Showing papers on "Economic interdependence published in 2001"

Investing in the Peace: Economic Interdependence and International Conflict

Abstract: Research appears to substantiate the liberal conviction that trade fosters global peace. Still, existing understanding of linkages between cone ict and international economics is limited in at least two ways. First, cross-border economic relationships are far broader than just trade. Global capital markets dwarf the exchange of goods and services, and states engage in varying degrees of monetary policy coordination. Second, the manner in which economics is said to inhibit cone ict behavior is implausible in light of new analytical insights about the causes of war. We discuss, and then demonstrate formally, how interdependence can ine uence states’ recourse to military violence. The risk of disrupting economic linkages— particularly access to capital— may occasionally deter minor contests between interdependent states, but such opportunity costs will typically fail to preclude militarized disputes. Instead, interdependence offers nonmilitarized avenues for communicating resolve through costly signaling. Our quantitative results show that capital interdependence contributes to peace independent of the effects of trade, democracy, interest, and other variables. Students of world politics have long argued that peace is a positive externality of global commerce. Theorists like Montesquieu and Kant and practitioners like Woodrow Wilson asserted that economic relations between states pacify political interaction. Mounting evidence in recent years appears to substantiate these claims. Multiple studies, many identie ed with the democratic peace, link interstate trade with reductions in militarized disputes or wars. 1 While we concur with the evolving

The Study of Interdependence and Conflict Recent Advances, Open Questions, and Directions for Future Research

Abstract: A burgeoning literature has emerged on the relationship between economic interdependence and political conflict. This literature is evaluated, and three issues are raised for future research. First, there is a need to improve the theoretical basis of claims about the influence of interdependence on conflict and to specify more clearly the causal mechanisms underlying any such relationship. Second, future research should identify the boundary conditions of the effects of interdependence on conflict. Third, much more attention must be paid to the definition and measurement of interdependence and conflict.

Clear and Clean: The Fixed Effects of the Liberal Peace

Abstract: In their article in this issue, Donald P. Green, Soo Yeon Kim, and David H. Yoon claim, contrary to liberal theory and extensive evidence, that neither joint democracy nor economic interdependence significantly reduces the frequency of militarized interstate disputes in pooled time-series analyses when dyadic fixed effects are taken into account. Similarly, their fixed-effects analyses contradict theory and previous evidence that democracies have higher levels of trade with one another than do other types of states. Our reexamination, however, refutes both claims and reinforces previous findings. Their fixed-effects analyses of disputes produces distorted results because they consider a relatively short time period, 1951–92, in which variation in the binary dependent variable and the key independent variables, democracy and trade, is limited. When we analyze a longer period (1886–1992), the results confirm liberal theory. The differences between our analyses of bilateral trade and those of Green, Kim, and Yoon primarily arise from a seemingly minor methodological decision. A more reasonable method confirms that democracies do have higher levels of trade than expected on purely economic grounds. Though we do not advocate a fixed-effects model for analyzing these data and have serious reservations about its general usefulness, our findings provide additional confirmation of liberal theories of international relations.

Interdependence, Government Constraints, and Economic Voting

Abstract: This article examines the role of global economic interdependence in constraining citizens' responses to domestic economic performance. While recent work in economic voting has made strides in accounting for the contextual mediators of support, analyses have not gone beyond domestic political structures. At the same time, students of globalization highlight the constraints governments face from the world economy but do not extend their analyses to examine the role of mass political behavior. This article brings these two research agendas together. Using cross-sectional individual-level data, it is found that accounting for exposure to the world economy dampens the strength of domestic economic bases of popular support. Additional analyses show that the susceptibility of different groups in society to the global economy's mediating influences is not uniform but contingent on occupational differences.

Guns, Butter, and Openness: On the Relationship between Security and Trade

Abstract: Sovereign states arm to defend real or hypothetical interests, presumably because they cannot engage in complete, long-term contracting that would prevent such arming. International trade, therefore, takes place within an essentially anarchic context, and we can expect trade regimes and security policies to be related. Indeed, many embargoes, sanctions, and various other forms of trade restrictions that have been used throughout history and continue to be used today can be considered extensions of security policies, whereas some security policies can be attributed to trade policy. The relationship between trade and security, however, has been barely explored within economics.' We could fairly characterize the prevailing view within the discipline as the classical liberal view, according to which the expansion of international trade does not just increase the welfare of the trading partners, but can also patch up any differences they might have over other contentious issues. (Solomon Polachek [1980] represents a rare articulation of this widely held perspective.) More boldly, it could be argued that the expansion of trade always alleviates conflict by forcing the adoption of measures that manage conflict. Nevertheless, one does not need to dig much into history to show that, while trade and economic interdependence can contribute to the peaceful resolution of disputes, they are not sufficient by themselves to guarantee the absence of war and the reduction of arming. Many observers before World War I, for example, considered that the hitherto unprecedented expansion of trade and interdependence between Britain and Germany made war unthinkable and impossible, yet war occurred and with much ferocity and destruction. Furthermore, as Donald Kagan (1995 pp. 373-80) has argued, the British policy of appeasement toward Germany during the 1930's was based on similar arguments about the use of economic calTots to avoid war. What can inter

