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54241. Beyond Bipolar: A Three-Dimensional Assessment of Monetary Frameworks

Author:
Adam S. Posen and Kenneth N. Kuttner
Publication Date:
07-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
A great deal of attention has been focused recently on the impact of exchange rate regimes, just as previous empirical research examined central bank autonomy and announced targets for domestic monetary policy. To date, however, these three elements of monetary frameworks have been assessed in isolation from one another, and all have been viewed in terms of a unidimensional spectrum of fixity versus flexibility. Using a newly-constructed dataset, this paper jointly analyzes and compares all three elements' effects on inflation and exchange rate behavior. The results show that each of the three elements has independent and distinct effects on nominal outcomes. Key findings include: (1) although hard pegs do tend to reduce inflation and attenuate exchange rate fluctuations within some range, they are clearly characterized by large devaluations; (2) central bank autonomy is associated with a more stable exchange rate and lower inflation; and (3) explicit inflation targeting reduces both inflation and its persistence, consistent with the view that inflation targeting increases flexibility through transparency. These results raise the possibility that a combination of central bank autonomy, inflation targeting, and a free float might offer the same benefits as any intermediate exchange rate regime on its own, without the proclivity to occasional large depreciations.
Topic:
Economics, International Trade and Finance, and Political Economy

54242. Rating Banks in Emerging Markets: What Credit Rating Agencies Should Learn From Financial Indicators

Author:
Liliana Rojas-Suarez
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The rating agencies' and bank supervisors' records of prompt identification of banking problems in emerging markets has not been satisfactory. This paper suggests that such deficiencies could be explained by the use of financial indicators that, while appropriate for industrial countries, do not work in emerging markets. Among the conclusions, this paper shows that the most commonly used indicator of banking problems in industrial countries, the capital-to-asset ratio, has performed poorly as an indicator of banking problems in Latin America and East Asia. This is because of (a) severe deficiencies in the accounting and regulatory framework and (b) lack of liquid markets for bank shares, subordinated debt and other bank liabilities and assets needed to validate the “real” worth of a bank as opposed to its accounting value.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
East Asia and Latin America

54243. Unchanging Innovation and Changing Economic Performance in Japan

Author:
Adam S. Posen
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The Toyota Commemorative Museum of Industry and Technology gives its visitors much to ponder. Established at the site in Nagoya where in 1911 Sakichi Toyoda founded his automatic loom factory (the basis of the family fortune, which later funded his son Kiichiro's development of automobile production), the museum was opened on June 11, 1994, the 100th anniversary of Toyoda's birth. It is a popular stop on field trips for Japanese schoolchildren, who are required to study in the 3rd grade the automobile industry. The messages, which Toyota wishes to instill in its young visitors, are the importance of “making things” and of “creativity and research.” And confronting all museum visitors upon entry, having central place in the vast and largely empty first room of the exhibits, is Sakichi Toyoda's one-of-a-kind vertical circular loom.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Japan, Israel, and East Asia

54244. IMF Structural Conditionality: How Much Is Too Much?

Author:
Morris Goldstein
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
“...detailed conditionality (often including dozens of conditions) has burdened IMF programs in recent years and made such programs unwieldy, highly conflictive, time consuming to negotiate, and often ineffectual.” “The IMF should cease lending to countries for long-term development assistance (as in sub-Saharan Africa) and for long-term structural transformation (as in post-Communist transition economies)...The current practice of extending long-term loans in exchange for member countries' agreeing to conditions set by the IMF should end.”
Topic:
Economics, International Organization, and International Trade and Finance
Political Geography:
Africa

54245. Foreign Direct Investment in China: Effects on Growth and Economic Performance

Author:
Edward M. Graham and Erika Wada
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
By almost all accounts, foreign direct investment (FDI) in China has been one of the major success stories of the past 10 years. Starting from a base of less than $19 billion in 1990, the stock of FDI in China rose to over $300 billion at the end of 1999. Ranked by the stock of inward FDI, China thus has become the leader among all developing nations and second among the APEC nations (only the United States holds a larger stock of inward FDI). China's FDI consists largely of greenfield investment, while inward FDI in the United States by contrast has been generated more by takeover of existing enterprises than by new establishment, a point developed later in this paper. The majority of FDI in China has originated from elsewhere in developing Asia (i.e., not including Japan). Hong Kong, now a largely self-governing “special autonomous region” of China itself, has been the largest source of record. The dominance of Hong Kong, however, is somewhat illusory in that much FDI nominally from Hong Kong in reality is from elsewhere. Some of what is listed as Hong Kong-source FDI in China is, in fact, investment by domestic Chinese that is “round-tripped” through Hong Kong. Other FDI in China listed as Hong Kong in origin is in reality from various western nations and Taiwan that is placed into China via Hong Kong intermediaries. Alas, no published records exist to indicate exactly how much FDI in China that is nominally from Hong Kong is in fact attributable to other nations.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Japan, China, Israel, East Asia, Asia, and Hong Kong

