Varieties of regional monetary cooperation: a tool for reducing volatility in developing economies?

Can regional monetary cooperation shield developing regions from global volatility? The article argues that the main contribution of regional monetary cooperation to enhancing the shock-buffering ability of its member countries is to provide short-term liquidity and to increase regional trade and financial links. In contrast, traditional optimum currency area (OCA) theories formulate the advantages of regional monetary cooperation in terms of allocative efficiency gains and aim at a full currency union as final stage. As such, traditional theory widely ignores the shock-buffering capacity of regional monetary cooperation as well as their varieties. In contrast, the article argues that intermediate stages of regional monetary cooperation have their own rationales related to such shock-buffering capacity. This paper systematically examines the variety of regional cooperation arrangements in the developing world that range from regional payments systems over the pooling of reserves to exchange rate coordination. We propose that the potential for shock buffering is dependent on the chosen form of cooperation. Furthermore, in contrast to full monetary integration, which is highly demanding in terms of policy coordination, the requirements for regional policy coordination are significantly lower, depending on the form and aim of the arrangement.     

The professional politics of the austerity debate: A comparative field analysis of the European Central Bank and the International Monetary Fund

How do different professional structures shape the economic ideas that international economic organizations use to prescribe policy recommendations or derive legitimacy and authority for them? The comparative professional field analysis proposed herein deploys a novel combination of content, network and regression analysis to uncover the precise role of different qualifications, experiences and hierarchies in shaping the economic expertise invoked by the European Central Bank's and the International Monetary Fund's main policy documents, with a specific focus on debates over fiscal consolidation in the wake of the global financial crisis of 2008. The findings challenge much of the scholarship about how economic ideas diffuse across professional domains and where change on macroeconomic policy in international economic organizations is likely to come from. As such, the article should be of interest to scholarship on international bureaucracies, the politics of professional knowledge and the international political economy of fiscal consolidation.     

Federal politics and market reform in the developing world

Prior research on the politics of market reform in developing nations has generally ignored the significant role of federal political and economic arrangements in shaping adjustment processes. In contrast, this research develops a model of macroeconomic reform that accounts for the significance of subnational economic policy in the developing world’s nine major federations. I examine five hypotheses which are expected to influence the capacity of developing federations to conduct polity consistent with the exigencies of market pressures. With the use of a cross-sectional time-series analysis of fiscal and monetary policies, I show that the policy divergence between levels of government shrinks when provincial governments have greater fiscal power and there are high degrees of party centralization across levels of government. These findings have important implications for the political economy of market reform, the widespread move toward fiscal decentralization, and the design of regional supranational institutions. This research is based on work supported by the National Science Foundation under Grant SBR-9809211. I would like to thank Karen Remmer, Ken Roberts, Wendy Hansen, Alok Bohara, and excellent reviewers for helpful comments.     

Economic Crisis and Sub-national Elections in Selected European Countries. Three Types of Possible Relationships

During the past two decades, decentralisation issues have generated a keen interest in a large number of countries. However, this notion is very difficult to define as it refers to a wide range of institutional arrangements on the political, economic and social levels. There are many good reasons why the allocation of fiscal resources and budget transfers among levels of government must come after a strict assignment of spending powers. Hence, decentralisation as a silent revolution in public sector governance has swept across the globe and has reemerged as a valued political and economic goal in most countries, significantly varying from country to country. The purpose of this article is to show the impact of financial and economic crisis on sub-national government and sub-national elections in chosen European countries such as Poland, Ireland, Denmark and Greece. In some of the countries mentioned the sub-national run-offs were conducted with national parliamentary elections, but not in other countries, including Poland. Because of its uniqueness, however, the explanation of which constitutes an essential part of the article, Poland can be ‘a matiere a penser’ and a starting point for interesting analysis. As can be seen, the economic situation can not only change the election results, but also stabilise the political system, which is a good example of how the government party can manipulate public opinion, or even make elections a referendum on economic policy. The main determinant is the financial situation of sub-national government units and the country concerned.     