An Insurgent Path to Democracy Popular Mobilization, Economic Interests, and Regime Transition in South Africa and El Salvador

Abstract: In El Salvador and South Africa, mobilization by the economically and socially marginalized impelled the transition to democracy, forcing the initial liberalization of the regime and eventually laying the political and economic foundations for democratizing compromise. These cases thus provide an opportunity to analyze one mechanism by which mobilization “from below” impels some regime transitions. In this insurgent path to democracy, sustained mobilization by poor and working-class people transformed key interests of economic elites, leading to pressure on the state to compromise with the insurgents, thereby strengthening regime moderates over hard-liners with the result that negotiated transitions to democracy followed. The dramatis personae of these transitions were not contending elite factions, as in most Latin American and southern European transitions, but representatives of distinct classes whose conflict of economic interest propelled the conflict and whose economic interdependence contributed to...

Economic Interdependence Within the Chicago Metropolitan Area: A Miyazawa Analysis

Abstract: The present study explores the nature and strength of economic interde- pendence between inner-city communities and suburbs within the Chicago metropolitan area. Employing Miyazawa's extended input-output framework, a multiregional model is used to investigate the interdependence of income formation and output generation. The metropolitan area is divided into four regions and particular attention is directed to predominantly minority areas on the south and west sides of the city of Chicago. The region-to-region impacts of trade flows and their associated multipliers proved to be far less important in determining the strength of interregional interdependence in contrast to income flows derived from journey-to-work movements. The interrelational income multiplier revealed considerable interdependence between regions although the strength of this interdependence was asymmetric.

A Grand Trade Bargain

Abstract: The Clinton administration came to Washington eight years ago with a straightforward plan to reorient American foreign policy. To spur a lagging economy, it put America's commercial interests? promoting exports and opening markets?on par with the country's traditional security interests. It was a strategy born of the "it's the economy, stupid" campaign. To its enthusiasts, this was a long-overdue adjustment in the country's foreign policy priorities, a recognition that the Cold War had ended and that Europe and Japan had long put their competitive interests first. To Clinton's critics, it was low diplomacy, a perversion of America's global role. As Clinton leaves office, this argument over where America's diplomatic priorities should lie seems quaint and hopelessly out-of-date. Eight years of growing economic interdependence around the world have all but ended the debate. Moreover, the political and economic dynamics of America's world role have completely reversed. Today there is no question the American economy reigns supreme?at least for the moment. Japan has been flat on its back for so long that few in the White House even remember when they were consumed with opening Japan's markets for American cars, apples, and cell phones. At the same time, the concept of how economic forces shape foreign policy and vice versa has become infinitely more complex. If most of the first Clinton term was all about boosting American exports, the past five years have been about stabilizing the rest of the globe, from

Is a Free Trade Zone Emerging in Northeast Asia in the Wake of the Asian Financial Crisis

Abstract: S ince the mid-1980s Northeast Asia' has witnessed a phenomenally accelerating economic integration among its economies, as manifested by the declining importance of the United States both as a market and as a source of investment for Northeast Asian economies and the concurrent deepening economic interdependence among the economies in the region with rising intraregional trade and direct investment flows3 (See Tables 1-5). As an autonomous process, however, growing economic integration in Northeast Asia has been primarily driven by market forces, but short of a formal regional grouping equivalent to the European Union (EU) and the North American Free Trade Agreement (NAFTA). The very nature of economic integration in Northeast Asia is due largely to the continuing existence of some significant constraints that make official regional schemes hard-born in Northeast Asia.