54246. Subsidies, Market Closure, Cross-Border Investment, and Effects on Competition: The Case of FDI in the Telecommunications Sector

Author:
Edward M. Graham
Publication Date:
02-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Telecommunications long was a sector where sellers of services operated in protected local markets, where law and government regulation created and enforced barriers to entry, especially by foreign firms. In many nations, in fact, the provision of telecommunications services was reserved for state-owned monopoly suppliers. During the late 1980s and through the 1990s, however, many of these barriers have been removed while formerly state-owned firms have been partially or wholly privatized. This has in turn engendered some cross entry by telecom service providers; firms that once were purely domestic in the scope of their operations thus have become multinational.
Topic:
Economics, Government, Political Economy, and Science and Technology

54247. Price Level Convergence and Inflation in Europe

Author:
Gary Clyde Hufbauer, Erika Wada, and John H. Rogers
Publication Date:
01-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Consumer price inflation in the euro area declined steadily during most of the 1990s. However, in the last two years, both headline and core inflation have risen throughout the area, and sizable cross-country differences in inflation have re-emerged. This is illustrated by Figure 1, which shows the headline consumer price inflation rate for the euro area as a whole and for select member countries. As of October 2000, all euro area countries had headline inflation rates above the European Central Bank's 2 percent medium-term ceiling, with rates ranging from 2.1 percent in France and Austria to 6 percent in Ireland. In Greece, which will join the euro area on 1 January 2001, inflation was 3.8 percent.
Topic:
Economics and Political Economy
Political Geography:
Europe, Greece, France, and Austria

54248. The Bulgarian Defense Industry

Author:
Curtis M. Coward and Jeffrey P. Bialos
Publication Date:
07-2001
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
This Report identifies strategic options available to the Bulgarian government and its defense industry, as well as the United States and its NATO partners, for transforming and repositioning the industry for the 21st century and facilitating its integration into the NATO and European Union industrial base. Since other Partnership for Peace (PfP) countries that are aspirants to NATO membership face similar difficulties concerning their defense industries, many of the recommendations herein apply to these countries as well. The report is based on numerous interviews with officials of government entities, private sector firms, and nongovernmental organizations and a review of pertinent governmental and private reports and original documents. A number of the members of the Atlantic Council's working group visited Bulgaria and several of its defense firms in April 2001. Given limitations of time and access to information, the report does not, however, attempt to set forth a thorough review of each firm in the Bulgarian industry.
Topic:
Security and Foreign Policy
Political Geography:
United States and Eastern Europe

54249. Thinking Beyond the Stalemate in U.S. - Iranian Relations, Volume I - Policy Review

Author:
Brent Scowcroft, C. Richard Nelson, Lee H. Hamilton, and James Shlesinger
Publication Date:
05-2001
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The current stalemate between the United States and Iran, while emotionally satisfying to many Americans, does not serve overall U.S. interests well. It hinders the achievement of several key U.S. geopolitical interests, especially over the longer term. These interests include, but are not limited to, regional stability, energy security, and the broader and evolving geopolitical relationships between the United States and China and Russia in the Persian Gulf and Caspian basin. Furthermore, the leading industrial countries are moving to improve relations with Iran.
Topic:
International Relations and Foreign Policy
Political Geography:
Russia, United States, China, and Middle East

54250. Permanent Alliance? NATO's Prague Summit and Beyond

Author:
C. Richard Nelson, Chas W. Freeman Jr., Wesley K. Clark, Max Cleland, Gordon Smith, and Robert L. Hutchings
Publication Date:
05-2001
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
With U.S. leadership, the Alliance has undertaken an impressive transformation over the past decade: from the July 1990 London Summit, which heralded a “Europe whole and free,” to the April 1999 Washington Summit, which welcomed three former Warsaw Pact members as new allies, even as NATO forces were engaged in combat for the first time. But the Alliance has not yet realized its full potential as an institution embracing all democratic nations of Europe dedicated to collective defense and embodying the interests and values of the transatlantic community. Moreover, the allies still confront important challenges to their shared goal of bringing lasting security to the European continent as a whole, as well as to the overall vitality of the transatlantic relationship.
Topic:
Security, NATO, and Economics
Political Geography:
United States, Europe, and London

