Topic: Political Economy - CIAO Search Results

1. Rethinking Monopoly as a Power Relation: The Shift from Market to Intellectual Monopoly

Author:: Cecilia Rikap
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: City Political Economy Research Centre (CITYPERC), University of London
Abstract:: The critical literature on monopolies, from monopoly capital to recent contributions, focuses on the organization that concentrates either market power, capital or property rights. I complement this literature by conceptualizing monopolies as a power relation, which enables me to integrate different ways in which the term is used, from capitalists’ monopoly over the means of production to intellectual monopolization. As I explain here, some firms have developed greater capacities to systematically monopolize intangibles that are essential for organizing labour beyond their owned assets and for controlling demand. Coupled with institutional, political and technological changes, larger absorptive and management capacities to produce and capture knowledge and information resulted in firms’ technological differentiation. The systematic winners of the innovation race hold persistent intellectual monopolies while other firms become subordinate due to their lack of technical autonomy. From this perspective, (intellectual) monopoly power is essential for understanding the distribution of value in capitalism.
Topic:: Political Economy, Labor Issues, Capitalism, Monopoly, Capital, Power Relations, and Value Capture
Political Geography:: Global Focus

2. Fossil Fuel Industry Phase-Out and Just Transition: Designing Policies to Protect Workers’ Living Standards

Author:: Robert Pollin
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: This paper focuses on just transition policies targeted at supporting workers now employed in the fossil fuel industries and ancillary sectors within high-income economies. As a general normative principle, I argue that the overarching aim of such policies should be to protect workers against major losses in their living standards resulting through the fossil fuel industry phase-out. The impacted workers should be provided with three critical guarantees to accomplish this, in the area of jobs, compensation and pensions. Just transition policies should also support workers in the areas of job search, retraining and relocation, but these forms of support should be understood as supplementary. Within the framework of these broad principles, the paper first reviews experiences with transitional policies in Germany, the UK, the EU and, more briefly, Japan and Canada. A critical point that emerges is that these just transition policies do not provide the needed guarantees for assuring workers that they will not experience major living standard declines. The paper then describe an illustrative just transition program for workers that includes reemployment, income and pension guarantees, focusing on a case study for the U.S. state of West Virginia. The results show that the costs of the just transition program for West Virginia’s fossil fuel industry dependent workers will amount to an annual average of about $42,000 per worker, equal to about 0.2 percent of West Virginia’s GDP. I briefly summarize results from the seven other studies of U.S. states and for the overall U.S. economy. For the U.S. economy overall, the just transition program’s costs would total to about 0.015 percent of GDP. These findings demonstrate that providing a generous just transition program does not entail unaffordable levels of public spending. Robust just transition policies should therefore be understood as an entirely realistic prospect for all high-income economies.
Topic:: Political Economy, Labor Issues, European Union, GDP, Economy, and Fossil Fuels
Political Geography:: Japan, United Kingdom, Europe, Canada, and Germany

3. The Political Economy of the Cost of Living Crisis in the UK: What Is to Be Done?

Author:: Ozlem Onaran
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: This paper analyzes the political economy of the cost of living crisis in the context of the United Kingdom. The paper presents the long-term trends in the wage share, wealth inequality, labour’s bargaining power, and real wages in the UK. The first and second waves of inflation in 2021-22 are discussed presenting the trends in the profit margins. The policy responses by the conservative governments and the Bank of England are analyzed, and their limitations are assessed. The paper concludes with short-run and medium-run policy alternatives to the cost of living crisis
Topic:: Political Economy, Labor Issues, Inequality, Inflation, and Cost of Living
Political Geography:: United Kingdom and Europe

4. Sellers’ Inflation, Profits, and Conflict: Why Can Large Firms Hike Prices in an Emergency?

Author:: Isabella Weber and Evan Wasner
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: The dominant view of inflation holds that it is macroeconomic in origin and must always be tackled with macroeconomic tightening. In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices. Such firms are price makers, but they only engage in price hikes if they expect their competitors to do the same. This requires an implicit agreement which can be coordinated by sector-wide cost shocks and supply bottlenecks. We review the long-standing literature on price-setting in concentrated markets and survey earnings calls and compile firm-level data to derive a three-stage heuristic of the inflationary process: (1) Rising prices in systemically significant upstream sectors due to commodity market dynamics or bottlenecks create windfall profits and provide an impulse for further price hikes. (2) To protect profit margins from rising costs, downstream sectors propagate, or in cases of temporary monopolies due to bottlenecks, amplify price pressures. (3) Labor responds by trying to fend off real wage declines in the conflict stage. We argue that such sellers’ inflation generates a general price rise which may be transitory, but can also lead to self-sustaining inflationary spirals under certain conditions. Policy should aim to contain price hikes at the impulse stage to prevent inflation from the onset.
Topic:: Political Economy, Inflation, Profit, and COVID-19
Political Geography:: Global Focus

5. The Cross-Border Interbank Payment System: A Case Study in Chinese Economic Leadership

Author:: Aidan Campbell
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: Investigations seeking to explain the rise of China rarely investigate the many new institutions founded to increase China’s economic success and influence over global affairs. In the economic sector, some better-known projects include the Belt and Road Initiative, the Asian Infrastructure Investment Bank, and the New Development Bank. One of the newest and least understood institutions founded to promote international use of the RMB is the Cross-Border Interbank Payment System (CIPS). The purpose of this research is to examine the development, policies, and goals of CIPS in order to better understand the phenomenon of Chinese-lead international economic institutions. Novel evidence for CIPS’s intention to adopt blockchain technology and provide services for currencies other than the RMB is presented. The conclusion to this research is that CIPS is presently too small to pose a threat to the existing SWIFT network or predominance of US dollar transactions in international trade. At the same time, CIPS evidences a patient and rational strategy designed to reform international norms and patterns of trade to China’s advantage in the long term.
Topic:: Political Economy, Leadership, Economy, Belt and Road Initiative (BRI), and Banking
Political Geography:: China and Asia

6. Federal Reserve Anti-Inflation Policy: Wealth Protection for the 1%?

Author:: Aaron Medlin and Gerald Epstein
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: The Federal Reserve has a dual mandate from Congress that directs it to conduct monetary policy as such to achieve “maximum employment” and “stable prices.” Yet the U.S. central bank typically chooses to address inflation as a top priority and focuses on employment only secondarily, if at all. Why? In this paper we argue that an important reason is that the Federal Reserve conducts policy so as protect the real wealth of the top 1% of the wealth distribution. We focus on the Fed’s fight against inflation in 2021-2022, when it rapidly raised its policy interest rates by almost 4 percentage points in the face of more than 6 percent inflation. Using a novel econometric analysis, we provide evidence that shows that this policy serves as a real net wealth protection policy for the 1% by restoring some of the lost wealth that they would otherwise lose due to unexpected inflation. The results of this policy for the top 10% of the wealth distribution are econometrically ambiguous. But to the extent that the Fed’s high interest rates generate higher unemployment or even a recession, this wealth protection for the 1% could have serious income costs for workers who find themselves or another member of their household out of a job.
Topic:: Political Economy, Monetary Policy, Inflation, Elites, and Wealth
Political Geography:: North America and United States of America

7. State Capitalism, Imperialism, and China: Bringing History Back In

Author:: Isabella Weber
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: State capitalism is experiencing a great revival as a term to capture the current capitalist constellations, increasingly replacing neoliberalism. Unlike neoliberalism, however, the term state capitalism has a long history reaching back to the age of imperialism in the late 19th century. While state capitalism has been used as a pejorative term by Marxists, liberals and neoliberals alike, it has served as a programmatic label for developmentalist and neomercantilist projects in reaction to imperialism in the periphery. This paper argues that we need to bring the intellectual history of state capitalism into the ‘new state capitalism’ debate. China has played a major role in the revival of state capitalism in the social sciences, but the long history of China’s engagement with state capitalism as a concept and program dating back to the late Qing reformers has been overlooked for the most part. State capitalism is by no means new to China, from Liang Qichao, Sun Yatsen and Mao Zedong to Deng Xiaoping, the idea that China had to create a modern nation state and industrial capitalism in the name of economic progress and to get ahead in the global competition is a recurring theme. What is new is that for the first time the ambition to use state capitalism as a means to catch up with the West is bearing fruits in ways that could undermine the predominance of Western economies.
Topic:: Imperialism, Political Economy, History, Capitalism, and State Capitalism
Political Geography:: China and Asia