Rethinking sensitivity interdependence: Assessing the trade, financial, and monetary links between states

Abstract: International relations scholars do not adequately conceptualize or measure economic interdependence, a crucial variable in studies of trade and conflict, economic sanctions, and globalization. Most studies conflate vulnerability with sensitivity and confuse interconnectedness with genuine interdependence by relying on inadequate indices of interdependence such as unadjusted trade as a percentage of GDP. Such measures fail to capture the true cost to states of a termination of normal trading relations and ignore completely interstate financial and monetary ties. In this article, we offer a new method, the Contextual Sensitivity Estimator (CSE), for gauging sensitivity interdependence. The CSE addresses existing shortcomings in several noteworthy ways. First, it takes into account the strategic and domestic economic context of external economic linkages. Second, it assesses the composition of trade and the uses of trade proceeds. Third, it provides a detailed conceptualization of critical channels of sensi...

Concepts of Competition in Theory and Practice

Abstract: Begins by critically reviewing Vicker's list of reasons why business competition is likely to lead to productive efficiency, and then argues that traditional economic concepts of competition and productive efficiency need to be broadened to take account of dynamics and uncertainty, and of the importance of economic interdependence which is not based on competition. The structuralist approach to competition policy is examined and particular attention is given to the 'structure - conduct- performance' paradigm. It is suggested that competition policy in practice tends to emphasize structure rather than conduct and is highly static in orientation. Although earlier, most members of the Chicago School e.g. Stigler, supported a structuralist approach to competition policy, more recently several Chicago economists have proposed the "efficiency defense" of market concentration, namely that dominance in an industry is almost always a result of superior efficiency. This evolutionary Darwinian-type defence is based on dynamics and converges towards the Schumpeterian view. Hayek, like Schumpeter, had an interest in competitive processes but the competitive models of these two Austrian-trained economists are very different. The model of Schumpeter is open whereas the system of Hayek is relatively closed and unable to take account of the competitive complexities of modem economic systems. Despite Hayek's interest in processes, his recommended competition policy is structuralist in character and similar to Stigler's.

The impact of China’s WTO accession on trade and economic relations across the Taiwan Strait

Abstract: This paper evaluates the impact of China’s World Trade Organisation (WTO) accession on trade and economic relations across the Taiwan Strait and its implications for the rest of the world by a recursive dynamic, 17-region, 25-sector computable general equilibrium (CGE) model according to actual market access commitments that China and Taiwan have made to date. The simulation results show that both China and Taiwan will substantially benefit from their WTO memberships, and their economic interdependence and their dependence within the rest of the world will further deepen. The rest of the world may also benefit because of the expansion of world trade and improvement of their international terms of trade, but some developing countries with an endowment structure similar to China, like those in South America and Southeast Asia, may experience keener competition in labour-intensive exports and lower prices for their products. JEL classification: F1, F02, C68, P52.

Concepts of Competition in Theory and Practice

Abstract: Begins by critically reviewing Vicker's list of reasons why business competition is likely to lead to productive efficiency, and then argues that traditional economic concepts of competition and productive efficiency need to be broadened to take account of dynamics and uncertainty, and of the importance of economic interdependence which is not based on competition. The structuralist approach to competition policy is examined and particular attention is given to the 'structure - conduct- performance' paradigm. It is suggested that competition policy in practice tends to emphasize structure rather than conduct and is highly static in orientation. Although earlier, most members of the Chicago School e.g. Stigler, supported a structuralist approach to competition policy, more recently several Chicago economists have proposed the "efficiency defense" of market concentration, namely that dominance in an industry is almost always a result of superior efficiency. This evolutionary Darwinian-type defence is based on dynamics and converges towards the Schumpeterian view. Hayek, like Schumpeter, had an interest in competitive processes but the competitive models of these two Austrian-trained economists are very different. The model of Schumpeter is open whereas the system of Hayek is relatively closed and unable to take account of the competitive complexities of modem economic systems. Despite Hayek's interest in processes, his recommended competition policy is structuralist in character and similar to Stigler's.

Cooperation and Competition, Psychology of

Abstract: There are three major theoretical orientations to the study of cooperation and competition: cognitive-developmental, behavioral-learning, and social interdependence. Of the three, social interdependence theory has generated the most research and application. There are two types of interdependence: positive (cooperation) and negative (competition). The absence of interdependence results in individualistic efforts. The basic premise of social interdependence theory is that the type of interdependence structured in a situation determines how individuals interact with each other which, in turn, determines outcomes. Positive interdependence tends to result in promotive interaction in which individuals encourage and support each other's efforts. Negative interdependence tends to result in oppositional interaction in which individuals block and obstruct each other's efforts. No interdependence results in an absence of interaction. The hundreds of studies that have been conducted indicate that cooperation, compared with competitive and individualistic efforts, tends to result in higher achievement and productivity, more positive interpersonal relationships, and greater psychological health. There are, however, competitive and individualistic efforts which result in constructive outcomes.