54251. Changing Terms of Trade: Managing the New Transatlantic Economy

Author:
David L. Aaron and Donald L. Guertin
Publication Date:
04-2001
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The economic relationship between the United States and the European Union (EU) is in the midst of a significant transition. In the past, the dominant element of that relationship was trade. This was only natural, given their large share of the global trading system: the United States generates 19 percent of world trade, and the European Union 20 percent. Moreover, the United States is the EU's largest trading partner, while the EU is the single largest importer into the United States and the second largest market for U.S. exports. But in recent years, several new elements have become more prominent in the transatlantic economic relationship, bringing with them both challenges and opportunities.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

54252. Governance and Politics of the Internet Economy–Historical Transformation or Ordinary Politics with a New Vocabulary?

Author:
Steven Weber and John Zysman
Publication Date:
08-2001
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
Driven by two fundamental processes, rapid technological change as well as social innovation and reorganization, a new digital economy, the E-conomy, is emerging. Rather than merely adding an Internet sector to the economy, the E-conomy has brought about tools for thought, tools that transform every sector of the economy by amplifying brainpower the way steam engines amplified muscle power during the Industrial Revolution. For analytic purposes, the rise of the E-conomy can be told as a story composed of 1) networks and tools, 2) e-business and e-society, 3) the productivity dilemma resolved, and 4) governance and politics. In the short run, the transformative processes unleashed by the E-conomy are likely to lead to new bargains among existing coalitions and interest groups. In the long run, the changes underway promise to fundamentally alter the political sociology of vast communities, give rise to new interests and coalitions, and transform the institutional foundation of social, economic and political life.
Topic:
Economics, Government, Political Economy, Politics, and Science and Technology

54253. The Growth and Development of the Internet in the United States

Author:
Martin Kenney
Publication Date:
06-2001
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
Rarely does a new technology emerge that galvanizes a dramatic rethinking of the nature of commerce. The Internet is such a technology. At this early stage, it is difficult to appreciate fully the importance of the Internet, but some speculate it might be as momentous as the arrival of the telegraph (Cohen et al. 2000; Standage 1999). Radically new communication technologies such as the Internet have multiple applications and often become ubiquitous. As such, the adoption, diffusion, and development of this new technology provide an especially penetrating view of how different national innovation systems have responded to and shaped the commercial possibilities inherent in the Internet. Of course, such an assessment for an economy as large as that of the U. S. is difficult. It is further complicated by the peculiar way in which communications technologies permeate and facilitate connections and relationships. Often the action of such technologies is imperceptible to most of the actors involved and even to aggregate statistics; e. g., better information transfer between customers and suppliers is not manifested in the finished good, though it is embodied in the good in terms of lower cost and/ or higher quality. Given the diffuse nature and the speed of the Internet's evolution, any analysis can only be tentative.
Topic:
International Political Economy, International Trade and Finance, and Science and Technology
Political Geography:
United States

54254. The Internet and E-commerce Development in Mexico

Author:
Martin Kenney, James Curry, and Oscar Contreras
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
The Internet is by all accounts one of the most important innovations of the late twentieth century. As yet the Internet's impact on the economies of developed countries is not obvious, and the economic implications for developing countries are even more unclear. Already much has been written about a supposed "digital divide" within nations and between nations, but no one has a clear understanding of the exact dimensions or implications of this divide. This paper does not take any position on whether Mexico is suffering from a digital divide or is likely to do so in the future; rather, it focuses on the recent rise of Internet sites and e-commerce in Mexico.
Topic:
International Political Economy, International Trade and Finance, and Science and Technology
Political Geography:
Mexico

54255. Creating an Environment: Developing Venture Capital in India

Author:
Rafiq Dossani and Martin Kenney
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
In the last decade, one of the most admired institutions among industrialists and economic policy makers around the world has been the U. S. venture capital industry. A recent OECD (2000) report identified venture capital as a critical component for the success of entrepreneurial high-technology firms and recommended that all nations consider strategies for encouraging the availability of venture capital. With such admiration and encouragement from prestigious international organizations has come various attempts to create an indigenous venture capital industry. This article examines the efforts to create a venture capital industry in India.
Topic:
International Political Economy, International Trade and Finance, and Science and Technology
Political Geography:
United States and India