8. Japan's New Security Strategy and the Changing Geopolitics in the Indo-Pacific

Author:: Sheila Smith and Gerald Curtis
Publication Date:: 03-2023
Content Type:: Video
Institution:: Weatherhead East Asian Institute, Columbia University
Abstract:: Major changes that have occurred in the global political economy and in international politics in recent years have had a profound impact on nations all around the world. This is nowhere more evident than in the countries in the Indo-Pacific region and especially Japan. This conversation addresses Japan's evolving foreign policy and its impact in the Indo-Pacific.
Topic:: Security, Foreign Policy, Political Economy, Geopolitics, and Regional Politics
Political Geography:: Japan, Asia, and Indo-Pacific

9. Climate versus trade? Reconciling international subsidy rules with industrial decarbonisation

Author:: David Kleimann
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: The vast environmental subsidies that may be required for the transition to net-zero greenhouse gas emissions are starting to generate international trade and political frictions between the world’s largest economies. This puts (supra-)national industrial decarbonisation efforts on a collision course with international subsidies rules and national countervailing duty (ie anti-foreign subsidy) laws and regulations. International cooperation will be essential to defuse such tensions before they escalate and impede effective climate policy rollouts, and before they lead to economic countermeasures that create new barriers to trade in environmental goods. This requires agreement on permissible environmental subsidy practices that minimise distortions. Meanwhile, it will be crucial to provide financial transfers to assist poorer economies with industrial decarbonisation at the same time as those poorer economies are suffering from the cross-border negative economic impacts of otherwise net-global-welfare enhancing environmental subsidies paid out by wealthy countries. Various forums can host the technical and political negotiations necessary to set the parameters of net global-welfare enhancing subsidies. These include the G7, the G20, the Organisation for Economic Co-operation and Development, the World Trade Organisation’s Trade and Environment Committee and WTO Trade and Environmental Sustainability Structured Discussions, and the Coalition of Trade Ministers on Climate.
Topic:: Climate Change, Political Economy, Trade, Carbon Emissions, Subsidies, and Decarbonization
Political Geography:: Global Focus

10. The Political Economy of Anti‐bribery Enforcement

Author:: Lauren Cohen and Bo Li
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: A level playing field for firm competition is a fundamental requirement for any market to maximize its potential and achieve productive efficiency. When government favors a set of firms or individuals over others, distortions arise that reverberate throughout entire industries, affecting sales, production, innovation, and more. This is not to say that barriers to firms may not sometimes naturally arise, but if a finger is placed on the scale by government to allow certain firms to gain some unerodable advantage, this can have large implications on allocation and overall economic development.
Topic:: Corruption, Political Economy, Law Enforcement, Accountability, and Bribery
Political Geography:: Global Focus

11. China's Political-Economy, Foreign and Security Policy: 2023

Author:: Center for China Analysis
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: Asia Society
Abstract:: It has now been three months since the 20th Party Congress convened in Beijing on October 15. While the Congress set Xi Jinping’s ideological, strategic, and economic direction for the next five years, much has happened since then that the Chinese leadership did not anticipate. Principal among these surprises was the spontaneous eruption in late November of public protests across multiple Chinese cities against the economic and social impact of the Chinese Communist Party’s “dynamic zero-COVID” policy. These protests resulted in an unprecedented U-turn on December 8 from China’s relentless pursuit of its three-year-long national pandemic containment strategy to the Party now seeking desperately to restore economic growth and social calm. This shift has in turn generated major public pressures on the Chinese health system as hospitals struggle to cope with surging caseloads and mortalities. All of these developments stand in stark contrast to the political, ideological, and nationalist self-confidence on display at the 20th Party Congress. In October, Xi Jinping swept the board by removing any would-be opponents from the Politburo and replacing them with long-standing personal loyalists. Xi also proclaimed China’s total victory over COVID-19, contrasting the Party’s success with the disarray its propaganda apparatus had depicted across the United States and the collective West. Despite faltering economic growth, Xi had doubled down in his embrace of a new, more Marxist approach to economic policy which prioritized planning over the market, national self-sufficiency over global economic integration, the centrality of the public sector over private enterprise, and a new approach to wealth distribution under the rubric of the Common Prosperity doctrine. At the same time, Xi’s 2022 Work Report, delivered at the Congress, abandoned Deng Xiaoping’s long-standing foreign policy framework that “peace and development are the principal themes of the time” and instead warned of growing strategic threats and the need for the military to be prepared for war. As part of a continuing series on China’s evolving political economy and foreign policy, this paper’s purpose is threefold: to examine the political and economic implications of this dramatic change in China’s COVID-19 strategy; to analyze what, if any, impact it may have on China’s current international posture; and to assess whether this represents a significant departure from the Party’s strategic direction set at the 20th Party Congress last October. The paper concludes that the Party changed course on COVID-19 for two reasons: (1) it feared that not doing so would threaten its unofficial social contract with the Chinese people based on long-term improvements in jobs and living standards; and (2) that a structural slowdown in growth could also undermine China’s long-term strategic competition against the United States. This paper also concludes that the stark nature of the December 8 policy backflip, together with the Chinese health system’s lack of preparedness for it, has dented Xi Jinping’s political armor for the medium term. This setback comes on top of internal criticism of Xi’s broader ideological assault on the Deng-Jiang-Hu historical economic growth formula that Xi has prosecuted since 2017, as well as Xi’s departure from Deng’s less confrontational foreign policy posture that characterized previous decades. Nonetheless, these policy errors remain manageable within Chinese elite politics, where Xi still controls the hard levers of power. Furthermore, many of these changes on both the economy and external policy are more likely to be short-to-medium term and therefore tactical in nature, rather than representing a strategic departure from the deep ideological direction laid out for the long-term in Xi’s October 2022 Work Report. While these changes to current economic and foreign policy settings are significant in their own right, there is no evidence to date that Xi Jinping’s ideological fundamentals have changed.
Topic:: Security, Foreign Policy, Political Economy, and COVID-19
Political Geography:: China and Asia

12. The political economy of energy production in post-independence Tanzania: A review

Author:: Japhace Poncian and Rasmus Hundsbæk Pedersen
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: In Tanzania, energy production is a matter of great political significance. Despite government commitment to promote non-hydro renewable energy, like solar and wind deployment, so far has been limited. Large, non-hydro, renewable projects have not yet attracted adequate government interest to get implemented. This new DIIS Working Paper suggests that the prioritisation of different sources of energy has been influenced by major shifts in the country’s broader development policy priorities. Access to electricity has in turn been scaled up. These developments point to the importance of political economy factors influencing energy sector development in Tanzania. The paper examines how such factors have influenced government energy source choice and, more importantly, how renewable energy has featured in Tanzania’s energy politics since independence. The paper is based on a review of existing academic and grey literature on energy sector development, reform, and politics throughout the period from independence in 1961 to 2021.
Topic:: Development, Political Economy, Renewable Energy, Independence, and Energy
Political Geography:: Africa and Tanzania

