Political Markets, Bond Markets, and the Effects of Uncertainty: A Cross-National Analysis

One of the critical challenges of contemporary democracy is securing a balance between the markets of representation and the markets of exchange and capital within democracies. This article explores the effect that political markets have upon capital markets' performance as measured by the market risks within the long-term government bond markets in nineteen democracies of the Organization for Economic Cooperation and Development (OECD) between 1955 and 1992. Our theory linking political markets and capital markets will be developed around the logic of transaction cost economics. We will argue that critical aspects of transaction costs within political markets generate corresponding transaction costs and risks within capital markets thereby reducing market efficiency. Specifically, we demonstrate that, based on cross-national evidence drawn from three panels over the time period 1955–1992, stochastic political markets generate transaction costs within long-term government bond markets, the consequences of which are reflected in rising market risk within these capital markets. Our pooled cross-sectional sample confirms that stochasticity in institutional structure presents trade-offs for democracy. Stochasticity may reflect more responsive and generally sensitive representative institutions, but often at the price of risk-laden capital markets. We consider the implications of these findings at the conclusion of the article.     

Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law

An important theory of international cooperation asserts that governments comply with international law because of the reputational costs incurred by reneging on public agreements. Countries that sign binding international agreements in the realm of monetary relations signal their commitment to an open economic system, which should reassure international market actors that the government is committed to sound economic policies. If the theory is correct, we should observe evidence that noncompliance is in fact costly. I test this argument by examining the effect of noncompliance with Article VIII of the IMF’s Articles of Agreement on sovereign risk ratings. The results show that noncompliance with the agreement mitigates any benefits that accrue to Article VIII signatories. The empirical evidence suggests that, in addition to improving economic and political conditions at home, governments in the developing world would improve their access to financial markets by signing and complying with international monetary agreements.     

广西企业开拓东盟市场的营销对策分析

经过努力,东盟已连续多年成为广西最大的贸易伙伴。随着中国-东盟自由贸易区构建进程加快,中国-东盟博览会自2004年起每年都在广西南宁举行,这为广西企业拓展东盟市场提供了新的机遇。在这样的背景下,我们有必要分析广西企业在拓展东盟市场过程中面临的优势和遇到的困难,提出具有针对性的对策措施,才能进一步开拓东盟市场。     

Fools Suffer Gladly: The Use of Economic Sanctions in International Crises

A number of recent international situations have raised again questions regarding the usefulness of economic sanctions as an instrument of foreign policy. Sanctions continue to be applied in a variety of contexts, yet we have not developed a sufficient understanding of the processes involved to determine when, or even if, sanctions can "work." While a great deal has been written on the subject, there have been neither attempts to subject the theoretical arguments to empirical testing nor efforts to provide systematic theoretical explanations for the empirical results that have been produced. In this article, we attempt to address this shortcoming in the literature. We propose a theory of sanctions effectiveness that is based on the spatial model of bargaining in international crises and use this theory to derive a number of hypotheses regarding when sanctions should produce favorable policy outcomes. We then subject some of the derived hypotheses to an empirical test based on a large number of international disputes. The model suggests that while sanctions will not work in many cases, they can have a slight effect on the distribution of expected outcomes if the costs of the sanctions are sufficiently high relative to the values at stake. The available evidence appears to support these expectations.     

Hierarchy Amidst Anarchy: A Transaction Costs Approach to International Security Cooperation

This article provides an interest-based explanation for hierarchy in international politics. The study suggests that—even in a self-help system—self–interested actors voluntarily curtail their sovereignty to obtain needed assurances, yet that these actors have a choice among cooperative security arrangements with different degrees of "bindingness." The key to understanding countries' international institutional choices is in focusing on economic theories of organization and, more specifically, transaction costs. The study begins with the conceptualization of a continuum of cooperative security arrangements with different degrees of bindingness. It then examines different bodies of literature—the traditional realist model and economies–of–scale arguments—and claims that both fail to account for hierarchical security structures in the international system. Recognizing that economists explain hierarchy amidst market anarchy by examining transaction costs, the study makes use of this insight by developing an analogous argument for hierarchy in international politics. Finally, to test the propositions advanced in this article, a brief case study examines plans for the creation of a European Defense Community.     

