Search

Begin New Search Topic Political Economy

61. The political economy of Kazakhstan. A case of good economics, bad politics?

Author:
Simon Commander
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Can autocracies and their associated institutions successfully implement economic policies that promote growth and investment? Can ‘good economics’ somehow offset the effects of ‘bad’ politics? Kazakhstan is a case where an autocratic regime has actively projected market-friendly policies and attracted significant amounts of incoming investment. These policies are to some extent reflected in the country’s governance ratings, although there has been a significant amount of investment disputes that question the attachment to the rule of law. Moreover, the political regime remains strongly personalised around the founder President, his family and associates. This is reflected in the economics of the autocracy whereby a large public sector and a set of privately held businesses coexist to mutual benefit. The latter have been formed around a very small number of highly connected individuals whose initial accumulation of assets allows them also to act as necessary gatekeepers for entrants. Competition as a result remains limited in both economic and political domains. Yet, uncertainties over the future leadership, along with latent rivalry over access to resources and markets, make the political equilibrium quite fragile. In short, ‘bad’ politics both squeezes the space for, and distorts the benefits from, ‘good’ economics.
Topic:
Political Economy, Politics, Economic Growth, Investment, and Autocracy
Political Geography:
Central Asia and Kazakhstan

62. China's Belt and Road Initiative in Italy: An Analysis of Financial Cooperation

Author:
Nicola Bilotta
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Financial cooperation is essential to boosting bilateral economic ties, providing firms with more effective instruments to operate in foreign markets. It should come as no surprise, then, that financial cooperation was a pillar of the 2019 Memorandum of Understanding (MoU) reached between Italy and China in support of the latter’s Belt and Road Initiative (BRI). However, a preliminary analysis of BRI-related commercial agreements between Italian financial institutions and their Chinese counterparts shows that they have not resulted in any ground-breaking development. These Memoranda have apparently just added a “BRI” badge to pre-existing trends of collaboration. The BRI-related MoUs in the field of financial cooperation do not, for the time being at least, justify concerns that China may gain an economic foothold in Italy large enough to win it much political influence. A more realistic risk is that these MoUs may undermine a common European approach to China, weakening the negotiating stance of the European Union’s. Paper prepared in the framework of the IAI project “When Italy embraces the BRI”.
Topic:
Foreign Policy, Political Economy, Governance, Finance, and Belt and Road Initiative (BRI)
Political Geography:
China, Europe, Asia, and Italy

63. CBDCs for Dummies: Everything You Need to Know about Central Bank Digital Currency (And Why You Shouldn’t Be Afraid of It)

Author:
Nicola Bilotta
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
“No cash accepted in this store”. What might seem to some like science fiction is on its way to becoming reality. The rise of non-cash payments is a global phenomenon, although moving at different speeds around the world. To keep up with the digitalisation of payments (and of the economy), many central banks are exploring the development of Central Bank Digital Currencies (CBDCs), a digital form of cash. Despite being confined to a technical discussion among experts, when (rather than if) launched, CBDCs concerns us all. Thus, raising awareness of what CBDCs are, and of their key economic and political dimensions, is crucial to ensure that citizens are not only passive spectators. This paper has the ambition to provide (non-expert) readers with straightforward and simple answers to some of the many questions they may have around CBDCs. It sets the ground to better understand what CBDCs are (and are not), their drivers and their possible design. It will explore the impact of CBDC systems on privacy, the geo-strategic drivers of CBDCs and the possible rivalry between public and private money. Paper prepared in the framework of a research effort on the risks and the opportunities related to Central Bank Digital Currencies (CBDCs) with the support of Intesa Sanpaolo and the Bank of Italy.
Topic:
Political Economy, Governance, European Union, Finance, Currency, and Digital Policy
Political Geography:
China, Europe, and United States of America

