration by the anchor-currency ally to defend the regime, and signal to the currency market the durability of the regime. Hence, a country is biased toward pegging to its ally, relative to either pegging to a nonally or choosing the flexible regime. I test the argument for both the Bretton Woods and the post- Bretton Woods periods. I find that alliance ties affect both the anchor currency and the flexible-fixed regime choices, as expected. But these effects appear to function through the defense-pact alliance alone and are most pronounced for the developing countries.     

Some Thoughts on ＂Harmonious Globalization＂

This article argues that ＂Harmonious Globalization＂ offers a platform for harmonizing the positive and negative aspects of the current U.S.-led economic globalization that reflects the objective laws of human development. The article attempts to chart the path ahead for the world economy in the context of economic globalization, pervasive poverty/inequality, the resultant worldwide political awakening, the degradation of global ecosystems, and the current turmoil in financial institutions. The global challenge ahead will be three-fold： to bring the excluded 1/3 of the world＇s population into the open trade system; to encourage emerging markets like China and India to carry on with open policies and to persuade the developed Western nations to adhere to an open trade system and resist the temptations of trade protectionism. Free market access should be offered to those marginalized countries, the so-called ＂failed or failing states＂ that have been excluded from and angered by the globalization process. The growth in prosperity of these nations will open up a vast potential market for the world.     

新时期朝鲜经济发展战略调整

2009年末朝鲜突然实施的货币更换和禁止外币流通措施以失败告终,虽然没有达到抑制通货膨胀、扭转汇率双重结构、整顿经济管理秩序混乱的目的,却加快了朝鲜扩大对外经济合作的步伐,明确显示出朝鲜利用外部力量促进经济发展的战略调整轨迹。朝鲜将经济重心由重工业向农业和轻工业转变,把提高人民生活水平作为经济政策的核心目标。但是,朝鲜要正确处理计划经济与市场经济、自力更生与有限的对外开放、重工业与农业和轻工业之间的关系,才能从根本上解决其经济难题,实现经济稳定增长。     

Social Europe and/or global Europe? Globalization and flexicurity as debates on the future of Europe

This article claims that the European Union (EU) has had a very peculiar relationship with the globalized post-Cold War economic order. On the one hand, the EU was instrumental in bringing about this order. It aggressively promoted (both internally and externally) the principles and policies upon which this economic order has been based. On the other hand, this proactive engagement was translated within the EU into a highly polarized and antagonistic public discourse that led to a serious identity crisis. In this way, it is argued that economic globalization emerged in the EU as a debate on the nature and future of Europe. After 2005, this polarized and antagonistic discourse started to change. The rise of flexicurity, as a new way of thinking about Europe's place and orientation in the global political economy, has been instrumental in this shift. The article examines and evaluates these developments and their implications for the European project.     

Toward an International Relations Theory of National Innovation Rates

The ability of nations to innovate technologically plays an important causal role in both security studies and international political economy. Explanations for national differences in technological capabilities, however, have had little place in international relations theory. This gap is partly the result of assumptions made by scholars that the rate and direction of technological change are determined by a state's domestic institutions and policies. This article will bring together recent findings about the political economy of technological innovation in order to show that much of this conventional wisdom is incorrect. Instead, it will be shown that, due to the distributive nature of technological change, different combinations of domestic tensions and external security concerns motivate elites to pursue or eschew a technologically competitive economy. Institutions are not causal, they are merely instrumental. Recent findings in the economic development literature therefore have important implications for security studies.     

World Economic Prospects in the Next Ten Years

The world economy,which has displayed unprecedented changes in the 21st century,has three characteristics: the collective rise of emerging powers,the escalating development of globalization,and the further deterioration of global imbalances. International economic development,the relationship between market demand and supply,the balance of power between South and North,and world economic relations and world order are in a state of constant flux. In the next ten years,the world economy will follow a trend th...     