Negotiating the EU–U.S. Open Aviation Area Agreement 2007 in the Context of Transatlantic Airline Regimes Since 1944

Between 1944 and 2002, the United States sought to create a competitive and commercially driven international civil aviation regime. It tried to peel away politically inspired regulations, which fragmented the marketplace, and deliver efficiencies and consumer benefits. In contrast with the American liberal tradition—albeit with limitations—the industry in Europe was over-regulated and largely based on subsidised state-owned carriers with international market quotas. Thus for many years Europe and the U.S. followed different paths; but political and economic dynamics conspired together in the 1980s and early 1990s to produce remarkable change in the European Community and, by 1997, there were the makings of a competitive and lightly regulated single market, which brought it close to U.S. practice. Since 2002, the United States has been less liberal in its airline policies; the EU has been more liberal. It would be an irony indeed if the great regime liberaliser since 1944 were now to become a force of regulatory conservatism that denied consummation to the vision of a transatlantic open aviation area that could be a magnet to draw in the rest of the world into a truly global commercial airline market.     

“金砖五国”服务贸易竞争力比较分析

本文在综合既有关于国际服务贸易的理论及实证研究成果的基础上,以贸易竞争优势指数(TC指数)和出口比较绩效指数(CEP指数)为分析工具针对1997~2011年"金砖五国"各个服务贸易部门国际竞争力进行了纵向比较分析;再分别对按照生产要素密集度划分的劳动、资本及技术密集型服务的TC指数和CEP指数进行加权综合得到五个国家的综合国际竞争力指数并进行横向比较研究。通过对巴西、俄罗斯、印度、中国和南非贸易数据的分析及比较研究,总结这五个新兴市场国家服务贸易的发展现状、竞争优势及发展趋势。     

AVOIDING TRAGEDY IN POWER POLITICS:

When and why do states adopt new grand strategies? According to a “neoclassical realist” model, changes in international conditions are the chief cause of long-term adjustments in grand strategy, while domestic political-military cultures help specify the precise grand strategies chosen by state officials. What results are outcomes that appear surprising or skewed from a realist perspective. I test the neoclassical realist model against the cases of u.s. strategic adjustment in 1918–1921 as well as 1945–1948 and find that the long-term trajectory of America's rise to world power is best explained by international pressures. The precise strategies chosen in each period, however, were heavily influenced by American political-military culture. The implication is that theoretically inclusive forms of realism can provide convincing explanations for changes in grand strategy; furthermore, states can remain somewhat “differentiated” in terms of their foreign policy behavior, for cultural reasons, and in spite of international pressures to the contrary.     

再论振兴东北老工业基地的新思路

东北老工业基地特殊性在于:计划经济体制浓厚、国有经济比重大、重化产业比例大形成的“铁三角”架构,从而在向市场经济体制过渡的同时,会产生显著的沉淀成本。补偿或降低这些沉淀成本,构建完全的市场竞争环境是新形势下振兴东北老工业基地的关键。     

Buyer Beware: How Market Structure Affects Contracting and Company Performance in the Private Military Industry

Private military and security companies are integral components of the defense and intelligence operations of some of the world's most powerful states. Despite the increasingly pivotal role of contractors, analysts have yet to develop theories explaining when governments should outsource national security responsibilities or what conditions cause private defense markets to function efficiently. This inquiry addresses this gap in the literature by demonstrating that varying market structures—that is, the quantity of firms providing similar services and the number and purchasing power of those buying these services—have significant effects on costs, oversight, and company performance in the private defense industry. A principal–agent framework is developed to explain variation in the performance of firms in different markets across the industry. Evaluation of three private defense markets yields the surprising conclusion that monopsony, rather than a competitive market, is the ideal structure for governments outsourcing aspects of national defense.     