64. An International Digital Yuan: (Vane) Ambitions, (Excessive) Alarmism and (Pragmatic) Expectations

Author:
Nicola Bilotta
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
Days after the European Central Bank (ECB) publicly disclosed its roadmap for a digital euro project on 24 July, the People’s Bank of China (PBoC) published a white paper describing the advancements of its plan for a digital yuan (e-CNY). While the EU roadmap outlines an investigation phase which will end in five years, China has already introduced several pilot experiments for its e-CNY. In June 2021, the e-CNY was employed in more than 70.7 million transactions for a value of 34.5 billion yuan by 20.8 million retail users and 3.5 million corporate users.
Topic:
International Political Economy, Political Economy, Governance, Finance, Currency, and Digital Policy
Political Geography:
China and Asia

65. Covid-19 and the International Liberal Order: Goodbye “Global”, Hello “Regional”?

Author:
Irene Paviotti
Publication Date:
10-2021
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The Covid-19 crisis is broadly recognised as a watershed moment in world history, prompting a radical rethink of social norms and accelerating a number of pre-existing geopolitical trends. When it comes to globalisation and multilateralism, two defining features of the current international order, the pandemic has accelerated a move towards regionalism on the one hand and clearly exposed the shortcomings of an unequal multilateral system on the other.
Topic:
Globalization, Health, Political Economy, Politics, European Union, Institutions, and COVID-19
Political Geography:
Europe

66. If you Can't Beat Them, Join Them: Should States Embrace Bitcoin?

Author:
Jesse Colzani
Publication Date:
09-2021
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
Bitcoin – the most secure and well-established technology to store value[1] – was created in 2008 to challenge the state’s centralised monopoly on money. It is a digital currency worth 1 trillion US dollars that knows no boundaries and is not controlled by any central authority. Although it is considered a threat to the established order, countries and institutional actors are gradually realising Bitcoin can also be a tool to advance their economic and geopolitical interests. Today, governments find themselves in the difficult position of having to decide whether Bitcoin should be integrated into their economies and governance structures or if they should continue to oppose, block or seek to co-opt the digital currency. But to understand Bitcoin and make an informed decision, one has to first appreciate the different components of its ecosystem.
Topic:
Political Economy, Governance, Currency, Digital Policy, and Bitcoin
Political Geography:
Global Focus

67. Notes on Covid-19, Potential GDP, and Hysteresis

Author:
Thomas Michi
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This note provides a model framework for thinking about stabilization policies in the presence of hysteresis after a negative shock like the Covid-19 pandemic. Headline measures of so-called potential GDP published by the Congressional Budget Office represent only one of many possible inflation-neutral trajectories for output. The term potential GDP is misleading since potential implies a unique limit on output. It is much more accurate to consider a range of possible trajectories or multiple equilibria. Repairing the damages from a shock will require overshooting the inflation target and running the economy above its inflation-neutral equilibrium in order to restore the status quo ante level of output and employment. The model assumes constant trend growth so that path dependence takes the form of pure output-level effects.
Topic:
Political Economy, GDP, COVID-19, and Financial Stability
Political Geography:
Global Focus

68. The Public Banking Movement in the United States: Networks, Agenda, Initiatives, and Challenges

Author:
Esra Ugurlu and Gerald Epstein
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
In this paper, we analyze the contemporary public banking initiatives in the United States. We first provide a brief historical account of public-oriented banking in the United States. We then map out the central nodes in the contemporary public banking advocacy networks. Based on an online questionnaire and semi-structured interviews we held with public banking organizers and experts across the country, we provide an overview of the achievements of this growing movement, describe the central socio-economic issues they organize around, and examine the challenges they face. We demonstrate that the interest in public banking is a reaction to a number of socio-economic and ecological issues the United States faces, including the infrastructure crisis, ecological crisis, financial exclusion, and problems stemming from the management of state and local government resources. We argue that public banking can be an important tool in addressing these problems and suggest how the federal government, through the Treasury and the Federal Reserve, can support these initiatives.
Topic:
Political Economy, Banks, Advocacy, and Public Banking
Political Geography:
North America and United States of America

69. Did Alcohol Policy Really Cause the Postsocialist Mortality Crisis? Revisiting the Rebound and Affordability Hypotheses

