The four Visegrad states — Poland, the Czech Republic, Slovakia (until 1993 Czechoslovakia) and Hungary — form a compact area between Germany and Austria in the west and the states of the former USSR in the east. They are bounded by the Baltic in the north and the Danube river in the south. They are cut by the Sudeten and Carpathian mountain ranges, which divide Poland off from the other states. Poland is an extension of the North European plain and like the latter is drained by rivers that flow from south to north west — the Oder, the Vlatava and the Elbe, the Vistula and the Bug. The Danube is the great exception, flowing from its source eastward, turning through two 90-degree turns to end up in the Black Sea, forming the barrier and often the political frontier between central Europe and the Balkans. Hungary to the east of the Danube is also an open plain. The region is historically and culturally part of western Europe, but its eastern Marches now represents a vital strategic zone between Germany and the core of the European Union to the west and the Russian zone to the east.

Economy and Society

Archimedes said, "Give me the place to stand, and a lever long enough, and I will move the Earth" (Hirsch, Kett, and Trefil, 2002, p. 476). Economists have their own powerful lever: the instrumental variable estimator. The instrumental variable estimator can avoid the bias that ordinary least squares suffers when an explanatory variable in a regression is correlated with the regression's disturbance term. But, like Archimedes' lever, instrumental variable estimation requires both a valid instrument on which to stand and an instrument that isn't too short (or "too weak"). This paper briefly reviews instrumental variable estimation, discusses classic strategies for avoiding invalid instruments (instruments themselves correlated with the regression's disturbances), and describes recently developed strategies for coping with weak instruments (instruments only weakly correlated with the offending explanator). As an example of biased ordinary least squares, consider whether incarcerating more criminals reduces crime. To estimate the effect of increased incarceration on crime, an economist might specify a regression with the crime rate as the depen- dent variable and the incarceration rate as an explanatory variable. In this regres- sion, the naive ordinary least squares regression could misleadingly indicate that high rates of incarceration are causing high rates of crime if the actual pattern is that more crime leads to more incarceration. Ordinary least squares provides a biased estimate of the effect of incarceration rates on crime rates in this case because the incarceration rate is correlated with the regression's disturbance term. As another example, consider estimating consumption's elasticity of intertem- poral substitution (which measures the responsiveness of consumption patterns to changes in intertemporal prices). To estimate this elasticity, economists typically specify a linear relationship between the rate of growth in consumption and the

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Avoiding Invalid Instruments and Coping with Weak Instruments

This book explores whether the world economy is breaking up into regional trading and currency blocs centred on the European Community, Japan and the United States. Frankel uses trade, investment and financial data to assess this issue. He concludes with an analysis of how trends in regional economic integration can be used as building blocks for a stronger multilateral system.

Regional Trading Blocs in the world economic system, reseñado por Antonio Ortiz-Mena L.N.

The increasing density of international regimes has contributed to the proliferation of overlap across agreements, conflicts among international obligations, and confusion regarding what international and bilateral obligations cover an issue. This symposium examines the consequences of this “international regime complexity” for subsequent politics. What analytical insights can be gained by thinking about any single agreement as being embedded in a larger web of international rules and regimes? Karen Alter and Sophie Meunier's introductory essay defines international regime complexity and identifies the mechanisms through which it may influence the politics of international cooperation. Short contributions analyze how international regime complexity affects politics in specific issue areas: trade (Christina Davis), linkages between human rights and trade (Emilie Hafner-Burton), intellectual property (Laurence Helfer), security politics (Stephanie Hofmann), refugee politics (Alexander Betts), and election monitoring (Judith Kelley). Daniel Drezner concludes by arguing that international regime complexity may well benefit the powerful more than others.

/pdf/the-politics-of-international-regime-complexity-gv0bslklvy.pdf

The Politics of International Regime Complexity

Preferential trade agreements (PTAs) have been proliferating for the last twenty years. A large literature has studied various aspects of this phenomenon. Until recently, however, many large-N studies have paid only scant attention to variation across PTAs in terms of content and design. Our contribution to this literature is a new dataset on the design of trade agreements that is the most comprehensive in terms of both variables coded and agreements covered. We illustrate the dataset’s usefulness in re-visiting the questions if and to what extent PTAs impact trade flows. The analysis shows that on average PTAs increase trade flows, but that this effect is largely driven by deep agreements. In addition, we provide evidence that provisions that tackle behind-the-border regulation matter for trade flows. The dataset’s contribution is not limited to the PTA literature, however. Broader debates on topics such as institutional design and the legalization of international relations will also benefit from the novel data.