13. Trading short-term gains for long-term costs: the Egyptian political economy under al-Sisi

Author:: Matteo Colombo
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: Egypt’s political economy has been operating on the basis of three core principles over the last few decades. First, the country’s political authorities set strategic economic objectives in a top-down manner. Second, the power elite supports the political authorities and, in exchange, tightly supervises homegrown and foreign investment to generate revenues and job opportunities, as well as private benefits. Third, Egyptian citizens acquiesce, willingly or unwillingly, in this division of power that mostly benefits the political authorities and power elites in exchange for improvements in their livelihoods. Since 2014, President al-Sisi has held closely to these principles but relied increasingly on Egypt’s military networks (part of the power elite) to boost economic growth. This strategy has produced short-term gains – informal jobs and an array of consumer goods – at the expense of long-term economic prospects. In particular, the military’s economic influence has deepened some of Egypt’s structural problems: low productivity, inequality, informal unemployment and a suppressed private sector. This limits the future sustainability of the current economic model. Improving Egypt’s economic prospects requires reducing the role of the state – especially the military – in the economy in terms of decreasing the number of associated enterprises and lightening the regulatory framework. However, this is nearly impossible to realise in sectors in which the military already has a dominant profile, such as construction and extractives, because its support is essential for al-Sisi to maintain power. A more promising alternative for European policy makers to consider is influencing the Egyptian government to limit military influence in sectors with growth potential where the military is largely absent, such as manufacturing and Information and Communications Technology (ICT). A government strategy that prevents further military involvement in these sectors, crafts a regulatory framework conducive to private investment and invites foreign funding, can help Egypt realise greater economic growth and higher fiscal revenues.
Topic:: Development, Political Economy, Economy, and Abdel Fattah el-Sisi
Political Geography:: Middle East and Egypt

14. Schumpeter’s Creative Destruction as a Radical Departure: New Paradigm for Analyzing Capitalism

Author:: Leonardo Burlamaqui
Publication Date:: 03-2022
Content Type:: Special Report
Institution:: Brazilian Center for International Relations (CEBRI)
Abstract:: The paper’s core contribution is a reinterpretation of Schumpeter’s development theory, through the "creative destruction paradigm" provided in Capitalism, Socialism and Democracy (CSD). By linking the core propositions of the latter with the brilliant, but underdeveloped, innovations from The Theory of Economic Development (TED) and some largely ignored historical and institutional insights provided in Business Cycles (BC), the seeds of a new analytical framework emerge. One which is completely out of balance, centered on finance, entrepreneurial action, uncertainty, institutions, and competition by means of innovation.
Topic:: Development, Political Economy, Capitalism, Finance, Entrepreneurship, and Innovation
Political Geography:: Global Focus

15. Polanyi, Market Fundamentalism, and the Institutional Structure of Capitalism

Author:: Leonardo Burlamaqui
Publication Date:: 03-2022
Content Type:: Special Report
Institution:: Brazilian Center for International Relations (CEBRI)
Abstract:: The basic proposition of this paper is that the so-called "new economic sociology", which is rooted in key ideas of Karl Polanyi, is an indispensable "tool" for two tasks: a) it provides us with a powerful critique of market fundamentalism, and b) it allows us to analyze the economic performance of contemporary capitalism by accessing the working of its institutional structure. From an analytical perspective, the paper suggests that Polanyian Economic Sociology is an essential complement to both the Schumpeterian and the Post-Keynesian perspectives in economics. This is especially so when it comes to the discussion of "socioeconomic stability" and, more precisely, as Keynes himself stated in the General Theory: to explain why capitalist economies manifest themselves in different ways and degrees, in spite of encompassing inherent elements of instability and unpredictability.
Topic:: Economics, Markets, Political Economy, Sociology, and Capitalism
Political Geography:: Global Focus

16. Explaining immigration restrictions using a sequential path dependency model

Author:: Emmanuel Comte
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:: This paper, by Emmanuel Comte, Senior Research Fellow, Ariane Condellis European Programme, analyses immigration restrictions by discussing major recent debates of historical political economy and proposing a new explanatory model. The conclusions in recent research on the subject of immigration restrictions converge in highlighting the natives’ fear of economic costs as a potent factor in immigration restrictions, despite evidence proving that actual costs are small and circumscribed, while the aggregate impact of immigration is generally positive. This paper develops existing scholarship to explain the magnitude of current immigration restrictions in Europe and North America by proposing a sequential path dependency model based on both historical insights and the insights of institutionalist theories of path dependence. In this model, the fears of adverse economic effects held by specific segments of the national workforce interact with a power structure dominated by the state and with the agency of union leaders and policymakers initiating a series of policy cycles that lead to complete restrictions on low-skilled immigration.
Topic:: Political Economy, Immigration, and Border Control
Political Geography:: Europe and North America

17. Statesmanship for Political Economy in the National Interest

Author:: Nathan Hitchens
Publication Date:: 01-2022
Content Type:: Journal Article
Journal:: Humanitas
Institution:: The Center for the Study of Statesmanship, Catholic University
Abstract:: As we emerge unevenly from the ravages of a global pandemic, the new world upon us is summoning statesmanship for political economy in the national interest. 2020 was apocalyptic in the true sense of the word. The depth of our dependence on Chinese manufactures for everything from face masks, respirators, ventilators, to basic pharmaceuticals was revelatory. This emergency unveiled the gaunt figure of American industry. Yet, our industrial thinning-out was there for all to see during America’s decades-long, neoliberal diet of globalized supply chains, offshored manufacturing, and international trade based on economic comparative advantage and specialization. An optimist might object to this dire picture and point to Operation Warp Speed, the massive effort of industrial policy in pharmaceuticals and drug development, which produced vaccine formulae in record time by relying on a World War II model of public-private sector mobilization and on powers of the federal government in the 1950 Defense Production Act.
Topic:: Security, Political Economy, Governance, and Leadership
Political Geography:: North America and United States of America

18. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:: David Steinberg and Yeling Tan
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:: Economics, Political Economy, Public Opinion, Trade, and Protectionism
Political Geography:: China, Asia, North America, and United States of America

19. The political economy of women’s empowerment policies in India

Author:: Jyotsna Jha, Niveditha Menon, and Neha Ghatak
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: This paper analyses the political economy of women’s-empowerment-related policymaking in India through a re-examination of the context of both the genesis and closure of a major programme, Mahila Samakhya. Mahila Samakhya, which embodied feminist philosophy and pedagogy, started in 1987 with the aim of creating the education-based empowerment of Dalit and Adivasi women in rural India, and was inexplicably shut down in 2014. We argue that a combination of political philosophy, electoral majority, and contemporary global trends influenced both the beginning and the demise of the programme. We argue that programmes such as Mahila Samakhya, which called for a long and messy process of collectivization of the most marginalized women using the methodology of reflection and reconstruction, became much less desirable with global shifts in development discourse. These shifts towards more ‘evidence’-based policy focused much more on immediate ‘outcomes’ than on ‘processes’, much to the detriment of programmes such as Mahila Samakhya.
Topic:: Political Economy, History, Women, Feminism, Empowerment, and Collectivism
Political Geography:: South Asia and India

20. The New Wave of Defensive Trade Policy Measures in the European Union: Design, Structure, and Trade Effects

Author:: Fredrik Erixon, Oscar Guinea, Philipp Lamprecht, Vanika Sharma, and Renata Zilli
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: This study undertakes a comprehensive review of proposed and adopted defensive trade policy instruments in the EU, with the purpose of better understanding their design, functioning, and implications. The study covers eight policy instruments at different stages of development. These are: Anti-Coercion Instrument (ACI), International Procurement Instrument (IPI), Carbon Border Adjustment Mechanism (CBAM), Foreign Subsidy Instrument (FSI), Corporate Sustainability Due Diligence (DD), Level Playing Field Provisions in the EU-UK Trade and Cooperation Agreement (LPF), Enforcement Regulation (ER), and the Deforestation Initiative (DI). It is understandable that the EU seeks both redressive and retaliatory measures in its trade policy. However, these measures would have the total effect of Europe producing more for itself and being less dependent on imports. This is a significant policy shift, because in their totality the defensive trade policies make the EU more inward-looking. This can lead to major negative consequences. An extensive distortion of trade and markets would reduce the gains from trade and prompt a reallocation of European resources. Notably, the EU is a larger supplier of goods and services than it is a buyer, and an inward-looking policy that leads to retaliation from EU’s trading partners can harm its exports and trade surplus. There are also potential strategic consequences that could follow, and their importance has increased considerable as a result of the Russian war against Ukraine. Under these measures, the EU could introduce new trade frictions with friends and allies, and with countries that the EU seeks closer cooperation with to provide for a safer geopolitical environment. For each of these defensive measures, the study takes an extensive look at the objectives of the instruments, their legality, proportionality, and subsidiarity, the working of the instruments and the division of labour between institutions, as well as their enforceability in conjunction with existing multilateral and bilateral rules affecting the EU. It also attempts to capture the impact and potential for retaliation for the EU and its partners as a result of the implementation of the instruments. The study highlights the areas where the instruments lack clarity, particularly in the implementation of the instrument, the division of labour between the EU and EU member states, and the compliance of the instruments with WTO rules and bilateral FTA provisions. The instruments share some general characteristics. Many of the instruments have been created as retaliatory measures against coercion and unfair trade practices by partner countries. Very often, the partner countries most affected by the instruments are also the same. The United States, China, Russia, the UK, and Turkey are likely to be on the receiving end of the instruments due to the significant volumes of trade and economic interdependence with the EU, but also because they either do not follow the same trade rules as the EU, or the EU wants to maintain with them the current level of competitiveness. Most instruments also use restrictions to the EU market as the main policy lever. The objective is not just about creating an equal playing field but also ensuring that the rest of the world follows EU rules. Particularly, the EU aims at regulating non-EU companies directly and unilaterally through EU policies, which increases the risk of retaliation against the EU. At the same time, there are also important areas of departure in the specifics of each instrument, as illustrated by the varying objectives, measures, compatibility with international obligation, affected sectors, and whether the measures apply automatically or at the discretion of the EU.
Topic:: Defense Policy, Political Economy, European Union, and Trade
Political Geography:: Europe