Glocal Culture in the Thai Media: the Occidental ‘Other’ in TV Advertisements

Abstract: Giddens (1998: 28) is surely correct when he observes that the theme of globalization was hardly mentioned ten years ago, yet now discussion of it is to be found everywhere, from political speeches to business manuals. However, the concept will be misunderstood, he warns, if we think of it solely in terms of economic interdependence and the mere existence of interconnections that are literally worldwide. Driven by a mixture of political and economic influences, globalization actually encompasses a much wider and more complex area since it is transforming the very social institutions in which people’s lives are played out — even in the case of those living in the poorest regions. Furthermore, today’s world of instantaneous electronic communication is very much responsible for the intensity and acceleration of globalization. By definition, globalization is the process by which the relatively separate areas of the globe come to intersect in a single imaginary ‘space’ (Hall, 1995: 190). However, this process is by no means fair and equal. In reality, different places, and different social groups within them, experience globalization in widely varying ways (Massey and Jess, 1995: 220). Globalization, then, is a process which, though it affects the whole globe, is in fact highly uneven in its impact. Some countries, cities and social groups are more actively engaged with its various processes than others and some people are more affected by it than others, whether adversely or in ways that lead to personal empowerment.

Azerbaijan’s Energy Policy and its Implications for Russian Security

Abstract: With the collapse of the Soviet Union, a self-contained integrated economic unit fragmented into fifteen.1 The high level of interdependence among the republics was not perceived as a factor that would enhance mutual trust and foster cooperation. Rather, economic interdependence was and still is considered by the new states as a constraint on their newly acquired sovereignty. Ethnic conflicts and an urgency to break free from Moscow’s yoke impelled some of the new republics to pursue the goal of complete independence,2 if that is possible at all. Azerbaijan was among them.

Cracking the Conjugal Myths: What Does it Mean for the Attribution Rules?

Abstract: The Law Commission of Canada deserves praise for a report1 that is groundbreaking in both its substantive vision and its methodological approach to tax policy analysis. The report’s core argument is that the legal treatment of close adult relationships should depend less on whether they are conjugal in nature and more on their functional relevance to the policy objectives of particular legal regimes. Applying this principle to the Income Tax Act,2 the report criticizes the tendency in tax law to assume that conjugal partners share all their income, expenses, and property while ignoring or discounting the degree of economic interdependence that exists in many other types of close relationships between adults. The report’s recommendations would de-emphasize conjugality to make the income tax more individually focused overall and, where it does take relationships into account, more pluralistic with regard to the form of those relationships. To reach these conclusions, the commission employs a method of analysis that integrates conventional tax policy concepts with the broader public policy questions articulated by the report as a whole, an achievement that is all too rare in tax literature. In the first part of this brief commentary, I expand on the importance of these contributions and ref lect on other changes to the income tax, particularly to the rate structure, that would be needed in order to implement the report’s recommendations. In the second part, I turn to a curious silence in the report, namely, its lack of any commentary on the attribution rules. In particular, many of the commission’s arguments about the need to promote autonomy and equality in adult relationships could be extended to the spousal attribution rules. Other recent developments, such as the Supreme Court of Canada’s decision in Neuman3 and the introduction of the so-called kiddie tax, as well as academic commentary, suggest that we are due for a serious debate on whether to do away with these rules. It is sometimes suggested that abolishing spousal attribution would promote women’s equal access

Area and International Studies: International Relations

Abstract: The discipline of area studies was born out of the desire to have meaningful interactions with developing societies when the USA struggled with its self-appointed task of helping such countries to carry out the rule of law, economic growth, and political democratization. European-derived social sciences were felt to be totally inadequate for the task. At first, area studies focused on local societies, local dynamics, and local logistics and tried to accumulate ‘thick description’ (Cliford Geerz). But the dissatisfaction of the American social scientists in the 1950s through the 1960s gave rise to the American-centric modernization theory which in turn resulted in a merger between social sciences and area studies. This marriage between the two disciplines was short-lived, however. At the beginning of the twenty-first century, social sciences focus on the study of the market, broken down into the categories of the more and less open economies under the globalizing market system, and on the study of democracy, in turn broken down into the categories of established democracies, newly emerging or transitional democracies, and non-democracies and failed states under the third wave of democratization (Samuel Huntington). The inevitable unease associated with analysis using such oversimplified notions as ‘market’ and ‘democracy’ in order to deal with developing societies have led some authors to focus on the rule of law and social trust, studied with historical and cultural sensitivity. The relationship between area studies and international relations has always been ambiguous at best. When state sovereignty and modernization looked well functioning, the relationship was not particularly problematic. But once economic interdependence, transnational relations, deep global integration, and local fragmentation took place in leaps and bounds, it became evermore ambiguous. Area studies and international relations have come closer together, but institutional arrangements of these genres of study seem to be growing further apart.