/pdf/the-design-of-international-trade-agreements-introducing-a-5crvtdobr9.pdf

The design of international trade agreements: introducing a new dataset

This article examines lobbying in the United States on the North American Free Trade Agreement (NAFTA). I argue that economies of scale and production sharing across borders create incentives for firms to seek regional trade liberalization. Statistical analysis demonstrates that sectors with these characteristics were more likely to lobby for free trade in North America; these sectors were also exposed to free trade more rapidly under the tariff-phasing schedule in the NAFTA treaty. However, corporate restructuring to rescale production for the regional market and to increase offshore assembly presented adjustment costs for U.S. workers, which created divisions between labor unions and their employers. I conclude that regional arrangements are an attractive mechanism to liberalize trade for firms in need of larger-than-national markets to take advantage of economies of scale or to develop production-sharing networks.

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0020818303571053

Economic Interests and Regional Trading Arrangements: The Case of NAFTA

The GATT treaty's loophole for free trade areas in Article XXIV has puzzled and deceived prominent scholars, who trace its postwar origins to US aspirations to promote European integration and efforts to persuade developing countries to endorse the Havana Charter. Drawing from archival records, this article shows that in fact US policymakers crafted the controversial provisions of Article XXIV to accommodate a trade treaty they had secretly reached with Canada. As a result, the free trade area exemption was embedded in the GATT–WTO regime, even though neither the Havana Charter nor the US–Canada free trade agreement was ever ratified. Theoretically, the case is an important example of how Cold War exigencies altered the policy ideas of US officials.

Multilateralism compromised: the mysterious origins of GATT Article XXIV

This is an examination of the domestic politics involved in the creation of trading blocs. Global commerce is rapidly coalescing around regional trading blocs in North America, Western Europe, Pacific Asia, and elsewhere, with enormous consequences for the world trading system. "Trading Blocs" examines how domestic politics have driven the emergence of these blocs. Author Kerry Chase argues that certain businesses lobby for trading blocs in order to gain economies of scale or move stages of production abroad. His case studies of domestic trade politics illustrate why recent regional trading arrangements have consistently promoted trade liberalization rather than protectionist backlash. "Trading Blocs" builds on a growing body of research into political economy and domestic politics, challenging the tendency to explain international trade relations in terms of alliances, power politics, and intergovernmental bargaining. Rich in empirical detail and statistical analysis, this book is perfect for scholars and students in the fields of political science, economics, and business.

Trading Blocs: States, Firms, and Regions in the World Economy

International relations theorists attribute the post-1930 collapse of the world economy into protectionism and rival trading blocs to global causes such as hegemonic decline, problems of collective action and free riding, or the macroeconomic disturbance of the Great Depression. This article links protectionism and the formation of trading blocs to political pressure from manufacturing firms unable to take advantage of economies of scale due to the limited size of national markets. A comparative analysis of trade policy in this period demonstrates that small-scale producers with small domestic markets in Japan, the UK and Germany vigorously advocated the formation of protectionist trading blocs. However, large-scale firms in the US, with a vast continental market at their disposal, sought trade liberalization; instead of seeking a trading bloc of their own, these firms also pushed to eliminate commercial discrimination in foreign empires. The analysis concludes that while technological changes requiring a...

Imperial protection and strategic trade policy in the interwar period

The design of rules of origin in free trade agreements (FTAs) arouses spirited lobbying campaigns that mostly escape public attention. This article argues that the domestic groups generally most favorable to FTAs differ in their preferences over rules of origin: industries with large returns to scale favor strict rules of origin to gain scale economies in an FTA, while industries with multinational supply chains prefer lenient rules of origin to accommodate offshore procurement. An econometric analysis of rules of origin in the North American Free Trade Agreement (NAFTA) finds tougher rules of origin the higher the external trade protection and the larger the returns to scale, and more permissive rules of origin the greater the involvement in foreign sourcing. The results suggest that rules of origin may be critical to building domestic coalitions for FTAs. Industry preferences toward rules of origin therefore have important implications for the politics of FTA ratification.

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S002081830808017X

Kerry A. Chase

Papers

Economic Interests and Regional Trading Arrangements: The Case of NAFTA

Multilateralism compromised: the mysterious origins of GATT Article XXIV

Trading Blocs: States, Firms, and Regions in the World Economy

Imperial protection and strategic trade policy in the interwar period

Protecting Free Trade: The Political Economy of Rules of Origin