Contradictions between economic liberalization and democratization: The case of South Korea

This article examines the relationships between economic liberalization and democratization in South Korea. The two processes are often correlated, but in Korea liberalization has been problematic for democratization. Domestic liberalization initially expanded space for labour organizations, but after they appeared to become too active, the process was so managed as to block political activity. This also resulted from pressures brought on by international liberalization, which made competitive wage costs increasingly important and raised the prospect of disinvestment by Korean and foreign firms. Liberalization has not reduced the power of business (the chaebol). Deregulation and privatization have encouraged a transfer of public economic power to the private sector. The increased political role of business is not necessarily beneficial, and the chaebol's economic power represents a threat to democratization in a variety of ways. In previous decades state power rested on economic controls; and the main impetus for democratization has come from the expansion of civil society through economic development, rather than from economic liberalization. State intervention in the economy may continue to be required to protect the position of certain civil society groups and to control business power, but domestic and international liberalization have challenged both of these functions and may increasingly curtail them in the future. Thus, close examination of the specifics of liberalization in South Korea show no automatic positive correlation can be made between economic and political reform without risking either reductionism or reification.     

Managing the mixed economy in Central and Eastern Europe: Democratic politics and the role of the public sector

The central argument of this article is that the introduction of democracy and the transition to a market economy in Central and Eastern European countries is producing contradictory and even perverse effects on these societies. These effects are enlarging the micro‐macro paradox of politics and inducing political instability. Instead of focusing on the economic problems or institutionalizing democracy only, it is argued, one should elaborate more fully the relationship between democratic decision‐making, societal needs and wants in civil society and the public organization of policy‐making. In this article an attempt is made to conceptualize these relations by using the principal/agent approach. In addition various models of welfare capitalism and public sector management are discussed and their implications for East European countries. The main conclusion is that the model of the ‘mixed economy’ is not only appropriate, but also that it contributes to a better understanding of the present problems of democratization in this part of the world. In particular the role of the democratic principal and the position of public agents appear to be crucial.     

Culture,liberation, and 'development'

Most of the socio-economic changes taking place in Africa and much of the South are externally driven. External agencies, often in league with the State, by-pass working people and do not involve them in the decision-making processes. Their economic approaches ignore people's cultures and their world view. This denies working people a creative capacity to adapt new techniques and knowledge to their own concrete reality. This article argues for the importance of the historical frame of reference and for the centrality of culture in socio-economic processes. The author argues against approaches which are not culturally familiar to working people.     

In the shadows of war and peace: making sense of violence after peace accords

This article addresses an urgent but largely sidelined issue in the study of peace processes: that high levels of violence—usually framed as ‘crime’—are often ubiquitous in societies experiencing peace processes, even after the signing of peace accords. From South Africa to El Salvador, Guatemala to Northern Ireland, rising interpersonal violence has come to characterise the ‘peace’. This violence often takes place in the context of ambitious post-conflict development efforts. The article argues that even the seemingly non-political violence after peace accords is intimately linked to war, as well as the peace process—in both the causes of violence and in the types of violence that perpetrators use. In order to conceptualise post-peace accord violence, the article presents a framework of violence based on the perpetrators of violence and the types of violence (social, economic or political) that occur. This unpacking of post-peace accord violence emphasises the interconnectedness of political and non-political violence, and stresses the importance of security for development.     

South Africa's Economic Diplomacy: Constructing a Better World for All?

The article raises questions such as: 'Is South African "economic" diplomacy primarily "economic"?' and 'how altruistic in intention are the diplomatic efforts currently being undertaken by South Africa?' These questions flow from the interplay between the premise that economic diplomacy seeks to serve economic interests through diplomatic means, and the pronouncements made by South African decision makers that point to a broader, more altruistic agenda being pursued. In exploring the political and economic elements of current South African economic diplomacy, some pertinent aspects of South Africa's foreign and economic policies are highlighted, and South African economic diplomacy is broadly sketched. The focus is on the post-1994 period, but developments are put in historical perspective. The article concludes that current South African economic diplomacy serves both economic and political interests and that it is deployed in an extremely complex environment in which it is virtually impossible to disentangle the economic from the political and the altruistic from self-interest.     

