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2. Peripheral Growth Models and the Global Economy: A Second Image IPE Perspective
- Author:
- Michael Schedelik and Andreas Nölke
- Publication Date:
- 07-2025
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- The paper departs from the perspective of “second image IPE,” i.e., the need to closely combine Comparative Political Economy (CPE) and International Political Economy (IPE). More specifically, it focuses on the observation that the growth models in the (former) periphery of the global economy (a typical focus of CPE) are strongly shaped by their interdependencies with the structural transformations of the global economy (as studied by IPE). At the same time, the changes within the growth models of large economies in this periphery (CPE) can have a major impact on global interdependencies (IPE). For example, the rise of China as a major player in world trade and investment (“China shock”) has had a substantial impact on growth models elsewhere in the periphery, via import penetration, direct investment, and export demand. This paper shows how these growth models shape (and are shaped through) international interdependencies by analyzing (1) the effects of global commodity cycles on the growth experience of several major exporters of primary resources, such as Brazil or Indonesia, during and after the recent commodity boom. (2) We further elaborate on the effects of global financial cycles on peripheral countries, particularly those pursuing debt-led growth models, such as South Africa or Turkey. (3) We finally point to the role of global production chains and foreign direct investment for FDI-led growth models of manufacturing exporters such as Thailand or Vietnam in South East Asia.
- Topic:
- Political Economy, Foreign Direct Investment, Economy, Economic Growth, Commodities, Emerging Economies, and Growth Models
- Political Geography:
- Global Focus
3. Shifting Paths? The Evolution of Southern European Growth Trajectories Between the Global Financial Crisis and the Covid Pandemic
- Author:
- Fabio Bulfone, Mischa Stratenwerth, and Arianna Tassinari
- Publication Date:
- 06-2025
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- This paper traces the growth trajectories of the Southern European economies (Greece, Italy, Portugal, and Spain) from the financial to the covid crisis. From a review of the comparative political economy literature focusing on Southern Europe, we derive three propositions regarding the growth profile, the development of high value-added services and manufacturing exports, and employment outcomes. To assess the accuracy of these propositions, we conduct growth decompositions based on import-adjusted demand components as well as on sectoral output and employment indicators. The data show that Southern European economies are similar in that export-led growth has not been sufficient to boost aggregate growth, stimulate high value-added services or manufacturing, reverse pro-cyclical employment declines, or create high-wage employment opportunities. But the Southern European economies also differ, both in terms of their sectoral growth profiles and their aggregate performance. In the second half of the decade, Portugal and Spain managed to combine domestic demand and exports to achieve stronger growth than Italy and Greece. Sectoral developments in Portugal and Spain (and to a lesser extent in Italy) tentatively suggest a potential “Iberian growth path” that is compatible with euro area constraints but ultimately peripheral. The paper concludes by considering the empirical and theoretical implications of these findings for the study of the Southern European model of capitalism.
- Topic:
- Political Economy, Economic Growth, Exports, and Austerity
- Political Geography:
- Europe, Greece, Spain, Italy, Portugal, and Southern Europe
4. The Political Economy of Starmer's Labour
- Author:
- Colm Murphy, Sam Freedman, Morgan Jones, Theo Bertram, and Kate Alexander Shaw
- Publication Date:
- 03-2025
- Content Type:
- Video
- Institution:
- Mile End Institute, Queen Mary University of London
- Abstract:
- The first eight months of the new Labour government have been tumultuous, and nowhere more than in the politics of economics. Rachel Reeves has hiked taxes and increased borrowing, but her Treasury are also in tense negotiations with other departments over spending constraints. The Bank of England is trying to cut interest rates, but in a volatile market environment highly sensitive to developments across the Atlantic. The Government has already made itself vocal enemies ranging from tractor-driving farmers to child poverty campaigners, and businesses, trade unions, and lobbyists are currently battling to shape its policies on workers rights, planning reform, oilfields and airport expansions. What have we learned about Labour's economic policies? Do they have a coherent strategy? How united is the Labour Party and what are the emerging tensions? What would a successful economic strategy look like, given the UK's longstanding weaknesses of underinvestment and regional inequality and newer dangers like trade wars and recessionary risk? In this Mile End Institute webinar, Dr Colm Murphy, Sam Freedman (author of Britain's biggest politics Substack), the political writer Morgan Jones, former Number 10 advisor Dr Theo Bertram, and the economist Dr Kate Alexander Shaw explore the political economy of Keir Starmer's Labour Party.
