Out of the shadows or into the dark? Economic openness,IMF programs,and the growth of shadow economies

The existence of shadow economies is an important, yet understudied, issue for international political economy and development. This study examines how two distinct types of international economic engagement—economic openness and participation in International Monetary Fund (IMF) programs—affect the growth of shadow (informal) sectors. We theorize that increased economic openness will reduce the size of countries’ shadow sectors. More specifically, we posit that eliminating market-distorting trade barriers will decrease the incentives for shadow sector activities such as smuggling. Additionally, we posit that increased participation in global production and supply chains is likely to lead to a positive, “climb to the top” effect on states’ regulatory and labor policies that enhance the prospective benefits associated with formal sectors. Conversely, we argue that participation in IMF structural adjustment programs can lead to great shadow sector activity as IMF-imposed structural conditions might cause significant near-term economic hardship and degrade states’ regulatory capacity. The results from a panel of 145 countries from 1971 to 2012 indicate that economic openness reduces the size of the shadow economy, while participation in IMF programs is significantly related to a larger shadow economy. These findings have important implications for understanding how the divergent forms of international economic engagement might affect shadow economies.     

Can human rights conditionality reduce repression? Examining the European Union’s economic agreements

The insertion of human rights commitments into international economic agreements is now a widespread practice. We argue that the effect of such commitments depends on the degree of leverage held by one partner over the other. In a comprehensive analysis of the European Union’s (EU’s) relations with developing countries, we find that human rights clauses are conditionally effective; they are associated with improved political freedom and physical integrity rights only in countries that are more heavily dependent on EU aid. An in-depth look at the EU’s enforcement of its human rights clause in the African-Caribbean-Pacific (ACP) group reveals that the Union most often responds to violations of political rights—particularly coups and flawed elections—and that enforcement is indeed a more powerful catalyst for change in highly aid-dependent states. Alternative explanations—that the impact of the human rights clause depends on legalization, the country’s strategic importance, NGO activity, or domestic institutions—find little support.     

Learning geoeconomics: China’s experimental financial and monetary initiatives

China’s rise is increasingly impacting on the global financial and monetary order. To manage its growing centrality in global financial flows and its new relevance for patterns of currency usage, Beijing has been creating a set of new institutional arrangements in three crucial fields: the provision of crisis liquidity, development financing, and a global infrastructure to internationalize its currency. In contrast to the dominant power political interpretation of such developments, this article highlights the strong linkages of Beijing’s new initiatives with the changes in China’s capitalist development path and stresses their experimental character that serves to manage the economic and political risks of China’s accelerating financial internationalization. With a distinct learning attitude regarding its rising geoeconomic prominence and engagement, Beijing’s risk-averse strategy involves a very careful linking, layering, and nesting of new arrangements.     

India's Role in the South China Sea: Geopolitics and Geoeconomics in Play

This article looks at the South China Sea, an area of dispute between China and other littoral states, as a new area of geopolitical and geoeconomic interest for India. The article follows the strategic discourse on the South China Sea circulating in the Indian government and wider strategic community, and brings in Chinese responses and interpretations of India's involvement. India's role in the South China Sea is four-fold: first, naval deployments; second, increasing strategic-military links with littoral states like Singapore, Indonesia, the Philippines, and Vietnam; third, economic involvement of Indian energy companies in South China Sea waters; and fourth, discussions between India and other regional and extra-regional China-concerned powers about the South China Sea. India's involvement in the South China Sea represents a new development in its Look East Policy, a new balancing factor in the interplay of actors within these waters, and a new friction factor within India-China relations.     

Conceptualizing regional powers’ geoeconomic strategies: neo-imperialism,neo-mercantilism,hegemony, and liberal institutionalism

This article argues that geoeconomics, defined as the geostrategic use of economic power, has become an increasingly important feature of regional powers’ strategic behavior. Yet, we still lack analytical tools to identify and compare regional powers’ geoeconomic strategies. The article marks a first attempt to develop a typology for differentiating potential geoeconomic strategies that regional powers may pursue in dealing with their corresponding regions. It merges the regional power focus with a geoeconomic perspective, producing the following four ideal-typical strategies: neo-imperialism, neo-mercantilism, hegemony, and liberal institutionalism. This new typology serves as a conceptual device for creating analytical differentiation between regional powers and the range of possible geoeconomic strategies pursued by them. The paper discusses ways in which the new typology may contribute to our understanding of regional powers’ foreign policy conduct and to the emerging geoeconomic research agenda. While the purpose of the article is not to test any specific hypothesis or to empirically analyze cases, brief case study vignettes will be presented for illustrative purposes, looking particularly at Brazil, the EU, Germany, and Russia.     