War, Peace, and the Invisible Hand: Positive Political Externalities of Economic Globalization

Studies of signaling in international relations reveal how punishing bluffing ex post through domestic audience costs or opposition groups facilitates credible ex ante communication among states and reduces the impetus toward war. Global integration of economic markets may also reduce uncertainty by making talk costly ex ante. Autonomous global capital can respond dramatically to political crises. To the degree that globalization forces leaders to choose between pursuing competitive political goals and maintaining economic stability, it reveals the intensity of leaders' preferences, reducing the need for military contests as a method of identifying mutually acceptable bargains. Asymmetric integration can dampen the pacific effects of globalization, but asymmetry does not in itself exacerbate dispute behavior. We present the theory and offer preliminary corroborative tests of implications of the argument on postwar militarized disputes.     

论中、俄、日三国面向21世纪的利益关系框架

国际社会的竞争、经济利益的互补以及得天独厚的地缘优势 ,是形成中、俄、日三国关系框架的综合因素 ;而中、俄、日经贸合作与政治协作之间发展的不平衡性 ,又为三国构建利益关系框架的进程带来了现实困难。在这种情况下 ,中、俄、日必须克服“冷战”思维 ,注意解决热点问题 ,在实现市场对接、建立国际经济新秩序方面做出共同的务实性努力 ,才能推动东北亚区域经济合作的快速发展。同时 ,强化亚太经济圈的主体部位与核心作用 ,牵制美国建立单极世界格局的危险图谋 ,为国际政治与经济新秩序的形成做出贡献。     

Between Accommodation and Opportunism: Explaining the Growing Influence of Small Gulf States in the Middle East

Abstract

Smaller members of the Gulf Cooperation Council defied theoretical and practical expectations as they were able to enlarge their international influence during the years of the Arab Spring. They adopted markedly different foreign policy strategies, which can be seen as stances lying between accommodation and opportunism, depending on the extent to which they respected the security concerns of their geopolitical patron, Saudi Arabia. The mainstream schools of IR theory – neorealism, neoliberalism and constructivism – offer different explanations for these phenomena. Although none of the three schools can provide a completely exhaustive explanation, neoliberalism seems to offer the most comprehensive framework for analysis.     

振兴东北中的扩大就业问题研究

振兴东北老工业基地是一个经济社会系统工程,各方面的改革都是重要的,但是不同方面的改革并不是具有同等重要意义的,也不可能是同步进行的。振兴东北的首要目标要从经济增长转向扩大就业,不能把就业作为经济增长的一个配套措施来考虑。目前有两个认识误区:一个是经济增长会自然解决失业问题;另一个是东北地区人口规模较大,而且面临新增就业人口的高峰,高失业率将是一个常态。扩大就业有4条措施:一是坚持劳动者自主择业,是建立新型劳动就业体制的核心;二是建立公平竞争、自由流动的劳动力市场,降低-切阻碍劳动力流动的交易成本;三是补充东北等老工业基地养老金和失业社会保障基金的不足是中央政府的援助政策的重点;四是解除对关键中间产品市场的垄断,促进产业链的延伸和组织的演进。     

International relations: A theoretical synthesis

If the international system is envisaged as a trading network in which political, cutural and social mesotheses, as well as economic goods and services, are exchanged between Parsonian sectors (political, integrative and adaptive), then the behavior of governments, multinational corporations and other agencies can be modelled on those of actors exercising bounded rationality in a set of highly imperfect markets. Power can be conceptualized as a form of political credit, capable of investment, liable to inflation due to over‐extension, and subject to exhaustion—and the illegitimate substitution of force. Political actors attempt to optimize their legitimacy (or political solvency).

Thus global structure is envisaged as a more or less persistent network of exchanges, which necessarily assumes a market configuration, hierarchical and segmented. Then the nature of international relations varies as a function of the actors’ relative positions within this structure,—above/below, near/far—and of their relative systemic motions—fast/slow, rising/falling, approaching/receding.

It is proposed to accept the market structure as given, including the disparities in capacity between countries and their diverse institutions and cultures, in order to explain changes in international relations, i.e. changes in relative position. It is such change that chiefly concerns decision makers.