Author:
Aytalina Azarova, Gabor Scheiring, Michael Ash, and Lawrence King
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper reexamines the argument that alcohol policies were the major factor behind the mortality crisis in postsocialist Russia. We show that the correlation between the Gorbachev anti-alcohol campaign (rebound hypothesis), alcohol prices in the 1990s (affordability hypothesis), and mortality reported in previous analyses is not robust to splitting oblasts into Far- East and the rest of Russia. Our analysis conducted on a sample of 534 towns in the European part of Russia also finds no robust evidence supporting the two hypotheses. In contrast, findings linking privatization to mortality are robust to controlling for the anti-alcohol campaign and the affordability of alcohol.
Topic:
Health, Political Economy, Mortality, Alcohol, and Affordability
Political Geography:
Russia and Soviet Union

70. Predicting Chinese State-Owned Enterprise Policy Incidence

Author:
Sara Hsu
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
In this exploratory research, we examine the effect of economic and noneconomic indicators on the creation of Chinese state-owned enterprise policies. Using a VAR model, we find indicators that explain state-owned enterprise policy creation variance, which means that we can explain, to some extent, the incidence of state-owned enterprise policies. This reduces economic policy uncertainty, thereby having the potential to increase economic activity and reduce costs.
Topic:
Political Economy, Economy, and State-Owned Enterprises
Political Geography:
China and Asia

71. The Flimsy Foundations of Neoliberal Macroeconomics: David Gordon on Saving, Investment, and the Natural Rate of Unemployment

Author:
Robert Pollin
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
David Gordon was, at once, a highly creative economist with an enormous range of interests, while also uncompromising in maintaining rigorous research standards. He was focused equally on hard-core academic research and pressing policy issues. He was also openly committed to the political left, with this commitment animating all his work. One distinctive feature of Gordon’s work was his keenness to dive into the most important topics engaging mainstream economists and to inject explicitly left political economy perspectives into these mainstream debates. This paper focuses on two important examples of Gordon’s contributions that examine front-and-center mainstream macroeconomics questions. The first is the relationship between aggregate saving and investment. The second is the development of the concept of the ‘natural rate of unemployment.’ The evolution of mainstream research on these two questions played a critical role in overturning what had been, over the first two post-World War II decades, a prevailing Keynesian/social democratic consensus, at both the levels of analytic economics as well as economic policy. As the paper reviews, Gordon challenges the analytic findings and policy implications of these perspectives at their core. Gordon’s own basic premises and results are straightforward. He argues that, in fact, investment decisions, not saving rates, are the main driver of economic activity in capitalist economies and that operating capitalist economies at something akin to genuine full employment—i.e. in the range of 2 – 3 percent official unemployment—is a realistic goal. As such, these papers by Gordon contribute significantly toward envisioning a post-neoliberal social structure of accumulation that is committed to the egalitarian principles that were central to Gordon’s life work.
Topic:
Political Economy, Neoliberalism, Investment, Macroeconomics, Unemployment, Saving, and David Gordon
Political Geography:
Global Focus

72. Financialization and Militarization: An Empirical Investigation

Author:
Pelin Akcagun and Adem Elveren
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Based on Arrighi (1994), we empirically investigate whether financialization and militarization are mutually reinforcing phenomena in the U.S. during the post-WW II period. Military spending during the 1950s and 1960s in the U.S., along with other external stimuli, such as a rising sales effort and expansion in finance, insurance, and real estate, counteracted the stagnation of the monopolistic stage of capitalism. Monopoly capital was transformed into finance monopoly capital as the intensity of financial capital increased during the late 1970s in response to stagnation. Considering alternative financialization variables commonly used in the literature and the profit rate in the financial sector, and using several parametric and non-parametric methods, we found a significant relationship between financialization and militarization in the U.S. for 1949-2019. The findings show that the decline in the profit rates lead to a decline in military expenditure. The overall results suggest that the rise in financialization is parallel to the decline in the profit rates, leading to larger military expenditure in total, but with relatively smaller share in GDP.
Topic:
Political Economy, Military Spending, Financialisation, and Militarization
Political Geography:
United States of America