Proliferation Implications of Civil Nuclear Cooperation: Theory and a Case Study of Tito's Yugoslavia

Programs of international civil nuclear cooperation—of “Atoms for Peace”—have come under growing criticism for unintentionally fostering nuclear weapons proliferation in developing countries. However, drawing on the literature on international technology transfer and on Albert Hirschman's theory of exit, voice, and loyalty, this article argues that Atoms for Peace efforts may often seriously hamper developing countries’ nuclear weapons ambitions by empowering their scientific workers and by facilitating the brain drain to the developed world. The article then presents a case study of the historical nuclear program of Yugoslavia, which received very generous help from the Atoms for Peace programs of the United States, Soviet Union, and European states at a time when nonproliferation controls were minimal. The international ties of the Yugoslav nuclear program made its scientific workers much less likely to choose simple loyalty to the Tito regime, and much more likely to choose voice or exit, accelerating the program's ultimate collapse.     

Lessons from Taiwan's Economic Development

Taiwan changed from a traditional agriculture society into an industrialized modern country within roughly one century. This fast development was regarded as a model for developing countries. Taiwan together with Hong Kong, Singapore, and South Korea became known as the Four Asian newly industrialized countries (NICs) in the 1970s, recognized for their successful economic development. However, on its way to becoming a high-income developed country, Taiwan encountered a number of difficulties. Some of them might have been caused by the political threat from China, but there were other challenges that were common to many middle income countries. Taiwan's experiences of the latter may offer lessons to other developing countries. The difficulties for Taiwan caused by China may offer more alarming lessons for countries—including developing countries—that face growing interactions with China.     

Does China have a geoeconomic strategy towards Zimbabwe? The case of the Zimbabwean natural resource sector

The Chinese party-state and Chinese companies have become increasingly active in Sub-Saharan Africa, especially in the natural resource sector. Accessing natural resources is assumed to be one of the main goals of both the Chinese government and relevant Chinese companies in resource-rich African countries. In the article, the interplay between Chinese party-state and state-owned enterprises in Zimbabwe is analyzed from the viewpoint of China’s geoeconomic strategy. While existing literature has focused on various facets of China’s Africa policy, details of collaboration between Chinese party-state and corporate actors remain largely unexamined. In the natural resource sector, such collaboration ranges from negotiating access to natural resources to arranging large Chinese-financed projects repaid or collateralized in natural resources. The article analyzes in detail the cases of three companies that have been involved in such arrangements in Zimbabwe’s natural resource sector between 2000 and 2013: NORINCO, AFECC, and CMEC. The central argument advanced in the article is that China’s Ministry of Commerce, Eximbank and CDB have pressured the Zimbabwean government to offer resources as collateral for further Chinese loans, in particular in the mid-2000's. The article concludes that while a geoeconomic strategy seems to be in place, its implementation is hindered by the great variety of actors involved.     

Ideas matter: China’s peaceful rise

Illuminating on the power transition theory, realists are more than convinced of potential structural conflicts in both economic and security realms due to China’s rise. They see China as a dormant source of challenges to American preeminence, economic policies of the west as evident in the recent negotiation discourses (e.g., G-20 and G-8 meetings), the “western” norms of diplomacy (e.g., Washington consensus) in developing countries including in Africa, and security concerns of its neighboring states. However, China will be able to avoid this claimed inevitability by abiding to peaceful ideas deeply embedded in “New Security Concept,” “peaceful rise theory,” “peaceful development” and a “harmonious world” doctrine. This paper argues that China will be able to rise peacefully because of the efficacy of practicing liberalism and constructivism at large in its diplomacy. China is increasingly and genuinely embracing shared norms and institutions, gradually gravitating East Asian regional order to its favor in the form of power constellation.     

Emerging Powers in the World Trading System: Contestation of the Developing Country Status and the Reproduction of Inequalities

ABSTRACT

This article investigates discursive struggles over the boundaries of the categorisation of developing countries in the world trade regime. A key principle of the World Trade Organization (WTO) grants special rights to the group of developing countries. Recently, it has become highly contested whether emerging economies such as China can legitimately claim to belong to the group of developing countries. This article uncovers how old and new economic powers have tried to strategically (re)frame the boundaries of the developing country categorisation in the WTO. I argue that ongoing contestation reproduces inequalities because many developing countries are unwittingly negatively affected by the lack of formal criteria for classifying emerging economies—even if emerging economies themselves may benefit. In doing so, I illustrate how informal practices of classification may undermine the original intention of categorisation in International Organizations that aims to address inequality among its members.     