Introduction

Central Eastern Europe (further CEE) has been thoroughly reconstructed during nearly a quarter of century since the fall of the Berlin wall and the end of the cold war. The CEE countries turned to the West for economic and technological advancement, for political and administrative models as well as for protection. The authors coming from eight different countries look at the place and role of the former member states of the Warsaw Pact in the new European and international constellation. This concept of CEE includes most pro-western states of the former ‘Eastern block’: the four countries of Central Europe (Poland, the Czech Republic, Slovakia and Hungary) and the Baltic states (Lithuania, Latvia and Estonia). There were many tumultuous political developments in and around the region within the last decade, and especially during the last five years when the financial crisis started to take its toll. While the Atlantic link of Central and Eastern Europe is still strong, many commentators have pointed out its wearing strategic meaning. The balance between the focus on the USA and the EU has shifted in favour of Europe. However, this shift has rather been an incomplete one due to the region's own political and economic problems. The aim of this special issue is to analyse the new constellation by looking at the CEE countries themselves, at their ability to react and adapt, produce sound political strategies and act on as national actors: through bilateral ties, regional co-operation, NATO and the EU. Also, the main external actors - the USA, Russia and Germany - are looked at as they directly influence the way how the CEE countries shape their policies.     

The Reform of International Financial System and China’s Policy Options

The reform of international financial system is focused on the following aspects: international monetary system, international financial institutions (IFIs), and international financial regulatory system. The US, European Union, Japan, and the Emerging Market Countries all have different stances concerning the reforms in these fields. There is also an obvious deviation in the interests and demands of Emerging Powers and the US and EU. In addition, the G20 has become the major forum for economic coordination...     

Politics,sport mega events and grassroots mobilization. Anticipated triumph and unexpected failure of political elite in Poland

Sport mega events are the most prominent manifestations of the multidimensional and global interrelation between sport and politics. The purpose of the paper is to present the contrasting cases of two Polish SMEs: UEFA European Championships in football (Euro, 2012) and the bid for Winter Olympic Games Cracow 2022. This article pays special attention to the role of Polish political elite in promoting both events and to the grassroots movement that effectively ended the bidding for the latter event. It also discusses how the allegedly successful Euro 2012 tournament was presented in the public discourse in order to avoid conflicts and debates about the very idea of hosting the games. This proved unsuccessful in the latter case. This case deserves scrutiny as it is an unusual example of effective bottom up mobilization of civil society against the whole political elite.     

A Tale of Two Kazakhstans: Sources of Political Cleavage and Conflict in the Post-Soviet Period

Departing from some prominent scholarship on Kazakhstani politics, the author argues that competition between financial–industrial groups over scarce economic and political resources—rather than inter-clan or centre–periphery rivalries—largely determines who gets what, when and how. While clan politics and regional grievances may still influence struggles over the distribution of power and wealth, their importance has diminished in recent years. Instead, observable political conflict has centred around competing financial–industrial groups, which represent the diverse, and at times clashing, interests of Kazakhstan's business and political elites.     

Economic Transition in Latin American and Post-Communist Countries: A Comparison of Multilateral Development Banks

This article examines regional development banks and their relationship with the World Bank. Specifically, the article analyzes the roles of the Inter-American Development Bank (IDB) and the European Bank for Reconstruction and Development (EBRD), and the factors that have influenced the creation of these international financial institutions. Most of the literature examines regional development banking practices and development strategies as if all regional banks were the same. However, the missions of the IDB and the EBRD are quite distinct. While the IDB primarily provides social sector loans to nation-states, the EBRD primarily provides private sector loans for finance and business development. Given that Latin America and the former Soviet Union share many of the same economic, political and social problems, it is surprising that these institutions are so different. What accounts for the different missions of these regional banks? We find that the influence of borrowing and non-borrowing member states in the creation of these banks can help explain some of the differences between the IDB and the EBRD.     

Coping with U.S. and EU's challenges? Strategic confusion in the Czech foreign and security policy

This article traces developments in the Czech political elite's thinking about structural changes that the region and the country have experienced during the last several years. It is argued that two parallel, external structural constraints have significantly shaped decisions of the Czech political elite as the country has, once again, proven to be an ostensibly “reactive state”. These structural constraints have been the ongoing U.S. recalibration of its grand strategy as well as the financial crisis with a systemic challenge to the European political project in which fiscal and monetary issues have largely replaced previous criticism of the Constitutional Treaty and then the Reform Treaty. It is argued that these developments have posed a notable problem for two predominant ideological convictions present in the Czech political thinking – Atlantism and Europeanism, as neither of them has offered readily answers to deal with such a challenge. As will be shown, this mutually reinforcing dual challenge has further exacerbated previously existing Czech government's lack of political vision, and resorted to a political mentality which has contained elements of denial, rationalization, and political resignation.     