21. Processing Trade and Global Supply Chains: Towards a Resilient “GVC 2.0” Approach

Author:: Lucian Cernat
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: In the current global context marked by economic fragility, growing uncertainty and geopolitical conflicts, ensuring the smooth functioning of global supply chains becomes more important than ever. Supply shortages, higher freight costs, higher commodity prices and strong demand increase will trigger inflationary pressures for all economic sectors dependent on global value chains (GVCs). As part of global efforts to enhance the resilience of GVCs, this paper makes the case for a broader discussion about the untapped potential of processing trade, a relatively unknown trade facilitation option available in many countries around the world. Processing trade has been credited with stimulating China’s participation in GVCs, in combination with foreign direct investment (FDI) attraction and industrial upgrading. However, processing trade is not just a Chinese phenomenon. In the EU, significant trade flows (over 200 billion euros in 2021 alone) benefitted from a double-digit trade cost reduction, thanks to the EU processing trade provisions. Different types of processing trade arrangements exist in over 70 countries worldwide (including in the EU), as a way to facilitate the integration of developing countries in global production chains. However, these unilateral schemes have different requirements and co-exist without any attempt to facilitate their inter-operability along complex global supply chains. This paper argues that there is a pressing need for a global reflection on how best to promote a better integration between these national processing trade schemes. One option is to promote a “GVC 2.0” approach that offers key recommendations and best practices for processing trade along GVCs. Such a coordinated “GVC 2.0” trade facilitation initiative would not only make GVCs more resilient for countries that depend on global sourcing for their critical economic activities, but it will also reduce the inflationary effect generated by the unnecessary trade costs associated with GVC activities.
Topic:: Political Economy, European Union, Trade, Resilience, and Supply Chains
Political Geography:: Europe, Asia, and Global Focus

22. Policy Experimentation in China: The Political Economy of Policy Learning

Author:: Shaoda Wang and David Y. Yang
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: Determining what policies to implement and how to implement them is an essential government task. Policy learning is challenging, as policy effectiveness often hinges on the nature of the policy, its implementation, the degree that it is tailored to local conditions, and the efforts and incentives of local politicians to make the policy work.
Topic:: Political Economy, Politics, Policy Implementation, and Economic Policy
Political Geography:: China and Asia

23. No Strings Attached: Corporate Welfare, State Intervention, and the Issue of Conditionality

Author:: Fabio Bulfone, Timur Ergen, and Manolis Kalaitzake
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: This paper contributes to Comparative Political Economy (CPE), developing an analytical concept of corporate welfare. Corporate welfare — the transfer of public funds and benefits to corporate actors with weak or no conditionality — is a prominent form of state-business relations that CPE scholarship regularly overlooks and misinterprets. Such transfers should be understood as a structural privilege of business in a globalized post-Fordist capitalism, and an increasingly common strategy through which states attempt to steward national economic dynamism within a highly constrained range of policy options. However, with- out a well-developed concept of corporate welfare – premised upon the key criterion of conditionality – studies that identify a “return” of the state in industrial planning misrepre- sent these transfers to business as a reassertion of state influence and control, rather than a reflection of state weakness and subordination. The paper provides the analytical building blocks to properly conceptualize transfers to business, works out the core challenges for em- pirical research, and provides empirical illustrations of this burgeoning phenomenon from the fields of unconventional monetary policy, privatization, and urban political economy.
Topic:: Industrial Policy, Political Economy, Privatization, Monetary Policy, Welfare, and Public-Private Partnership
Political Geography:: Global Focus

24. Land Grabbing and International Political Economy: Towards a Critical Neo-Gramscian Theoretical Model of Land Governance in Latin America

Author:: Sol Mora
Publication Date:: 04-2022
Content Type:: Journal Article
Journal:: Contexto Internacional
Institution:: Institute of International Relations, Pontifical Catholic University of Rio de Janeiro
Abstract:: The vigorous debate on global land grabbing within Critical Agrarian Studies contrasts with the incipient analyses from International Political Economy (IPE). This divergence has overshadowed the multi-scalar nature of the power relations that shape land governance, and consequently its effects on land grabbing. For this reason, this paper provides a critical theoretical model of land governance based on Robert Cox’s historical structures approach to understand the causes of land grabbing in Latin American countries. It is argued that this model renders visible the articulation of local and global processes driving land grabbing because it foregrounds the power relations at multiple scales that shape decisions on land access, use and control, as well as the conflicts inherent to them. This demonstrates that, on the one hand, land governance structures in Latin America play a hegemonic role since they express and develop the global agricultural model that promotes land grabbing. On the other hand, social resistance highlights that land governance simultaneously possesses a potential for change. As a result, knowledge about land grabbing is enhanced through a dialogue between the two fields of study.
Topic:: Economics, Political Economy, Governance, International Relations Theory, and Models
Political Geography:: South America, Latin America, and North America

25. International Political Economy and Sustainable Finance: Assessing the EU’s Green Deal and UNCTAD’s Green New Deal

Author:: Johannes Jager
Publication Date:: 04-2022
Content Type:: Journal Article
Journal:: Contexto Internacional
Institution:: Institute of International Relations, Pontifical Catholic University of Rio de Janeiro
Abstract:: Sustainable green finance is often promoted as an innovative tool to deal with environmental problems. This paper assesses policy proposals at the level of the EU and UNCTAD’s Green New Deal, specifically regarding its suggestions in the field of sustainable finance. It provides a theoretical framework in the tradition of critical political economy and combines a global perspective with regulation theory in order to assess different strategies in the area of sustainable finance. The respective proposals and initiatives can be considered as possible blueprints for hegemonic strategies within different contexts. However, the analysis suggests both proposals, although substantially different and representing different entities in the international political economy, fail to provide a systematic answer to the problems of a highly unequal over-use of natural and environmental resources at a global level.
Topic:: Political Economy, Finance, Green Technology, and Sustainability
Political Geography:: Global Focus

26. Inequalities and Local Infrastructure: The Challenges of Post-Covid Recovery Investments

Author:: Filippo Barbera
Publication Date:: 02-2022
Content Type:: Commentary and Analysis
Institution:: Istituto Affari Internazionali
Abstract:: Rather than being mere “productive environments”, localities embedded in infrastructure are distinctive living places in which communities of people live and establish a greater part of their daily social relationships. As a result, infrastructure represents the backbone of citizenship rights and strongly affect territorial inequalities. Infrastructure is chiefly understood in physical terms as reticulated systems of highways, pipes, wires or cables. This physical reductionism is by no means sufficient to encompass the multiple facets of the concept or to make sense of the many ways infrastructure affects socio-political inequalities. Knowledge infrastructure, for instance, may indicate robust networks of people, equipment and institutions that generate, share and maintain specific knowledge about the human and natural worlds. Infrastructure furthermore refers to the interplay between information technologies, transportation and other intermodal transport devices. All of these kinds of infrastructure affect inequalities in different ways.
Topic:: Political Economy, Politics, Infrastructure, Governance, European Union, Sustainable Development Goals, and Institutions
Political Geography:: Europe