54256. The Role of the State in the Labour Market: Its Impact on Employment and Wages In Portugal as Compared with Spain

Author:
José Da Silva Lopes
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The role of the State in the economy and in the social arena was deeply transformed in the second half of the 1970s, on account of the change of the political regime. The integration into the European Union since 1985 has brought new radical changes in that role. The paper describes the most important of those changes, putting a special emphasis on social policies and on the labour market, and on the challenges that have to be faced because of European Monetary Union.
Topic:
Government and International Trade and Finance
Political Geography:
Europe

54257. In Defense of the “Democratic Deficit”: Reassessing Legitimacy in the European Union

Author:
Andrew Moravcsik
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Concern about the EU's 'democratic deficit' is misplaced. Judged against prevailing standards in existing advanced industrial democracies, rather than those of an ideal plebiscitary or parliamentary democracy, the EU is democratically legitimate. Its institutions are tightly constrained by constitutional checks and balances: narrow mandates, fiscal limits, super-majoritarian and concurrent voting requirements and separation of powers. There is little evidence that the EU impacts an unjustifiable neo-liberal bias on EU policy. The apparently disproportionate insulation of EU institutions reflects the subset of functions they perform – central banking, constitutional adjudication, civil prosecution, economic diplomacy and technical administration – which are matters of low electoral salience commonly delegated in national systems, for normatively justifiable reasons. Efforts to expand participation in the EU, even if successful, are thus unlikely to greatly expand meaningful deliberation. On balance, the EU redresses rather than creates biases in political representation, deliberation and output.
Topic:
Democratization and Government
Political Geography:
Europe

54258. Fifteen Years On: Spanish Membership in the European Union Revisited

Author:
Charles Powell
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
This paper attempts to describe and account for the major changes undergone by Spain as an EU player since her accession in 1986. Many analysts appear to have espoused the view that most if not all of these can be attributed to the fact that, following the 1996 general election, a decidedly pro-integrationist Felipe González was replaced as prime minister by a vaguely eurosceptical José María Aznar. Undoubtedly, ideological considerations (and, more importantly perhaps, differences in political culture) must be taken into account when examining the evolution of Spain's European policy over the past fifteen years. However, this paper will argue that changing policy styles and contents should be understood in terms of both the learning process undergone by all new member states as they mature, and the need to adapt and respond to developments within the EU, most notably the evolution of the European integration process itself.
Topic:
Development and International Trade and Finance
Political Geography:
Europe

54259. Social Citizenship and Institution Building:EU-Enlargement and the Restructuring of Welfare States in East Central Europe

Author:
Christiane Lemke
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
With the EU-enlargement process well underway, this paper focuses on social citizenship as a conceptual frame for analyzing the restructuring of social institutions in applicant countries in East Central Europe. So far, comparative welfare state analysis has concentrated mainly on the developed economies of the OECD-countries; there is little systematic analytical work on the transitions in post-communist Europe. Theoretically, this paper builds on comparative welfare state analysis as well as on new institutionalism. The initial hypothesis is built on the assumption that emerging patterns of social support and social security diverge from the typology described in the comparative welfare state literature inasmuch as the transformation of postcommunist societies is distinctly different from the building of welfare states in Europe. The paper argues that institutionbuilding is shaped by and embedded in the process of European integration and part of governance in the EU. Anticipating full membership in the European Union, the applicant countries have to adapt to the rules and regulations of the EU, including the “social acquis”. Therefore, framing becomes an important feature of institutional changes. The paper seeks to identify distinct patterns and problems of the institutionalization of social citizenship.
Topic:
International Relations and Security
Political Geography:
Europe and Eastern Europe

54260. On Incentives in Technology Policymaking: What the EU can learn from the U.S. developments

Author:
Wolfgang Gick
Publication Date:
01-2001
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
This paper focuses on the incentives political and bureaucratic actors face in the institutional setting of EU technology policy. In examining the implications and assumptions of neoclassical and evolutionary theories of technological change, it tries to answer why some approaches are difficult to translate into policy designs. By focusing on positive policymaking the paper examines why policy learning does not occur in certain institutional settings. A special focus is on the informational constraints that limit policy design. Since evaluation and oversight mechanisms have not been sufficiently developed and accepted within EU settings, there is much room for inefficiency, as a basic agency model with hidden information shows. If political planners have incomplete information about the state of the world, programs cannot be designed efficiently. Hence, a better link between evaluation and program design could reduce inefficiencies. Regarding this point, current discussions in U.S. policymaking seem to focus increasingly on program design effects and policy implementation.
Topic:
Science and Technology
Political Geography:
United States and Europe