Putting the nation back into ‘the international’

Alex Callinicos and Justin Rosenberg have both drawn on the concept of uneven and combined development to resolve what they see as deficiencies in international relations theory: in the case of the former, the absence of a non-realist explanation for the persistence of the states system; in the case of the latter, the absence of a sociological dimension to geopolitics. However, Callinicos omits any consideration of the ‘combined’ aspect of uneven and combined development, while Rosenberg ascribes characteristics of transhistoricity and internationality to uneven and combined development which it does not possess. Against attempts to either restrict or over-extend use of the concept, I will argue that its theoretical usefulness depends on understanding the limits of its spatial and chronological reach. An alternative, if still partial, explanation for the continued existence of the states system will emphasize the continuing indispensability of nationalism as a means of both containing class conflict within capitalist states and mobilizing support for ‘national capitals’ engaged in geoeconomic and geopolitical competition.     

“一带一路”倡议下中国与大加勒比地区的合作

中国与拉丁美洲关系源远流长,尤其是与加勒比国家。自1949年中华人民共和国成立以来,与大加勒比地区的政治、经济、文化关系日益密切。第一个与新中国建立外交关系的拉美国家是古巴,而巴拿马、萨尔瓦多与多米尼加则成为中国最新建交国成员。经过了70年发展历程,双边关系新纪元正在开启,特别是在“一带一路”倡议下。基于正在逐步兴起的“优势共享”理念,这个新时代亦开创了一个前所未有的新合作模式。中国与大加勒比地区关系发展所取得的经验能够展现一个新的协同合作方式。本文立足于大加勒比各经济体在同中国构建相互融合模式中发掘的机遇,并着眼于两个具体案例:“一带一路”倡议下的古巴和多米尼加,并以“双赢”原则为基础,对在特定领域深化同中国的关系提出建议,主要包括交通、电信、工业、贸易、能源、旅游、建筑业、金融、卫生和教育等领域。     

The promise of the geoeconomic Arctic: a critical analysis

Due to global climate change, the Arctic is losing its ice cover with two expected economic consequences: new accessible natural resource reserves and opening maritime routes are anticipated to become accessible. As a result, the Arctic is expected to transform into a globally important geoeconomic space. The article approaches the geoeconomic Arctic by asking whether this transformation is plausible and forthcoming. In particular, the article analyzes critically practical challenges for Arctic economic development as well as geopolitical challenges to the region as a favourable investment and operating environment. The article concludes that while the Arctic will develop economically, the pace and scope of developments are likely to remain moderate due to complex challenges, and that the geoeconomic importance of the region may be exaggerated. Furthermore, external geopolitical dynamics can hinder the realization of the geoeconomic potential of the Arctic. Due to various spill-over effects, illustrated by the crisis in Ukraine, the Arctic is not necessarily as stable an investment and operating environment as often assumed.     

State Building for Future Wars: Neoclassical Realism and the Resource-Extractive State

Neorealist theory holds that the international system compels states to adopt similar adaptive strategies—namely, balancing and emulation—or risk elimination as independent entities. Yet states do not always emulate the successful practices of the system's leading states in a timely and uniform fashion. Explaining this requires a theory that integrates systemic-level and unit-level variables: a “resource-extraction” model of the state in neoclassical realism. External vulnerability provides incentives for states to emulate the practices of the system's leading states or to counter such practices through innovation. Neoclassical realism, however, suggests that state power—the relative ability of the state to extract and mobilize resources from domestic society—shapes the types of internal balancing strategies that countries are likely to pursue. State power, in turn, is a function of the institutions of the state, as well as of nationalism and ideology. The experiences of six rising or declining great powers over the past three hundred years—China, France, Great Britain, Japan, Prussia (later Germany), and the United States—illustrate the plausibility of these hypotheses.     

European‐Atlantic Security Institutions: Current state and future prospects

Since the turn of the millennium, scholars and pundits have been musing over the decline of the West. The disappointing US military invasions in Afghanistan and Iraq, together with the subprime mortgage crisis, seem to be evidence of an abrupt end to America's ‘unipolar’ moment. In Europe, the sovereign debt crisis has amplified Europe's long-term structural economic problems and laid bare the fragile institutional foundation on which the Economic and Monetary Union was built. At the same time, the BRICs and other emerging economies have been growing at unprecedented rates. Those same analysts see a ‘decoupling’ in the world economy: the developing economies pulling the world out of recession, while the advanced industrial economies are unable to solve their domestic difficulties. So to them, the events of the past five years signify the beginning of the end of Western influence, eventually leading to a more complete rebalancing of the world economy's current ‘Western’ system of governance. This article argues instead that the West still has a significant edge when it comes to most critical factors that determine long-term economic growth potential, including technology, innovative capacity, research and development, investment climate and education. Furthermore, the transatlantic economy is less vulnerable than the rest of the world to outside economic shocks and might eventually prove more capable of reform than many expect. The current malaise in the transatlantic community might therefore prove once again to be more cyclical than structural. Relying on linear projections, many are ‘crying wolf’ again, too loud and too soon.     

