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42. The Political Economy of Conditionality and the New Industrial Policy
- Author:
- Fabio Bulfone, Timur Ergen, and Erez Maggor
- Publication Date:
- 09-2024
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- Conditionality was a central concern in the development literature of the 1990s. With the massive expansion of targeted public support to private firms since the Great Financial Crisis, the question of conditionality is once again at the center of industrial policy debates. Despite the growing interest in the concept, the existing literature does not provide a systematic conceptualization of conditionality in the context of industrial policy, nor does it outline the political factors that facilitate the introduction of conditionality by state actors. This paper addresses this gap by offering a systematic political economy of conditionality. We provide an overview of the literature on conditionality, focusing on different industries, historical periods, and national contexts. In doing so, we make three contributions to the debate on industrial policy. First, we distinguish between two broad instruments of conditionality: performance standards and corporate control devices. Next, we map the coalitional, institutional, ideational, and global contextual factors that facilitate conditionality. Finally, we offer two vignettes of recent industrial policy initiatives in the EU and the US as illustrative cases. We make two arguments. First, the presence of conditionality is not primarily a technical matter of political design, but is shaped by combinations of political economy factors. Second, industrial policy conditionality provides an important theoretical lens for assessing how and where the recent revival of state activism represents a substantive break from the neoliberal order.
- Topic:
- Development, Industrial Policy, Political Economy, European Union, Geopolitics, and Conditionality
- Political Geography:
- Europe and United States of America
43. Between Export-Led Growth and Administrative Keynesianism: Italy’s Two-Tiered Growth Regime
- Author:
- Donato Di Carlo, Andrea Ciarini, and Anna Villa
- Publication Date:
- 10-2024
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- Comparative political economy scholarship struggles to categorize Italy’s model of capitalism between a mixed-market economy and a hybrid, stagnant economic system. To enhance our understanding of the Italian political economy, this paper employs the analytical framework of growth regimes to study Italy’s regional economic systems. Our analysis indicates that Italy can hardly be defined as a “national growth regime” due to the presence of two diametrically opposed regional growth regimes: northern regions conform to a manufacturing-based, export-led growth regime supported by competitiveness-enhancing territorial institutions; southern regions conform to a particular variety of the consumption-led growth regime, that is, an administrative Keynesianism regime, which we theorize to typify a regime where growth and employment are systematically dependent on the state’s role as employer of last resort, the state’s consumption-enhancing social policies, and economic forbearance of labor and corporate tax regulations. The paper suggests that studying regional growth regimes is desirable when marked internal diversity in economic outcomes or productive structures exists across regions within (generally larger) countries, and when subnational governments have powers to develop their own major institutions/policies in support of regional growth regimes.
- Topic:
- Political Economy, Regional Economy, Growth Models, and Comparative Economic Systems
- Political Geography:
- Europe and Italy
44. On U.S.-China Relations & Political Economy
- Author:
- Lizzi C. Lee and Neil Thomas
- Publication Date:
- 10-2024
- Content Type:
- Working Paper
- Institution:
- Asia Society
- Abstract:
- Communist leaders may not like electoral democracy but there are few events they will pay more attention to this year than the U.S. presidential election on November 5. General Secretary Xi Jinping says U.S.-China ties are “the most important bilateral relationship in the world,” and Chinese officials, scholars, and netizens are anxious to glean insights about Republican Party candidate and former President Donald Trump and Democratic Party candidate and current Vice President Kamala Harris. For Beijing, the stakes are high. The presidencies of first Trump and now Joe Biden saw the United States adopt a posture of “strategic competition” toward China that has significantly impacted the ruling Chinese Communist Party’s external environment and domestic priorities. Trump imposed tariffs on most Chinese imports to the United States, which Biden ramped up in key industries including electric vehicles. Biden introduced extensive export controls aimed at curbing China’s chip industry, which could be expanded to other sectors. Trump and Biden have both elevated U.S. support for Taiwan; strengthened restrictions on inbound and outbound investment with China; and sanctioned hundreds of Chinese government agencies, state-owned enterprises, private firms, and individuals. Biden has further prioritized working with U.S. allies and partners on economic, political, and security policies to blunt China’s influence. Both countries seek “guardrails” against crisis and conflict, but bilateral diplomacy is increasingly fraught and multilateral cooperation on global challenges is increasingly difficult. This essay analyzes the China policies of both candidates, focusing on the diplomatic and economic dimensions of U.S.-China relations, highlighting how a second Trump administration could deliver acute shocks but potential openings while Harris would likely bring continuity with Biden’s approach. It argues that Beijing has no clear preference between the two candidates. Therefore, neither election outcome would fundamentally change China’s international strategy, although the result would produce different tactical responses. It concludes with recommendations for how both Washington and Beijing can safeguard global stability while preserving national sovereignty regardless of who succeeds Biden.