73. Predicting Chinese Banking Policy Incidence

Author:
Sara Hsu
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
In this exploratory research, we examine the effect of economic and noneconomic indicators on the creation of Chinese Banking and Insurance Regulatory Commission policies using a VAR model. We find that CBIRC policies are predicted by State Council construction policies and policies set by the State Administration of Foreign Exchange. This indicates that the CBIRC is inward-looking, observing what other regulators are doing rather than responding to changes in the real and financial economy. This may be a product of market distortions due to China’s unique blend of state-oriented and market-based institutions.
Topic:
Political Economy, Regulation, and Banking
Political Geography:
China and Asia

74. Stranded Fossil-Fuel Assets Translate into Major Losses for Investors in Advanced Economies

Author:
Gregor Semieniuk, Philip B. Holden, Jean-Francois Mercure, Pablo Salas, Hector Pollitt, Katharine Jobson, Pim Vercoulen, Unnada Chewpreecha, Neil Edwards, and Jorge E Viñuales
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The distribution of ownership of transition risk associated with stranded fossil-fuel assets remains poorly understood. We compute global stranded assets of US$1.4 trillion in the upstream oil and gas sector as expectations change to be consistent with stated climate policies. We trace the equity risk ownership from these 43,439 assets through a global equity network of 1.8 million companies to their ultimate owners. Most of the market risk falls on private investors, overwhelmingly in OECD countries, including substantial exposure through pension funds. Financial markets are exposed to a US$690 billion correction, comparable to the mispricing that triggered the 2007-08 crisis. The ownership distribution also shows the large stake OECD investors have in the continued operation of fossil-fuel facilities incompatible with climate change mitigation goals.
Topic:
Climate Change, Political Economy, Economy, Investment, and Fossil Fuels
Political Geography:
Global Focus

75. Work and Social Reproduction in Rural India: Lessons from Time-Use Data

Author:
Smita Ramnarain, Sirisha Naidu, Anupama Uppal, and Avanti Mukherjee
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Even as the literature on work in the Global South acknowledges the importance of forms of non-waged work, it has not sufficiently incorporated consideration of the labor of social reproduction. We propose understanding work through four conceptual dyads: waged productive labor, non-waged productive labor, waged reproductive labor, and non-waged reproductive labor. Through an in-depth description of three specific cases from a Time Use Survey we conducted in rural Punjab, India, we argue not only that all four dyads are required to encompass the world of work, but that this more expansive conceptualization can help us produce richer analyses of the intersections of class, caste, and gender.
Topic:
Political Economy, Labor Issues, Class, Caste, Gender, and Social Reproduction
Political Geography:
South Asia and India

76. National Policy Space: Reframing the Political Economy of Globalization and Its Implications for National Sovereignty and Democracy

Author:
Thomas I. Palley
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper critiques the trilemma framing of the political economy of globalization, and offers an alternative framing rooted in the construct of national policy space. Globalization causes changes in policy space that have drop-down implications for national sovereignty and democratic politics. Globalization involves choices regarding the “degree,” “type,” and “dimensions” of international economic integration. Contrary to the trilemma, the multi-faceted nature of the choices means there are no inevitable implications for sovereignty or democracy. Globalization is an intrinsically political project. To the extent it is now driving a nationalistic anti-democratic turn in politics, responsibility lies with political elites.
Topic:
Globalization, Political Economy, Sovereignty, and Democracy
Political Geography:
Global Focus

77. Oil and Capital Flight: The Case of Angola

Author:
Nicholas Shaxson
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Angola’s “paradox of plenty,” as a country with rich resources and poor development outcomes, makes it ideal for the study of capital flight. With the fifth largest economy in sub-Saharan Africa, the country is known not for what it has done with its vast natural resource endowment, but what it has failed to do with it. The country features prominently in the literature on the ‘resource curse,' as the discovery and exploitation of petroleum has suffocated the development of other economic sectors while profiting the national elite and its foreign partners. This has been accomplished notably through establishment of a powerful parastatal to manage oil, Sonangol, which observers have described as “an island of competence” yet has been instrumental to wealth extraction. Angola’s oil and diamonds also played a critical role in motivating and financing the country’s prolonged and devastating civil war.
Topic:
Development, Oil, Political Economy, Natural Resources, Conflict, and Capital Flight
Political Geography:
Africa and Angola