27. Putting Development at the Centre of G20 Policy Agenda: Lessons for the T20

Author:: Daniele Fattibene and Alice Fill
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: The G20 Development Working Group has gradually evolved throughout the years, following a haphazard and contradictory path. On the one hand, it has been progressively overshadowed by a sectoralisation of G20 activities, with several action tracks (i.e., the Finance Track) taking a more prominent role in the definition of the leaders’ priorities. On the other hand, its (unexploited) potential has increased due to the emergence of several global crises that have shown the importance of rekindling multilateral solutions at the G20 level. The T20 has a strong potential to boost G20 legitimacy on development cooperation worldwide, by drafting evidence-based and pragmatic policy proposals for the decision-makers. However, although often advocating for similar solutions, the Development Working Group and T20 have not necessarily fed into each other’s policy agendas, leading to misalignment and reducing their chances to influence other G20 tracks on crucial development issues such as development finance, food security or the global climate agenda.
Topic:: Development, Political Economy, Governance, G20, and Sustainability
Political Geography:: Global Focus

28. A Gravity Theory of Subordinate Financialisation

Author:: Photis Lysandrou
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: City Political Economy Research Centre (CITYPERC), University of London
Abstract:: Recent decades have marked both the globalisation of capitalism following the collapse of communism and its financialisation following the rapid growth of the world's securities markets. These developments have impacted the core-periphery divide in capitalism. In the case of globalisation, the entry of the ex-communist countries into the world capitalist system has swelled the ranks of the emerging capitalist economies (ECEs) that are kept subordinate through the pressures from the advanced capitalist economies (ACEs). In the case of financialisation, the growth of the securities markets has led to a palpable change in the pressures that perpetuate subordination. Where previously the use of authority was the chief source of those pressures, it now plays a secondary role. Absent that authority, and the ECEs would still be held in a subordinate position in global capitalism through the gravitational pull of the ACEs' financial securities markets. The central purpose of this paper is to explain this gravitational pull.
Topic:: Markets, Political Economy, Capitalism, Finance, and Financial Globalization
Political Geography:: Global Focus

29. The Rise of a Rule-Based Transgressor Elite

Author:: Ronen Palan
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: City Political Economy Research Centre (CITYPERC), University of London
Abstract:: Transnationally organised, rule-based transgressor elites are the wealthiest and most powerful elites today. The core of this group comprises managers of large multinational corporations and related ‘born global’ corporations, such as Tesla, eBay and the like, large investment houses, such as Blackrock, Blackstone and Vanguard, leading international investment banks and elite legal, consultancy and accounting firms. This elite core is joined by several ancillary groups. Arguably the most significant of those are midsize corporate groups, many of which are privately held. Numbering in the hundreds of thousands, perhaps even millions, they employ tactics perfected by large corporations to arbitrage rules and ensure corporate and other forms of taxation, rules specifying personal or group liabilities or other regulations, including protection of shareholders and the like, are either partially or fully avoided. To these, Ricardo de Soares adds another group; he argues elites from development countries latch onto existing institutional and professional providers serving those other elites; once they achieve their goal of transferring capital out of their own countries, they participate actively in the process of wealth and power concentration described in this paper (Soares, 2021) .
Topic:: Political Economy, Multinational Corporations, Elites, and Capital Accumulation
Political Geography:: Global Focus

30. What Do We Really Know about Productivity Differentials across Countries?

Author:: Jayati Ghosh
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: This paper examines and critiques the most widely used measure of productivity (output per worker employed) and argues that this is a flawed, inadequate and even misleading measure of economic progress. In terms of cross-country comparisons and assessing trends over time, both the numerator (GDP or value added) and the denominator (number of workers or hours worked) have significant conceptual and measurement problems. These issues are considered in general, and also with regard to how they affect analyses of productivity differentials in the U.S. and India in the recent period.
Topic:: Political Economy, GDP, Employment, Economy, and Productivity
Political Geography:: South Asia, India, North America, and United States of America

31. The Environmental Consequences of Inequality

Author:: James K. Boyce
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: Inequality has important consequences for the extent of pollution and natural resource depletion as well as for the distribution of the costs and benefits from environmental degradation. Inequalities in the distribution of purchasing power operate through the market, and inequalities in the distribution of political power operate through governance institutions, often with mutually reinforcing effects.
Topic:: Environment, Political Economy, Natural Resources, Inequality, Justice, and Pollution
Political Geography:: Global Focus

32. Who Gains from Agricultural “Reform”?: Understanding the 2020 Farm Laws and Protests

Author:: C. P. Chandrasekhar
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: Over 2020-21, farmer protests in India turned into a movement that took large numbers of farmers to the borders of India’s capital. The movement was provoked by the passage of three farm laws designed to dismantle regulation of agricultural trade, provide a legal framework for contract farming arrangements, and facilitate corporate entry into agricultural production and trade. Despite intense farmer opposition the government held out for almost a year after the movement began before withdrawing the laws. The paper attempts to understand the factors underlying this stand-off by tracing the post-Independence evolution of agricultural and food policy and examining the political economy context of the positions adopted by the farmers and the government. A lesson that the farmers have derived from experience, I argue, is that agricultural prices, the terms of exchange between agriculture and industry, and the viability of crop production are not determined by benign and free markets, but by structures of power reflected in state policy. Till the economic crises of the mid-1960s those power relations were skewed against agriculture, but the crisis forced a shift in state policy aimed at raising agricultural production by intensifying farming activity, especially food grain production. A new framework of intervention involving procurement at a cost-plus price and distribution to consumers at subsidised prices, helped either tilt the terms of trade in favour of agriculture or prevent an adverse shift in the terms facing agriculture. Farmers saw the farm laws and the failure to guarantee procurement at an adequately remunerative price as an effort to dismantle that protective framework and favour corporate interests. The protests have resulted in the. repeal of the laws. But the stand-off over the level and price of procurement is still unresolved.
Topic:: Agriculture, Political Economy, Reform, Protests, and Trade
Political Geography:: South Asia and India

33. The Distribution of the Cost of Cuban Social Reproduction in 2016: The Relative Contributions of Domestic and Diasporic Households, the Private Sector, and the State

Author:: Anamary Maqueira Linares and Katherine Moos
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: Drawing on feminist political economy and social reproduction theory, we propose an accounting framework for understanding the distributional role of household production, employment, remittances, and government social transfers in the social reproduction of the Cuban people. We apply this quantitative framework to available data and produce estimates for 2016. Our findings demonstrate that households—both domestic and diasporic—were the largest contributors to social reproduction in Cuba. Our empirical exercise provides insight for a qualitative conceptualization and analysis of the changing distribution of social reproduction in Cuba, especially regarding changes in state provisioning and employment. Results reveal how the actual distributional arrangements underlying Cuban social reproduction differ from the official commitments and goals of the Cuban Revolution and signal several potentially unsustainable self-reinforcing dynamics.
Topic:: Political Economy, Employment, Private Sector, and Remittances
Political Geography:: Cuba and Caribbean

34. Past Economic Decline Predicts Opioid Prescription Rates

Author:: Herb Susmann, Elias Nosrati, Michael Ash, Michael Marmot, and Lawrence King
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: America is in undergoing an epidemic of opioid related deaths. Analysts have emphasized two different (but not mutually exclusive) arguments. Supply based explanations emphasize the immoral activity of pharmaceutical companies from 1996 to aggressively market opioids. They typically use prescription rates as a measure of this variable. Demand based explanations emphasize the demand for opioids caused by economic hardship. This paper demonstrates that prescription rates are not entirely exogenous. We show that the decline of average household income from 1979 to 1989 at the county level is a significant predictor of opioid prescription rates in 2010. This is consistent with research that shows that childhood trauma predicts adult drug abuse. The policy implications of this finding are that an adequate response to the opioid epidemic must address economic dislocation and insecurity.
Topic:: Political Economy, Health Crisis, Pharmaceuticals, Opioid Crisis, and Income
Political Geography:: North America and United States of America