Anglo-American Relations and Diverging Economic Defence Policies in the 1950s and 1960s

Abstract: At the end of the Second World War Anglo-American relations deteriorated badly, but by 1950 economic interdependence and the cold war reversed this decline and forged a new special relationship.1 It was not as comprehensive or special as in the war, but it counted over a range of changing policy areas until the 1960s when sterling devaluation and British military withdrawal from east of Suez diminished its value. In the meantime it empowered, but also restrained, both countries and this may be clearly seen in the field of cold war economic defence policies.2

Europeanization and Cultural Identity: Two Worlds of Eco-capitalism

Abstract: Two Worlds of Eco-capitalism INTRODUCTION EUROPEAN INTEGRATION scholars have explored the extent to which states and societies in a region defined as "Europe" align policies and redefine institutions to conform to a collective identity. This process, which is referred to by scholars such as Johan P. Olsen as "Europeanization," has in and of itself generated conflicts between separately defined sub-regions within Europe.(1) This article analyzes the material and cultural motivations underlying Scandinavian resistance to European-level governance relying on insights from recent field work in Norway and Iceland. As I have argued elsewhere, the effects of Europeanization reach deeply into the domestic political economies of both European Union (EU) member-states and those states that have decided against joining the EU, such as Norway and Iceland.(2) By signing the European Economic Area (EEA) agreement, Norway and Iceland are legally bound to conform to decisions made in Brussels yet are not full participants in the political process of regional governance. For states which have such distinctive policies and institutions, the EU challenges basic principles of social organization, notions of economic sovereignty and, as this article will demonstrate, traditions of natural resource management. Recent comparative studies of European integration have shown how the Scandinavian way is increasingly contested by Europeanization. As Paulette Kurzer has argued, the EU has mandated a reform in state alcohol monopolies, which represents a major change in a social institution among citizens self-defined as heavy drinkers.(3) In northern Scandinavia, state alcohol control includes high levels of taxation, centralized distribution and sales, and social support for those dependent on alcohol. Market solutions are slowly being introduced, yet these contradict the interventionist philosophy of protecting the citizen and community from excessive drinking. In a separate study, Jonathon Moses and Ton Notermans identify the ways in which Scandinavian central bankers have adjusted national economies to EURO-requirements.(4) Economic convergence has corresponded to higher levels of unemployment in northern Europe with only the Norwegians avoiding the double-digit unemployment typical of continental Europe. Another contested arena of regional politics that has yet to be systematically explored shares the characteristics of social and economic institutions (the absence of a "good fit" between the EU and Scandinavia) yet is distinct from these other issue-areas because convergence is neither underway nor likely in the forseeable future. This conflict is over the regulation of the commons and the political legitimacy of natural resource extraction, and it is likely to be one of the most contentious issues in this new millenium. Within Europe, there are two opposing views of how the environment should be governed and whether particularly resources should be exploited. I refer to these paradigms as "two worlds of eco-capitalism"(5) In contrast to other issue-areas, this conflict has yet to be reconciled by political authorities. Relying on recent insights from the international relations literature and the role of norms, this article begins with a discussion of how the opponents in this eco-conflict frame the issues. What are the fundamental differences between Continental and Nordic norms of environmental management? The discussion provides examples of two issue-areas where no agreement has been reached and the cultural conflict endures. The concluding section discusses the broader relevance of these findings for other issue-areas, and for our understanding of the European integration process. TWO WORLDS OF ECO-CAPITALISM Continental Europe has effectively overcome traditional conflict by increasing economic interdependence and by formalizing political cooperation sector by sector. …

Regional Economic Integration: The European Model

Abstract: Regional initiatives have flourished since the end of the Cold War. Given the degree of integration it has achieved, the European Union is often cited as a model of regional integration. This article argues that European integration has been the product of very specific historical conditions, implying that the politics and dynamics of regional integration in Europe may not be appropriate for and replicable in other regions. It also discusses European monetary union (EMU) and argues that integration within EMU is still incomplete in particular because economic policies are not sufficiently coordinated. Finally, it discusses the contribution of regional integration to global governance and suggests that the "European model" can be a source of inspiration for the rest of the world not as much as a process to emulate as for the lessons that can be learned from the dynamics and experience of European integration about some important issues in managing economic interdependence.