78. Governance, Social Policy, and Political Economy: Trends in Norway’s Partner Countries

Author:
Stein Sundstol Eriksen
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Norwegian Institute of International Affairs
Abstract:
In 2017–2018, NUPI (the Norwegian Institute of International Affairs) headed a project where political economy analyses were undertaken in eleven of Norway’s partner countries. These analyses were published as eleven separate reports. The reports focused on power relations and political developments in the partner countries, but they also analyzed the nature of governance. After the publication of the World Bank’s Worldwide Governance Indicators for 2019, the MFA approached NUPI and requested that we summarize the findings of this report for Norway’s eleven partner countries and assess these findings in light of the political economy analyses. We were also asked to investigate whether there were any connections between the nature and quality of governance on the one hand, and the nature of social policies and the human rights situation on the other. This report presents the findings of this assessment of the governance scores in the light of the above-mentioned political economy analyses. The report is structured as follows: Firstly, after briefly describing the governance indictors used by the World Bank, we summarize the eleven countries’ scores on the various governance indicators. Secondly, we assess the evolution of governance in the eleven countries, by comparing the scores in the 2019 report with those from 2011. Thirdly, we summarize the findings of the political economy analyses of the eleven countries and discuss how they fit with the governance scores. Finally, we present the eleven countries’ expenditure on social policies, as reported in the ILOs World Social Protection Report, and the human rights situation for the partner countries, and then describe how these findings relate to the governance scores.
Topic:
Development, Economics, Political Economy, Governance, and Social Policy
Political Geography:
Africa, Europe, and Norway

79. A Short Note on Debt-Neutral Fiscal Policy

Author:
Zico Dasgupta
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Centre for Sustainable Employment, Azim Premji University
Abstract:
One of the central concerns against increasing expenditures in the recent period has been the possibility of an adverse impact on debt-GDP ratio. Once stability of debt-ratio is regarded as a policy-objective, the aggregate expenditure that is consistent with the stability condition gets determined by the given level of output growth rate and revenue receipts. Instead of perceiving expenditures to be determined by the debt-stability condition, this short note attempts to lay bare the conditions under which the debt-stability condition is restored despite increasing the growth rate of non-capital primary expenditure to a targeted level. The targeted level of growth rate of non-capital expenditures can be perceived to be one which compensates for the income loss of labour during the pandemic. In contrast to conventional wisdom, the possibility of increasing such expenditures is explored not by reducing capital expenditures, but rather by increasing the latter. Using the multiplier value of capital expenditures estimated by the RBI, it is argued that the debt-ratio would remain unchanged despite increasing the growth rate of non capital primary expenditure if the capital expenditures growth rate is allowed to increase in a specific proportion.
Topic:
Debt, Economics, Political Economy, Labor Issues, GDP, Employment, and Fiscal Policy
Political Geography:
India

80. The Political Economy of Syria’s Physical Fragmentation and Dependence

Author:
Samir Aita
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
The Geneva Centre for Security Policy
Abstract:
It is difficult to imagine how the Syrian conflict could be resolved through a political process alone that does not directly involve the combating forces in Syria – namely the Syrian army and its associated militias linked to the power system in Damascus, the Syrian Democratic Forces (SDF) and their Democratic Union Party (PYD) power system, as well as the “opposition” factions and their respective backers, i.e. Iran and Russia, the USA and Turkey. Similarly, it is difficult to imagine such a solution without addressing the political economy that has emerged and that now underpins these forces’ power, the warlords’ chaos-inducing advantages gained from the country’s physical fragmentation, the hidden or open bargains between these warlords and other powers, and the deterioration of Syrians’ living conditions to unbearable levels. The current situation, where the country’s physical fragmentation has reached relative stability, could persist for a long time at the people’s expense. However, several factors could reignite the conflict: growing competition over resources and rent-seeking activities, even within each area of influence; the ongoing decline in much-needed international aid; and the further deterioration of the situation expected in Lebanon and its consequences for Syria.
Topic:
Economics, Political Economy, Politics, Conflict, Peace, and Strategic Stability
Political Geography:
Middle East and Syria