‘Obligations of good faith’: on the difficulties of building US-style EU federalism

The sovereign debt crisis has exposed the weaknesses of the regulative and institutional arrangements of the European Monetary Union. A number of American scholars have highlighted that there are lessons on federalism for Europe to learn from the USA. But to what extent can the US model of fiscal federalism be transferred to the European context? Our general assumption is that besides the differences of the historically developed institutions, structures and economic concepts, it is the different logic that has and is driving the two integration processes that would impede such a transfer. Basing the argument on Oates’ theory of two generations of fiscal federalism, we see that the USA – building on a firm constitutional framework – provided for a crucial role of central government in macro-economic stabilization, whereas the European Union (EU) style of fiscal federalism remains contractual. Although transfers are inevitable, the EU shuns the logic of financial solidarity as economic divergencies cannot be harmoniously accommodated by a commitment to a common constitutional framework. As crisis management largely relies on an intergovernmental decision-making process, it enhances the power of creditor states vis-à-vis the debtor states and follows the logic of ‘surveillance and punishment’. The European emphasis is on controlling the moral hazard and the most likely outcome of the crisis will be differentiated integration.     

Financial crises as catalysts for regional cooperation? Chances and obstacles for financial integration in ASEAN+3, MERCOSUR and the eurozone

This article compares and analyses the different answers from the Association of Southeast Asian Nations+3 (ASEAN+3), Mercado Común del Dur (MERCOSUR) and the eurozone on financial crises in their respective regions. All three regions were hit by economic turmoil between 1997 and 2012, but whereas ASEAN+3 and the eurozone answered with establishing regional liquidity arrangements (RLAs) in order to fight future crises, financial cooperation did not take off in MERCOSUR. Thus, the paper asks why some regions establish RLAs in cases of crisis and others do not. It argues that the variance of regional financial integration in different world regions is due to different interests of regional powers in their respective regions. The regional powers of ASEAN+3 and the eurozone are institutionally and/or economically highly embedded within their respective regions, but this is not the case for Brazil in MERCOSUR. China and Japan suffered from negative externalities of the Asian crisis, and, consequently, have had an interest to stabilize their neighbours’ economies after the crisis. In contrast, Brazil was able to follow a beggar-thy-neighbour strategy at the turn of the millennium, which externalized some of the costs of Brazil's own economic crisis towards Argentina. As a result, Brazil has had no interest in providing liquidity for its regional neighbours after the crisis. France and Germany are not only economically but also institutionally highly embedded in the eurozone because they share a common currency with their regional neighbours. Thus, the stability of the eurozone is a vital interest for Europe's regional powers, and they devote significant resources to stabilize the economies of the eurozone's periphery.     

Macro‐economic coordination and elusive ownership in the European Union

The notion of ownership is well known in relation to global governance. In the realm of EU macro‐economic coordination, it has become a buzzword since the revamping process of the European Semester in 2015. This article investigates how ownership by four types of domestic actors (governments, administrations, parliaments and social partners) manifests itself in the European Semester. We conceptualize three types of ownership, namely institutional, political, and cognitive. Using network analysis, semi‐structured interviews, and a small‐scale survey, we find that ownership is strongest among governments and administrations which are able to shape the outputs of the European Semester (institutional ownership) with little political disagreement (political ownership). While national parliaments display low levels of all types of ownership, employers and unions exhibit relatively strong cognitive ownership. We conclude that the European Semester remains a bureaucratic process contributing to building a multi‐level administrative space rather than an arena for political debates.     

Southeast Asia and the politics of vulnerability

The economic and political crises that have engulfed Southeast Asia over recent years should not have come as such a surprise. A consideration of the region's historical position and economic development demonstrates just what formidable obstacles still constrain the nations of Southeast Asia as they attempt to restore growth and stability. This paper places the Southeast Asian experience in historical context, outlines the political and economic obstacles that continue to impede development, and considers some of the initiatives that have been undertaken at a regional level in the attempt to maintain a degree of stability and independence. Despite the novelty and potential importance of initiatives like the Asean +3 grouping, this paper argues that the continuing economic and strategic vulnerability of the Southeast Asian states will continue to profoundly shape their politics and limit their options.     

REGIONAL GOVERNANCE IN ENGLAND: A CHANGING ROLE FOR THE GOVERNMENT’S REGIONAL OFFICES?