- Topic:
- Political Economy, Political Parties, Labour Party, and Keir Starmer
- Political Geography:
- United Kingdom and Europe
5. Flawed by Design: What al-Sisi’s Egypt Reveals About the Myth of Authoritarian Efficiency
- Author:
- Johannes Späth
- Publication Date:
- 07-2025
- Content Type:
- Policy Brief
- Institution:
- Austrian Institute for International Affairs (OIIP)
- Abstract:
- This policy analysis challenges the rising narrative that authoritarian regimes, despite their repressive nature, offer superior governance efficiency and contribute to regional stability. Using Egypt under President Abdel Fattah al-Sisi as a case study, it argues that the perception of authoritarian efficiency is not only analytically flawed but dangerously misleading for international policymakers. European and Western engagement with Egypt continues to rely on flawed assumptions about authoritarian capacity and stability. Financial support, arms sales, and diplomatic legitimacy are extended largely unconditionally, under the illusion that al-Sisi’s regime can deliver long-term order. This approach ignores the structural fragility baked into Egypt’s political economy, and risks enabling a trajectory toward fiscal implosion and social unrest. The paper argues for a strategic recalibration. European policymakers should shift from regime-centered engagement to resilience-centered investment, focusing on areas like education, climate adaptation, and local economic empowerment that outlast regime cycles. Europe’s current approach risks buying short-term quiet at the cost of long-term instability. A policy recalibration grounded in realism, not regime accommodation, is both necessary and overdue.
- Topic:
- Political Economy, Bilateral Relations, Authoritarianism, European Union, Regime Security, Regional Stability, and Regime Legitimation
- Political Geography:
- Europe, North America, and Egypt
6. Identifying Mutual Interests: How Donor Countries Benefit from Foreign Aid
- Author:
- Tobias Heidland, Maximilian Michael, Moritz Schularick, and Rainer Thiele
- Publication Date:
- 06-2025
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- Official development assistance (ODA) is widely studied for its impact on recipient countries, but its effects on donor countries remain underexplored. To address this gap systematically, we develop a conceptual framework for understanding when foreign aid generates measurable returns for donor countries as well as those cases when donor and recipient interests align—what we term mutual interest ODA. We categorize potential donor benefits into three domains: economic, geopolitical, and security-related, and distinguish these benefits by their timing and degree of directness. We then systematically survey the empirical evidence on donor benefits, assessing the empirical credibility and magnitude of estimated effects and pointing out research gaps. We find consistent evidence of substantial donor benefits across all three domains. A key insight is that aggregate aid flows often mask significant variation: The returns to donors depend critically on the type of aid, delivery modality, and recipient context. These findings have important implications for both academic and policy debates on the effectiveness, political sustainability, and future direction of development aid.
- Topic:
- Climate Change, Globalization, Health, International Trade and Finance, Migration, Political Economy, Foreign Aid, and Sustainable Development
- Political Geography:
- Africa, Europe, Asia, and Americas
7. Hegemony and International Alignment
- Author:
- Fernando Broner, Alberto Martin, Josefin Meyer, Christoph Trebesch, and Jiaxian Zhou Wu
- Publication Date:
- 05-2025
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- This article explores the interplay between economic hegemony and political alignment. Using theoretical and empirical insights from Broner et al. (2024), we posit that hegemonic states, such as the U.S., foster political alignment, which enhances globalization. We use UN voting data to proxy for international alignment and show that hegemons induce alignment. This data has shortcomings, however. UN voting only covers the post-WWII period, refers to a narrow set of issues, and displays little time variation. As for military alliances, they were not widely used before the mid-20th century. We propose an alternative measure of alignment based on international treaties.