Globalisation

The term ‘globalisation’ is widely used to describe a variety of economic, cultural, social, and political changes that have shaped the world over the past 50-odd years. Because it is a complex and multifaceted phenomenon, globalisation has been credited with a wide range of powers and effects. Its proponents claim that it is both ‘natural’ and an inevitable outcome of technological progress, and creates positive economic and political convergences. Critics argue that globalisation is hegemonic and antagonistic to local and national economies. This article argues that globalisation is a form of capitalist expansion that entails the integration of local and national economies into a global, unregulated market economy. Although economic in its structure, globalisation is equally a political phenomenon, shaped by negotiations and interactions between institutions of transnational capital, nation states, and international institutions. Its main driving forces are institutions of global capitalism – especially transnational corporations – but it also needs the firm hand of states to create enabling environments for it to take root. Globalisation is always accompanied by liberal democracy, which facilitates the establishment of a neo-liberal state and policies that permit globalisation to flourish. The article discusses the relationship between globalisation and development and points out that some of the most common assumptions promoted by its proponents are contradictory to the reality of globalisation; and that globalisation is resisted by more than half of the globe's population because it is not capable of delivering on its promises of economic well being and progress for all.     

后金融危机时期中国参与国际金融体系改革的目标和路径——以中国参与IMF改革为例

在国际体系处于大发展、大变革、大调整的状态下,一场由华尔街次贷危机引发的全球金融危机加速了国际体系转型的进程。为了应对危机,全球主要经济体首次协商一致,采取共同应对政策。危机过后,如何反思现有的国际货币和金融体系存在的问题?中国的战略目标又是什么?本文主要以国际体系转型为基础,以IMF改革为例来探索中国应采取的路径和策略。     

China’s Belt and Road Initiative: Implications for the Middle East

This article examines the geopolitical and economic implications of the Belt and Road Initiative for the Middle East. It locates the BRI within the region’s politics and examines the opportunities that the initiative offers for the region, as well as its inherent risks and challenges. It argues that the BRI is not merely an economic project as framed by Beijing, but that it represents a new stage in China’s engagement with the region, and—if fully implemented—could have wide geopolitical implications. The Middle East has the potential to contribute immensely to China’s sustained growth by addressing its energy security, supporting China’s role as a ‘megatrader’, and, more importantly, driving China’s efforts to become a global maritime power and monetary power by internationalizing the Renminbi (RMB). Thus, the BRI could have wide implications for the Middle East. Far from being a win-win project for all, the BRI will likely benefit some countries in the region more than others. Iran stands ready to benefit most. The BRI will likely increase the strategic importance of the Suez Canal and could potentially undermine the importance of some logistic hubs in the Middle East in favour of other trade hubs in Central Asia.     

The Islamic challenge in North Africa

This article analyzes and compares the growth of Islamist movements and regime responses in the three core Maghrib states — Morocco, Algeria and Tunisia. In spite of the many points of commonality and their geographical proximity, the particular sociopolitical and historical circumstances of each of the three states have varied widely, producing a different state‐society/regime‐opposition dynamic in each case, resulting in very different political outcomes. Algeria has been, and remains, in many ways, sui generis in the Arab world. Consequently, even if the Islamists do eventually come to power there, one should avoid adopting any simplistic Islamic ‘domino theory’ for the region.     

China,the Interdependent Giant,and the Global Economic Crisis

The global economic crisis revealed China to be an interdependent giant, one whose ‘rise’ was undeniable but also one whose deepening participation in transnational production sharing and network trade made it highly susceptible to an external shock. China weathered the storm relatively well – avoiding a recession, in particular – not because it had ‘decoupled’ from the G7 economies but because its stimulus measures were unusually swift and powerful. One cost, however, has been a worsening domestic imbalance between investment and consumption that carries a heightened risk of asset price inflation, non-performing loans and destabilising levels of local government debt. Meanwhile, China’s ties to the world economy have not fundamentally changed since the crisis began. Despite stirring leader rhetoric and summit declarations, the BRICS have made only modest progress in meeting their goals. East Asia, North America and Europe remain China’s principal trade partners, and cross-border production chains connecting these regions remain the dominant mode of China’s incorporation into the world economy.