35. Inconsistent Definitions of GDP: Implications for Estimates of Decoupling

Author:: Gregor Semieniuk
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: Efforts to assess the possibilities for decoupling economic growth from negative environmental impacts have examined their historical relationship, with varying and inconclusive results. Part of the problem is ambiguity about definitions of environmental impacts, e.g. whether to use territorial or consumption-based measures of environmental impact. This paper shows that ambiguities arising from definitional changes to GDP are sufficiently large to affect the outcomes. I review the history of structural revisions to GDP using the example of the United States, and on international comparisons of purchasing power parity, compare decoupling results using various historical definitions of GDP on the same environmental indicator, and demonstrate that changing the GDP data vintage does impact decoupling results in qualitatively important ways, with and without purchasing power parity. Inconsistencies in economic measurement introduce an additional layer of ambiguity into historical decoupling evidence and model projection into the future. To advance debate and be clear about scenario assumptions, rigorous reporting of GDP definitions used and the sharing of data vintage for subsequent comparison and replication are urgently needed.
Topic:: Environment, Political Economy, GDP, and Economic Growth
Political Geography:: Global Focus

36. Time Use Data in Feminist Political Economy Analyses: Gender and Class in the Indian Time Use Survey

Author:: Sirisha Naidu and Smriti Rao
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: The literature on agrarian change in India has largely employed class categories based upon data on land, assets and occupational status. Land and asset data tend to exist at the level of households, while occupation categories have neither fully counted reproductive labour nor accounted for diversified livelihood strategies. As a result, categorizations of class in the literature on agrarian change tend to collapse women’s class relations into those of male household heads. The recent completion of India’s first ever national time use survey provides an opportunity to address these longstanding gaps. This paper examines whether and how the 2019 Indian Time Use data lends itself to an understanding of class relations that i) can better accommodate an expanded conception of work as including reproductive labor ii) better accommodate the highly diversified livelihoods of rural Indians iii) better grasp the articulation of caste and gender differentiated labor processes with capital. In this paper, we are able to show i) and ii). The third goal is somewhat stymied by the absence of qualitative data that contextualize time use data. We compare the class relational mapping obtained from time use data with that obtained from land and occupational data and examine the possibilities and limits of employing time use data to deepen feminist political economy analyses of agrarian change.
Topic:: Agriculture, Political Economy, Labor Issues, Feminism, Caste, and Gender
Political Geography:: South Asia and India

37. Diversifying Supply Chains: The Role of Development Assistance and Other Official Finance

Author:: Conor M. Savoy and Sundar R. Ramanujam
Publication Date:: 06-2022
Content Type:: Policy Brief
Institution:: Institute for Security and International Studies (ISIS)
Abstract:: The Issue: The international political economy has undergone significant transformation since March 2020, profoundly impacting global supply chains and bringing to light the risks supply chains pose to economic development around the world. This brief explores some of these risks in detail and lays out the role foreign assistance can play in de-risking and diversifying supply chains by building capacity in new partner countries.
Topic:: International Cooperation, Political Economy, Foreign Aid, and Supply Chains
Political Geography:: Global Focus

38. Trust as state capacity: The political economy of compliance

Author:: Timothy Besley and Sacha Dray
Publication Date:: 11-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: This paper explores the link between trust in government, policy-making, and compliance. It focuses on a specific channel whereby citizens who are convinced that a policy is worthwhile are more motivated to comply with it. This in turn reduces the government’s cost of implementing a policy and may also increase the set of feasible policies. Thus, state capacity is greater when citizens trust their government. The paper discusses alternative approaches to modelling the origins of trust, especially the link to the design of political institutions. We then provide empirical evidence consistent with the model’s findings that compliance is increasing in trust using the Integrated Values Survey and voluntary compliance during COVID-19 in the UK. We also show that countries with high levels of citizen trust in government were more likely to implement policies requiring voluntary compliance during the COVID-19 pandemic. The paper suggests that trust in government can play a role in building and expanding state capacities.
Topic:: Government, Political Economy, Capacity, Compliance, and Trust
Political Geography:: Global Focus

39. US Power and the Multinational Tech Companies of the Digital Era: An Analysis of the Obama and Trump Governments Oligopolization

Author:: Cristina Soreanu Pecequilo and Francisco Luiz Marzinotto Junior
Publication Date:: 08-2022
Content Type:: Journal Article
Journal:: AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:: Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:: Science and technology are relevant issues in the studies of international political economy. Innovation, at the same time, favors economic growth and impacts the States and non-States players nexus. In the competitive arena of global markets, highly developed innovative organizations tend to provide cheaper and more effective products in a larger scale. In the “anarchic environment” of the international system, technological and scientific supremacy has always been determinant to achieve and maintain power. As power resources do not remain static, their fluidity leads to technological (Kondratieff 1935; Perez 2003) and hegemonic (Arrighi 1996) “long waves” that oscillate during history. After 1945, the United States (US) rose as the hegemonic power and technology, amongst its power resources, was, and remains one of its significant assets of power projection.
Topic:: International Cooperation, Political Economy, Science and Technology, and Hegemony
Political Geography:: Global Focus

40. The Political Economy of the Landscape of Trade Unions in Bangladesh: The Case of the RMG Sector

Author:: Mirza M. Hassan, Syeda Salina Aziz, Raeesa Rahemin, Insiya Khan, and Rafsanul Hoque
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: BRAC Institute of Governance and Development (BIGD), Brac University
Abstract:: The paper explores the political economy landscape of trade unionism in Bangladesh. The focus is on the Ready-Made Garments (RMG) sector, where trade unions (TU) are highly salient and relatively more operational because of the sector’s economic importance, numerical strength of the labour, high degree of concentration of the industries, and TU’s global network, among other factors. Relying predominantly on primary data, we look at both the formal and informal dimensions of industrial relations and their implications for the state-capital-labour interactions as well as governance of TUs. Literature on RMG-related TUs in Bangladesh generally examines it from a social movement perspective. We take a slightly different approach in this paper by making a modest attempt to fulfil the knowledge gaps in TU research. We do this by exploring the formal and informal aspects of relations between the regulatory institutions and the TUs and, more importantly, the internal governance of the TUs themselves as noted above. Additionally, we explore the two-way relational dynamics of TU leaders and the garment workers. These areas have not received much attention in the extant literature. By adopting a politico-sociological perspective, the paper reflects on the collective action dynamics of industrial labour in the context of the global south.
Topic:: Political Economy, Labor Issues, Economy, Trade Unions, and Textile Industry
Political Geography:: Bangladesh and South Asia

41. The Economic Impact of Political Instability and Mass Civil Protest

Author:: Samer Matta, Michael Bleaney, and Simon Appleton
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: An extensive literature has examined the economic effects of non-violent political instability events. Nonetheless, the issue of whether economies react differently over time to such events remains largely unexplored. Using synthetic control methodology, which constructs a counterfactual in the absence of political instability, we estimate the output effect of 38 regime crises in the period 1970-2011. A crucial factor is whether crises are accompanied by mass civil protest. In the crises accompanied by mass civil protest, there is typically an immediate fall in output which is never recovered in the subsequent five years. In crises unaccompanied by protest, there are usually no significant effects. Furthermore, this paper provides new evidence that regime crises (with and without mass civil protest) have heterogeneous (country-specific) effects on output per capita.
Topic:: Economics, Political Economy, Regime Change, Political stability, Economic Growth, Protests, Economic Policy, and Civil Unrest
Political Geography:: Global Focus

42. Gender, Selection into Employment, and the Wage Impact of Immigration

Author:: George J. Borjas and Anthony Edo
Publication Date:: 04-2021
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Immigrant supply shocks are typically expected to reduce the wage of comparable workers. Natives may respond to the lower wage by moving to markets that were not directly targeted by immigrants and where presumably the wage did not drop. This paper argues that the wage change observed in the targeted market depends not only on the size of the native response, but also on which natives choose to respond. A non-random response alters the composition of the sample of native workers, mechanically changing the average native wage in affected markets and biasing the estimated wage impact of immigration. We document the importance of this selection bias in the French labor market, where women accounted for a rapidly increasing share of the foreign-born workforce since 1976. The raw correlations suggest that the immigrant supply shock did not change the wage of French women, but led to a sizable decline in their employment rate. In contrast, immigration had little impact on the employment rate of men, but led to a sizable drop in the male wage. We show that the near-zero correlation between immigration and female wages arises partly because the native women who left the labor force had relatively low wages. Adjusting for the selection bias results in a similar wage elasticity for both French men and women (between -0.8 and -1.0).
Topic:: Economics, Gender Issues, Political Economy, Labor Issues, Immigration, and Workforce
Political Geography:: France