- Topic:
- Globalization, International Trade and Finance, Political Economy, Treaties and Agreements, Hegemony, Multipolarity, and Geoeconomics
- Political Geography:
- Global Focus and United States of America
8. Geoeconomics and Conflict: A Review and Open Questions
- Author:
- Eoin McGuirk and Christoph Trebesch
- Publication Date:
- 10-2025
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- We examine the intersection of two subfields within political economy: geoeconomics and conflict. Geoeconomics is primarily concerned with the use of "economic weapons" of coercion, while the conflict literature mainly focuses on military weapons and war. We propose bridging these two approaches, focusing on the international dimension of conflict. We start by reviewing the existing literature linking both fields, in particular research on the relationship between trade and war and on the use of geoeconomic tools such as foreign aid and sanctions. We then highlight four main directions for future research. First, we call for a broader view of the geoeconomic toolkit, as rogue leaders do not limit themselves to economic coercion. In addition to economic weapons, future research should also consider more aggressive—and often costlier—forms of intervention short of war, including sabotage, cyberattacks, covert operations, and the sponsorship of terrorism or insurgency. Second, we require a better understanding of how geoeconomic tools affect the likelihood of conflict. Do sanctions, strategic tariffs, or military aid provoke or deter war? Third, more research is needed on the domestic political economy of geoeconomic actions and their link with conflict. When and why do governments and citizens support the use of economic versus noneconomic weapons? Finally, we stress the importance of research on explicitly peacemaking tools of diplomacy, including mediation, security guarantees, and transparency initiatives.
- Topic:
- Globalization, Political Economy, Conflict, and Geoeconomics
- Political Geography:
- Global Focus
9. Resolving the puzzle of "reversed favoritism" in African agriculture
- Author:
- Lennart C. Kaplan
- Publication Date:
- 09-2025
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- The political economy literature highlights the redistribution of resources to political support groups - often along regional or ethnic lines - as an axiom of political systems. In contrast to this dominant pattern, Kasara (2007) documents a puzzling result of discriminatory rent extraction by political leaders from farmers in their ethnic home region. Linking a new database on the ethnic and regional affiliation of political leaders to fine-grained survey data, I disentangle ethnic and regional affiliations and show that their intersection explains the phenomenon which I will label in the following “reversed favoritism." More specifically, I provide evidence that agricultural price hikes indeed do not reduce poverty among co-ethnic farmers in the leader's birth region. My results indicate that leaders seem to act politically rational as they only apply this treatment in regions where they enjoy high trust. I show in an exploratory analysis that the counter-intuitive support of discriminatory policies can be explained by transfers in other areas, namely development aid.
- Topic:
- Agriculture, Political Economy, Ethnicity, Development Aid, and Favoritism
- Political Geography:
- Africa
10. Rethinking Aid in a Contested World
- Author:
- Stefan Dercon
- Publication Date:
- 09-2025
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- Development aid faces a crisis of budgets, legitimacy, and political alignment. Framed in recent decades as technocratic and benevolent, aid has always been political, shaped by donor and recipient incentives. Its post–Cold War expansion reflected a permissive era of unipolarity and globalization, when Western foreign policy, business, and security establishments provided broad support. That equilibrium has now collapsed. Multipolar rivalry, protectionism, and fragmented domestic coalitions have left aid vulnerable, shallowly supported, and increasingly driven by narrow donor interests. The paper calls for recognition of the need for a globalization 2.0 that enables poorer countries to grow, warning that without such a framework, remaining aid will become more fragmented and ineffective. It also cautions against a euphemistic reliance on “mutual interest,” as evidence of genuine donor–recipient benefits is limited; trade facilitation and post-conflict stabilization are rare exceptions. Finally, the paper advances four propositions: aid must be selective, avoid entrenching dependency, balance short-term results with long-term system building, and support reformers willing to challenge the status quo. Only by acknowledging its political nature and aligning incentives within a reconfigured global order can aid remain relevant to development.
- Topic:
- Globalization, International Trade and Finance, Markets, Political Economy, Foreign Aid, and Sustainable Development
- Political Geography:
- Africa, Europe, Asia, South America, and North America