Several processes contribute to structural change. First, the great engine of change is “progress”: the market imperative for actors either to rise in the structure or to be taken over by others more progressive than they. Thus the whole system tends to “develop” upward. Second, cycles of deflation and inflation in various forms of “credit” operate to raise or lower the overall height of the market pyramid. Third, disparities in levels between Parsonian sectors give rise to turbulance within the global system.     

Systemic Explanations, Divergent Outcomes: The Politics of FinancialLiberalization in France and Spain

This article challenges the adequacy of prevalent market-driven models of regulatory change, and more specifically, the stipulation that international market integration will lead governments undertaking financial liberalization in formerly interventionist states to carry out adequate market reforms. It does so through an analysis of financial regulation in two European countries: France and Spain. The article offers an integrated historical perspective on regulatory change which suggests that the market-driven convergence thesis does not adequately capture the political dynamic behind financial interventionism and liberalization in the two countries. The introduction of dirigisme and its later-day abandonment were driven less by the "state vs. market” dynamics emphasized in much of the literature than by macroeconomic policy choices on the part of postwar elites. Focusing on similarities and differences in the timing and pattern of reform, the article argues that dirigisme was abandoned in France and Spain not because of changing sectoral pressures or the lack of viability of external controls, but because it raised the political costs of monetary austerity for elected authorities. This link between regulatory choices and the politics of macroeconomic adjustment has implications that are likely to be critical in any country undergoing financial liberalization.     

The political economy of labor market regulation by the European Union

Since the introduction of qualified majority voting, at least 58 labor regulations have been imposed by the European Community/Union. Three types of explanations are considered: i) the asymmetry of the EC budgetary process, ii) regulatory collusion and iii) the strategy of raising rivals’ costs. Collusion and the strategy of raising rivals’ costs are compared in a two-country game-theoretic model with international capital mobility. The empirical analysis shows that the transition to qualified majority voting was not preceded by a striking tendency of competitive national deregulation. In all cases in which a directive was contested, the UK was among the contestants. Various indices show that the UK has the least regulated labor market. More generally, the anti-regulation coalition also includes Ireland, the Scandinavian countries and the Netherlands. There are examples showing that if the coalition is too small to block the regulation, its members prefer not to record their dissent officially. In most investigated cases, the European labor regulation is more restrictive than most but not all prior national regulations. The empirical analysis demonstrates that the strategy of raising rivals’ costs plays an important role in EU labor regulation.

Political institutions and FDI inflows in autocratic countries*

ABSTRACT

Why do some autocratic countries attract more foreign direct investment (FDI) than others? Surprisingly, few studies have explored the considerable variation in FDI inflows to non-democratic countries. In this article, I argue that non-democratic countries with seemingly democratic political institutions, such as elected legislatures, attract more FDI inflow than others. This is because these institutions can (1) reduce the transaction costs of investment activities due to the relative transparency of the policy-making process, and (2) act as veto players, making the existing market-friendly policy changes difficult, and thus, promising a more stable investment environment. My empirical results support the main expectation that autocratic countries with legislatures attract more FDI than other autocratic countries, and the institutions’ effects are conditionally modified by the quality of market protecting institutions.     

External-Internal Linkages in Democratization: Developing an Open Model of Democratic Change

This article presents an open model of democratization in the context of discussing some well-known approaches to the role of international factors in democratic transitions. The open model is applied to semi-peripheral states of the international system, more specifically the cases of political change in Spain, Portugal and Turkey in the aftermath of the Second World War. Starting from Dahl's conditions for democratic change, it is argued that the impact of external factors on democratization should be examined closely where the regime expects the internal costs of suppression to be lower than the internal costs of toleration, in other words where the internal balance of forces is unlikely to impel a willingness to democratize. Two new external variables are introduced to open Dahl's closed model: the expected external costs of suppression and toleration. It is shown that, in a democracy-promoting international environment, the leaders of an authoritarian state would base their decisions about whether to democratize on their expectations of both the internal costs of toleration and the external costs of suppression.     

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.