43. Pork, infrastructure and growth: Evidence from the Italian railway expansion

Author:: Roberto Bonfatti, Giovanni Facchini, Alexander Tarasov, Gian Luca Tedeschi, and Cecilia Testa
Publication Date:: 07-2021
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: This paper studies the role played by politics in shaping the Italian railway network, and its impact on long-run growth patterns. Examining a large state-planned railway expansion that took place during the second half of the 19th century in a recently unified country, we first study how both national and local political processes shaped the planned railway construction. Exploiting close elections, we show that a state-funded railway line is more likely to be planned for construction where the local representative is aligned with the government. Furthermore, the actual path followed by the railways was shaped by local pork-barreling, with towns supporting winning candidates more likely to see a railway crossing their territory. Finally, we explore the long-run effects of the network expansion on economic development. Employing population and economic censuses for the entire 20th century, we show that politics at a critical juncture played a key role in explaining the long-run evolution of local economies.
Topic:: Development, Political Economy, Infrastructure, and Railways
Political Geography:: Europe and Italy

44. Politicians' neighbourhoods: Where do they live and does it matter?

Author:: Olle Folke, Linna Martén, Johanna Rickne, and Matz Dahlberg
Publication Date:: 04-2021
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: This paper studies the political economy of local politicians' neighborhoods. We use detailed population-wide data on the location of politicians’ and citizens' homes and their socioeconomic traits. We combine this information with neighborhood-level data on building permits and proposals to close schools. A descriptive analysis uncovers that politicians live in neighborhoods with more socio-economically advantaged people and more of their own party’s voters. Next, we analyze whether having politicians in a neighborhood reduces the likelihood that local public "bads'' are placed there. This analysis compares home neighborhoods for politicians with different degrees of political power (ruling majority or opposition) and where power was won in a close election. We find negative effects on approved building permits for multifamily homes and proposals to close schools. This result is most likely explained by undue favoritism. We conclude that local politicians live in advantaged neighborhoods that they shield from local public bads.
Topic:: Political Economy, Inequality, Geography, and Politicians
Political Geography:: Global Focus

45. The political economy of pandemic preparedness and effectiveness

Author:: Cullen S. Hendrix
Publication Date:: 07-2021
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: The success of countries in the Organization for Economic Cooperation and Development (OECD) in controlling the COVID-19 pandemic has varied greatly. Explanations for the differences fall into four broad categories: political/economic, cultural/social, demographic/geographic, and policy-oriented. This paper uses Bayesian model averaging to assess the explanatory power of 21 potential covariates. It shows that standard political economy variables that predict greater investment in public health, such as GDP per capita and level of democracy; both general and pandemic-specific measures of government effectiveness; and demographic factors that predict increased vulnerability, such as the share of population that is elderly or obese, do not explain the differences in outcomes. The key factors appear to have been interdictability (the ability to tightly control borders and effectively restrict or monitor entrants at a limited number of entry ports), the early adoption of stronger international travel restrictions, and a female head of government.
Topic:: Political Economy, Crisis Management, COVID-19, and OECD
Political Geography:: Global Focus

46. Preventing Violent Islamic Radicalization: Experimental Evidence on Anti-Social Behavior

Author:: Pedro C. Vicente and Inês Vilela
Publication Date:: 10-2021
Content Type:: Working Paper
Institution:: Kellogg Institute for International Studies
Abstract:: Violence perpetrated by radicalized Muslims is a major problem around the world. We collaborated with the main Islamic authority in Mozambique, which sponsored two randomized interventions to prevent violence related to youth radicalization: a religious campaign against extremist views of Islam, targeting change in beliefs; and a training module on entrepreneurship and employment, aiming to increase the opportunity cost of conflict. Our measurement focuses on anti-social behavior in a Joy-of-destruction lab game. We find that only the religious treatment decreased the propensity to destroy the payoffs of others. Consistently, surveys show increased trust in the state and decreased support for extremism.
Topic:: Development, Political Economy, Religion, Economic Growth, Youth, Conflict, Violence, and Peacebuilding
Political Geography:: Africa and Mozambique

47. Toxic Conflict: Understanding Venezuela's Economic Collapse

Author:: Juan Carlos Fernández-Rodríguez
Publication Date:: 11-2021
Content Type:: Working Paper
Institution:: Kellogg Institute for International Studies
Abstract:: This paper discusses the causes of Venezuela’s recent economic collapse, the largest in modern Latin American economic history and one of the largest in modern world history outside of wartime. I argue that Venezuela’s economic implosion is a combination of two crises. The first one reflects the standard unraveling of a populist macroeconomic cycle fed by overspending during a resource boom, while the second one reflects the severing of the country’s trade and financial links with the global economy. This severing is the consequence of the decision by political actors to adopt “scorched earth” strategies with large negative aggregate economic spillovers in their fight for power. I argue that the inability of Venezuela’s high-stakes, winner-take-all political system to deal with the large negative 2014–16 trade shock precipitated the change in political strategies and the descent into economically destructive political conflict.
Topic:: Development, Political Economy, Democracy, Economic Growth, Conflict, Institutions, and Peacebuilding
Political Geography:: South America and Latin America

48. Will corporate debt choke the post-COVID-19 recovery?

Author:: Frederico Mollet
Publication Date:: 01-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: Europe’s economic recovery is threatened by the corporate debt overhang created in the wake of the pandemic. Even as vaccines roll out, Europe faces the prospect of a prolonged retrenchment as indebted firms pull back investments and repair their balance sheets. Insolvency procedures have gradually improved over the past decade in Europe, but decisive and swift public action is needed to take advantage of these reforms. Given the scale of the crisis, Frederico Mollet argues in favour of a comprehensive European restructuring strategy. EU member states and the Commission must step in to provide the resources, guidance, and coordination necessary to push through this monumental restructuring. This strategy would furthermore benefit from common European guidelines and criteria for creditors and debtors. It will not only increase the likelihood of success but also protect the level playing field. Lack of a clear strategy and coordinated approach will result in a drawn-out restructuring process that pushes too many viable firms into liquidation and permanently hampers the economic recovery. Centring on private restructurings would also minimise the use of public funds at a time when governments have to deal with multiple competing fiscal pressures.
Topic:: Debt, Political Economy, and Economic Recovery
Political Geography:: Europe

49. The EU–UK relationship: It is what it is

Author:: Fabian Zuleeg and Jannike Wachowiak
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: European Policy Centre (EPC)
Abstract:: The EU–UK Trade and Cooperation Agreement might have pulled both sides back from the brink of a no-deal cliff edge, but it remains a shaky foundation for the next stage of EU–UK relations. Both sides must invest in the relationship and rebuild trust to prevent any conflict from escalating into a tit-for-tat. Or else, they risk the collapse of the deal and the return to a no-deal-like state. In the first months of its new phase, the relationship is already off to a rocky start. The rows over the diplomatic status of the EU mission in London and the Commission’s (now reversed) decision to trigger Article 16 of the Northern Ireland Protocol expose the volatility of the relations and the importance of good communication and trust. The hope for a deal came with the expectation that it would provide the foundation upon which a closer relationship could be constructed over time. It now seems more likely that it will be the basis for a diverging – and at times conflicting – relationship, with little prospect for a significantly closer economic relationship anytime soon. There seems little political appetite on both sides to build on the economic settlement meaningfully, which would require a significant shift of red lines. Previous expectations that a deal would pave the way for outstanding issues, such as the EU granting equivalence for financial services, have also diminished. Given both the political climate and many red lines, the agreed thin economic settlement may be the most we can expect.
Topic:: International Relations, Political Economy, Regional Cooperation, Treaties and Agreements, European Union, and Trade
Political Geography:: United Kingdom and Europe