Debates about the appropriate territorial scales of government to meet the challenges of economic, political and social change have gained momentum in Western Europe in recent years. In the UK, political mobilization has transformed constitutional arrangements in Northern Ireland, Scotland and Wales. By contrast, in the English regions, a less radical approach has been adopted, but the outcome has been a strengthening of the institutions of regional governance. A key feature has been the enhanced responsibilities of the Government Offices for the Regions, which have been encouraged to build on their traditional administrative functions and adopt a more strategic role. This article explores the Offices’ contribution to regional and local governance. Our central argument is that although increasingly expected to act as a bridgehead between national and sub‐national government and a focus for regional policy coordination, their potential role in filling the missing gap in English regional governance has not yet been fully grasped.     

Central banks under stress: Reputation,accountability and regulatory coherence

This symposium homes in on an area of public administration that has been through a period of significant change in the last ten years. Since the global financial crisis, central banks have expanded their operations in financial markets, buying up vast quantities of assets as part of expansive monetary policy strategies. They have also played a leading role in the reform of financial regulation and have been entrusted with enhanced authority to supervise financial institutions. This activity has taken place amid heightened political contestation, with central banks increasingly viewed as the quintessence of a technocratic mode of governance that eschews traditional democratic control. The purpose of this symposium is to consider how central banks’ reputation, accountability and regulatory roles have changed since the financial crisis, and what those changes tell us about the balance of power between independent regulatory agencies and elected policy‐makers.     

Changing development models in small economies: The case of Jamaica from the 1950s to the 1990s

By examining in detail the successes and failures of different development models in one developing country over a four-decade period, this article sketches a development model for small economies in the 1990s as an alternative to the neoliberal model pushed by the International Monetary Fund. It reviews the experience of Jamaica with various development models from the 1950s to the 1990s, with special attention focused on the experience of the Seaga government of the 1980s. It also draws lessons from the successful development experience of small European countries and of the East Asian Newly Industrialized countries. In normative terms, the alternative development model attempts to combine growth with equity and democracy. In analytical terms, it takes account of the constellation of domestic forces and appropriate political strategies, as well as of international economic and political conditions. The main features are a strong role for the state in economic interactions with transnational corporations, in identification of export markets and promotion of export production, in selective protection of domestic industry with an export potential, in promotion of agriculture linked to industrial development, in improvement of human resources and promotion of regional economic integration. Within these parameters, a crucial role is assigned to the domestic private sector and a complementary one to foreign investment. Distribution is to be addressed primarily through distribution of productive assets and access to health care and education. Evelyne Huber is professor of political science at the University of North Carolina, Chapel Hill. She is a coauthor ofDemocratic Socialism in Jamaica andCapitalist Development and Democracy. She is currently involved in research on the changing role of the state in Latin America and on comparative social policy. John D. Stephens is professor of political science and sociology at the University of North Carolina, Chapel Hill. He is a coauthor ofDemocratic Socialism in Jamaica andCapitalist Development and Democracy. His current research focuses on options for social democracy and comparative social policy.     

The G‐20 Must Get Serious About Its Commitments

The sovereign debt problem in Europe, ignited by Greece, has morphed into an economic crisis challenging the solvency of major banks and countries as well as a generalized crisis of governance. Lacking the legitimacy of public support, the leaders of the European Union's fledgling institutions have been indecisive and unable to contain the looming danger of financial contagion. Along with the economic slowdown in the United States, instability and volatility in Europe threaten to derail the fragile global recovery. In this section, several former European leaders as well as political figures from the emerging economies offer their ideas on how to fix Europe and stem the global threat.     

How to Save Europe

The sovereign debt problem in Europe, ignited by Greece, has morphed into an economic crisis challenging the solvency of major banks and countries as well as a generalized crisis of governance. Lacking the legitimacy of public support, the leaders of the European Union's fledgling institutions have been indecisive and unable to contain the looming danger of financial contagion. Along with the economic slowdown in the United States, instability and volatility in Europe threaten to derail the fragile global recovery. In this section, several former European leaders as well as political figures from the emerging economies offer their ideas on how to fix Europe and stem the global threat.     

A Robust Vision of Europe

The sovereign debt problem in Europe, ignited by Greece, has morphed into an economic crisis challenging the solvency of major banks and countries as well as a generalized crisis of governance. Lacking the legitimacy of public support, the leaders of the European Union's fledgling institutions have been indecisive and unable to contain the looming danger of financial contagion. Along with the economic slowdown in the United States, instability and volatility in Europe threaten to derail the fragile global recovery. In this section, several former European leaders as well as political figures from the emerging economies offer their ideas on how to fix Europe and stem the global threat.