- Topic:
- Foreign Policy, Political Economy, Sovereignty, Bilateral Relations, Elections, and Donald Trump
- Political Geography:
- China, Asia, North America, and United States of America
45. Inflation Surprises and Election Outcomes
- Author:
- Jonathan Federle, Cathrin Mohr, and Moritz Schularick
- Publication Date:
- 12-2024
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- We study the political consequences of inflation surprises, focusing on votes for extremist and populist parties in 365 elections in 18 advanced economies since 1948. Inflation surprises are regularly followed by a substantial increase in vote shares of extremist, anti-system, and populist parties. An inflation surprise of 10 percentage points leads to a 15% increase in their vote share, comparable to the increase typically seen after financial crises. We show that the change in voting behavior is particularly pronounced when real wages decline, and less evident when real wages are not affected. Our paper points to considerable political after-effects of unexpected inflation.
- Topic:
- Political Economy, Monetary Policy, Elections, Radicalization, Business, Inflation, Voting, and Political Extremism
- Political Geography:
- Global Focus
46. Pay Day Loans and Backroom Empires: South Sudan’s Political Economy since 2018
- Author:
- Joshua Craze
- Publication Date:
- 10-2023
- Content Type:
- Policy Brief
- Institution:
- Small Arms Survey
- Abstract:
- Though elections are now postulated for next year, South Sudan remains in crisis. Conflict continues to scar the country, and climatic shocks exacerbate already acute resource scarcity, leaving approximately 76 per cent of South Sudan’s population surviving on humanitarian assistance. The regime of South Sudanese President Salva Kiir survives by diverting revenues in three key areas—oil production, humanitarianism, and loans from international financial institutions—to the benefit of an elite class in Juba, but at the cost of the immiseration of the people of South Sudan. Pay Day Loans and Backroom Empires: South Sudan’s Political Economy since 2018—a Briefing Paper from the Small Arms Survey’s Human Security Baseline Assessment for Sudan and South Sudan (HSBA) project—analyses this predatory political economy in South Sudan, and charts a shift from the use of wages to reward loyal appointees to a more obscure system based on the dispensations of favours.
- Topic:
- Security, Corruption, Political Economy, Elections, Conflict, and Revenue
- Political Geography:
- Africa, Sudan, and South Sudan
47. Xi Jinping’s Vision for the Middle East
- Author:
- Yair Albeck
- Publication Date:
- 07-2023
- Content Type:
- Policy Brief
- Institution:
- Hudson Institute
- Abstract:
- Chinese leader Xi Jinping clearly aspires to establish a new global economic order centered around Beijing, not Washington. However, a new global economic order cannot be built in a day. The immensity of this challenge has forced Xi to set his sights on a set of interim goals. These include cementing the Communist Party’s control of the Chinese economy and shielding supply chains, capital flows, and strategic bilateral and multilateral relationships from hostile American policies. These goals equate to the creation of a Sinocentric global economic subsystem. This would be partially integrated into the current Western-led system but would be sufficiently decoupled from the West to protect the pillars of the Chinese Communist Party’s political economy. In Beijing’s grand design, the Middle East plays an indispensable role. But Western analysts have often misjudged China’s interests in the region as purely commercial. While Xi values the region for its economic potential, he sees it as one of the most important arenas of competition with the United States. Yet when United States National Security Advisor Jake Sullivan recently discussed American leadership of the global economy, he focused on Europe and the Indo-Pacific and mentioned Africa and Latin America. He did not mention the Middle East once.1 Washington’s persistent blind spot in the Middle East has obscured its view of Beijing’s global ambitions. If the US does not rectify this mistake, it risks losing more influence in the region and aiding China’s effort to supplant the US atop the global economic order.
- Topic:
- Foreign Policy, National Security, Political Economy, Foreign Direct Investment, and Xi Jinping
- Political Geography:
- China and Middle East
48. The political economy of Bitcoin as legal tender in El Salvador: Temporary bandages to permanent wounds?
- Author:
- Tobias Boos and Juan Grigera
- Publication Date:
- 11-2023
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper provides a contextual analysis of the adoption of Bitcoin as legal tender in El Salvador. First, we outline the historical context and the political situation of the period 2019–24 that serve as context for the passage and implementation of the Bitcoin law (Decree No. 57). We identify the institutional and political context and the main areas of contention. Next, we delve into the macroeconomic context of El Salvador, outlining the fundamental features of its economy and highlighting how they relate to currency issues. Our analysis reveals that the adoption of Bitcoin cannot be understood without factoring in the mounting strains surrounding dollarization, remittances, and foreign debt. We conclude by putting forth a set of hypotheses regarding the potential dynamics and future of Bitcoin as legal tender in El Salvador that point beyond Bukele’s tactics.