The Dominican Republic and Central America Free Trade Agreement with the USA: some concerns

This article examines the role of free-trade agreements that integrate profoundly asymmetrical economies in simultaneously benefiting the more powerful nation and exacerbating inequalities within and between the countries involved. The latest in a series of such agreements in the Americas, the Dominican Republic and Central America Free Trade Agreement (DR–CAFTA), opens up the economies of these small nations to US investment and exports, as multinational companies are able to take advantage of lower production costs and weak labour legislation. In the global economy, South–South trade agreements offer a far better alternative for countries with weak institutions and little economic or political leverage.     

African rural labour and the World Bank: An alternative perspective

In the context of economic and technological change in the late twentieth century, the World Bank's World Development Report 1995 combines the themes of labour and the global market, celebrating the triumph of the market in efficient labour-allocation worldwide. The World Bank's emphasis on boosting Africa's agricultural export capacity ignores the prevailing hostile conditions which African products encounter on the world market, and the current tendency towards agricultural labour displacement. `Labour flight', particularly of youth, signals African farmers' own disenchantment with farming under present liberalised market conditions. The narrowness of the W orld Bank's policy vision for Africa avoids the social and political implications of rural labour displacement as well as the need for human-capital investment in rural areas. This article argues that the alternative to human-capital investment now may be war and expensive disaster-relief for decades to come.     

Violence,fear, and development in Latin America: a critical overview

This introduction presents the core concepts that shape this special issue on the impact of violence and the processes of development in Central and South America. The understanding of development is considered in terms broader than the economic context alone, in order to assess wider social and political aspects. With a similarly expansive scope, forms of violence are addressed that range from direct physical harm and bodily attack to the often more subtle aggression of racialised abuse or the pressures on community-centred production from dominant market forces. In these contexts, violence, economic initiatives, and political allegiances form unintended and often dangerous networks of consequence for development matters. All the articles in this volume exemplify further the spatial environments of violence and diverse ‘landscapes of fear’ that shape our existence and help to define our actions, territories, and understanding of what happens around us.     

To Devalue or to Defend? The Political Economy of Exchange Rate Policy

Speculative currency attacks are a regular feature of the international political economy. Nevertheless, not all speculative attacks result in a devalued currency. In many cases, politicians were willing and able to defend the exchange rate peg. I develop a model of strategic interaction between speculators in currency markets and policymakers in governments. This model indicates that speculative attacks occur when economic fundamentals are weak or when there is uncertainty about the capability and/or willingness of governments to defend the currency peg. I show that the government's decision to defend the peg reflects institutional, electoral, and partisan incentives. I test hypotheses from this model on a sample of 90 developing countries between 1985 and 1998 using a strategic probit model.     

Marketization,Class Structure,and Democracy in China: Contrasting Regional Experiences

After two and half decades of market reforms in China, the question of whether reforms have created favourable social conditions for democracy and whether the country's emerging entrepreneurial class will serve as the democratic social base have become hotly debated issues in both academic and policy circles. Based upon an analysis of two regions – Sunan and Wenzhou, the two prototypical local development patterns in China – the article argues that different patterns of economic development have produced distinct local level social and political configurations, only one of which is likely to foster the growth of democratic practices. It suggests that China's political future is largely dependent upon the emerging class structure and class relations that reform and development have produced. If the market reforms and economic development only enrich a few (like the Sunan case), then the possibility of democratic transition will likely be very bleak. Nonetheless, the possibility of a brighter alternative exists, as demonstrated by the Wenzhou case. These arguments thus link China's political transition to critical social conditions, echoing Barrington Moore's influential work on the social origins of democracy and dictatorship.     

Economic policy reform and political transitions in sub‐Saharan Africa

This article examines the distributional consequences of neo‐liberal economic reform during the contemporary era of political transition in the sub‐Saharan African nations of Ghana, Kenya, Senegal, Tanzania and Zambia. It questions the conventional wisdom that reform, by imposing austerity, only produces economic ‘losers’ and subsequent political opposition which will derail reform programmes, particularly in transitional democracies such as those in present‐day Africa. Indeed, it demonstrates that economically reformist politicians employ democratization as a strategy to rebuild support coalitions after initiating economic reform, as it allows them to disengage from old clients and to organize reform ‘winners’. Therefore, taking the above‐mentioned cases as a group, this article suggests that Africa's current economic and political reforms may be mutually reinforcing.