- Topic:
- Debt, Political Economy, Economy, Bitcoin, Digital Currency, Remittances, Dollarization, and Nayib Bukele
- Political Geography:
- Central America and El Salvador
49. Addressing Loss and Damage through the Mosaic: A Simulation from the Delta Republic
- Author:
- Michael Franczak and Michael Weisberg
- Publication Date:
- 10-2023
- Content Type:
- Policy Brief
- Institution:
- International Peace Institute (IPI)
- Abstract:
- The 2023 UN Climate Change Conference (COP28) takes place amid change and contestation in the global political economy. High prices for food and fuel are still a problem, particularly for countries that are net importers of both. Sovereign debt also remains a challenge due to rising borrowing costs and inaction from major creditors. Meanwhile, the adverse impacts of climate change are rising in scale and intensity and falling disproportionately on the countries least equipped to address them. In this context, parties to the 2022 Climate Change Conference (COP27) agreed to establish new funding arrangements for addressing loss and damage, including a new Loss and Damage Fund (LDF). The proposal for a fund and funding arrangements coordinated by a Loss and Damage Impact Council presents an opportunity to assemble the mosaic of solutions imagined at COP27. The problem is that we still lack a clear and shared picture of what it means to fully address loss and damage: what needs doing, who needs to do it, and how and when it needs to be done. This paper is an attempt to imagine a well-functioning and coordinated system—a mosaic—with functions, institutions, and results that deliver stability in the face of adverse climate change impacts. First, the paper presents the scenario of the fictional Delta Republic, which is suffering a slow-onset crisis compounded by repeated extreme events. It then identifies elements of an ambitious but practical response from the system we have, including actions, modalities, actors, and timing. The paper identifies gaps in the response and obstacles to the actions envisaged in the scenario, including but not limited to finance and financial arrangements. In its conclusion, the paper uses insights gained through the scenario to propose: (1) the purpose of the funding arrangements for extreme and slow-onset events, (2) an initial list of members for a Loss and Damage Impact Council, and (3) potential actions and interventions for the Loss and Damage Fund. Finally, the paper emphasizes the critical nature of a country- or demand-driven approach to the support provided by the LDF, including the use of accredited entities for implementation.
- Topic:
- Climate Change, Political Economy, Simulation, Loss and Damage (L&D), and Conference of the Parties (COP)
- Political Geography:
- Global Focus
50. BlackRock ve ABD Hegemonyası
- Author:
- Muhammet Sait Pınarbaşi
- Publication Date:
- 12-2023
- Content Type:
- Journal Article
- Journal:
- Bilgi
- Institution:
- Sakarya University (SAU)
- Abstract:
- 1980’lerde başlayan uluslararası ekonomi politik gelişmeler kurumsal yönetişim rejimini de etkileyerek, varlık yöneticisi kapitalizmi olarak adlandırılan bir sürece girilmesine ve bu sürecin sonunda yeni ekonomi politik aktörler olan dev varlık yöneticisi şirketlerinin önemli ölçüde büyümesine sebep olmuştur. Ekonomik sistemde hâkimiyetin, rızaya dayalı tahakküm biçimi olarak hegemonyanın ön koşullarından birisi olarak sayılması, bu şirketlerin en büyüğü olan BlackRock’ın ABD hegemonyasındaki konumunun değerlendirilmesinin önünü açmıştır. Konuyla ilgili eserlerin incelendiği literatür taramasının yanında yorumsamacı yaklaşımdan yararlanılarak yapılan çalışmada BlackRock’ı ABD hegemonyası perspektifinden araştırmak hedeflenmiştir. Bu amaç doğrultusunda yapılan araştırmanın sonucunda, yönetimi altındaki varlıkların 10 trilyon dolara ulaştığı BlackRock’ın; ABD ile yakın ilişkisi, ekonomik kriz dönemlerindeki kurtarıcı rolü, dünyanın en büyük finans kuruluşlarına (merkez bankaları dahil) danışmanlık yapması, hissedar olduğu binlerce şirketin genel kurulunda oylama hakkı bulunması ve 2012’den itibaren her yıl yayınlanan mektuplar aracılığıyla küresel ekonomik sisteme önemli ölçüde etki etme kabiliyeti bir bütün olarak değerlendirildiğinde ABD hegemonyası lehine konumlandığı gözükmektedir.
- Topic:
- Political Economy, Hegemony, Capitalism, and BlackRock
- Political Geography:
- North America and United States of America