50. Updating the European industrial strategy for the post-pandemic world

Author:: Marta Pilati and Frederico Mollet
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: On 27 April, the European Commission is expected to publish an update to their 2020 Industrial Strategy, a blueprint for an assertive European industrial policy that drives the digital and green transitions. While the current strategy’s broad principles continue to hold, it must now adapt to the post-pandemic world’s challenges. Furthermore, the original strategy only provided a high-level roadmap, with many areas requiring further development. Frederico Mollet and Marta Pilati break down European industry’s weaknesses and potential areas of success, the effects of COVID-19 this past year, key points of the 2020 Industrial Strategy and its relevance for Europe and beyond. They outline 16 recommendations which would strengthen the design and implementation of the programmes outlined in the current strategy, across four themes: finance, industrial ecosystems and alliances, technology transfer, and strategic autonomy.
Topic:: Development, Political Economy, European Union, Digital Economy, Green Technology, Industry, COVID-19, Strategic Autonomy, and European Commission
Political Geography:: Europe

51. The Industrial Strategy refresh: A new opportunity to reboot the EU’s industrial innovation performance

Author:: Alison Hunter
Publication Date:: 04-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: The EU’s forthcoming Industrial Strategy update aims to put Europe’s industry at the core of the Union’s efforts to improve competitiveness. To achieve this, the Union must upgrade its policy and investment framework in a way that supports collaboration on industrial innovation across the EU. Although the EU has made some gains when it comes to boosting industrial innovation, recently, a disjointed framework has begun to emerge with two separate ‘tiers’ of support: one geared towards key industry initiatives, such as Industrial Alliances and Important Projects of Common European Interest (IPCEIs); the other towards place-based industrial innovation, driven primarily by EU regions, such as Cluster Collaborations and Smart Specialisation Partnerships. To maximise the impact of these collaborative efforts and to generate a connected, Europe-wide industrial ecosystem, we need an industrial innovation pipeline for the whole of the EU. Amid growing concerns about an uneven recovery from the pandemic, the EU cannot afford to perpetuate the current innovation divide or widen the distance between industrial winners and losers. The new Industrial Strategy update should, therefore: spearhead efforts to close the gap between the EU’s ‘Tier 1’ and ‘Tier 2’ industrial innovation support landscape; improve the analysis of the barriers that prevent many EU regional industrial innovation systems from flourishing; and promote an ‘Innovation Everywhere’ agenda, focusing on EU territories where industrial innovation continues to fall behind.
Topic:: Political Economy, European Union, Innovation, and Industry
Political Geography:: Europe

52. China’s grand industrial strategy and what it means for Europe

Author:: Frederico Mollet
Publication Date:: 04-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: In its 14th Five-Year Plan, China has mapped out a grand economic and industrial strategy that upends many of the assumptions that underpin the EU's approach - how can the Union respond? With this new plan, the EU can expect tougher competition and greater protectionism in its economic relations with China. A further blurring of the public-private sector distinction in the country's economic model will make it harder to combat unfair Chinese competition. And while China is actively courting foreign investment, it is also signalling greater protectionism to products not made in China, which will lead to European investors' and exporters' interests diverging. To balance the scales, the EU should adapt its own strategy by: continuing to develop trade instruments to combat unfair competition at home and abroad; ensuring that these instruments and institutions can respond to unfair competition from private companies benefiting from state capital investment; ensuring that the extensive and often opaque government holdings in private firms are reflected in foreign direct investment and export controls; incorporating China's attempts to reconfigure supply chains into its own assessment of strategic dependencies, identifying areas that could become vulnerable; prioritising the improvement of access to the Chinese market for goods and services produced in Europe; developing alternative sources of growth, and boost demand and reduce barriers within the Single Market to offset greater Chinese protectionism; and ensuring that its industrial policy efforts will enable European industry to match China's developments. The present moment may mark a turning point in EU–China relations: in a little over three months, an agreement on an investment treaty was followed by sanctions and countersanctions. Geopolitical conflict ratchets up between China and the US. Beijing's new economic course will reshape its global relationships. China's protectionist turn and growing one-sided dependencies will threaten Europe's long-term strategic autonomy and undercut any attempts to construct a balanced approach to EU–China relations. If the EU's multi-track strategy is to work, a concerted effort is required to preserve economic parity and balance between the two powers.
Topic:: International Relations, Political Economy, European Union, Grand Strategy, Industry, and Supply Chains
Political Geography:: China, Europe, and Asia

53. Recovery and reform in the EU’s most vulnerable regions

Author:: Alison Hunter and Marta Pilati
Publication Date:: 06-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: Europe’s most vulnerable regions, characterised by persistent low growth and poverty, face a systemic lack of specific EU support. These regions display particularly high levels of vulnerability to the social, economic and territorial impacts of COVID-19, which will affect their recovery trajectories. They risk being left further behind in the EU’s complex pathway towards ‘a green and digital recovery’. The Union’s lack of focus and action for investing in these most vulnerable regions must be addressed. First and foremost, EU institutions and member states should recognise that some territories will struggle much more than others in their recovery trajectories. Ignoring their plight would have potentially far-reaching consequences. The EU’s ‘convergence machine’ could be damaged irreparably, with long-term – and potentially political – consequences. Alison Hunter and Marta Pilati continue their extensive research on the Union’s low-growth, poor regions, calling for the founding of a specific EU initiative to support them as well as further targeting by the existing policy architecture. In particular, they recommend: creating an EU policy space for regions experiencing long-term low growth and poverty, to promote the value and visibility of place-based support; aligning Cohesion Policy and the Recovery and Resilience Facility for improved policy coherence and greater investment impact; and tailoring support for growth-enhancing reforms in the EU’s most vulnerable regions. The EU’s green and digital recovery strategy fails to account for the specific needs of its poor and low-growth regions. Existing disparities and fragmentation challenges across the Union could widen or even become entrenched, casting new doubts on the EU’s ability and commitment to strengthen its convergence agenda and execute a just transition. The fallout could lead to a rise in territorial and political tensions while leaving many vulnerable places behind. Hunter and Pilati outline an agenda for a new EU initiative that champions reform support for these vulnerable territories and improves their prospects for a digital and green recovery.
Topic:: Political Economy, Poverty, Reform, European Union, Digital Economy, Economic Growth, Green Technology, Recovery, COVID-19, and Economic Recovery
Political Geography:: Europe

54. How to get European businesses to digitalise

Author:: Frederico Mollet
Publication Date:: 07-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: Europe’s underperforming tech sector and reliance on foreign technologies has long alarmed its policymakers. But a significant – and often overlooked – factor in the EU’s economic underperformance over the last two decades is its slow business digitalisation. EU industry, especially SMEs, struggles with the prosaic challenge of integrating digital technologies into its business models and operations. The preoccupation tends to be on how to foster new digital start-ups. But what about the digitalisation of existing firms? The EU budget and recovery fund are armed with a range of new EU funding streams and programmes to tackle this challenge. With its 2030 targets and new policy framework, the EU aims to catch up with the previous generation of digital technologies and ensure that it does not miss out on the next wave of transformational change. Otherwise, Europe will fall behind its economic competitors even further. But there are still some gaps in the EU’s game plan for business digitalisation. Frederico Mollet outlines several areas where the new policy framework can be optimised, and new initiatives would be worthwhile: Additional funding should be mobilised from Cohesion Policy funds. Business digitalisation is a critical factor in regional convergence, and so an increased funding share would be in line with the policy’s main objectives. The Commission should use its coordinating and convening powers to get banks to commit to a best practice code, to assess digitalisation loans and improve their staff’s digital knowledge. Public authorities should leverage private partners. Many firms lack the awareness and information necessary to digitalise, but a number of ‘access points’ and private sector networks (e.g. finance providers, B2B businesses, supply chain networks) can reach them. The EU should consider complementing the design and implementation of European Digital Innovation Hubs and transition pathways – its main programmes for supporting business digitalisation directly – with 5 additional components. Taken together, these recommendations will bolster the funding available for business digitalisation, tackle some of the critical barriers to finance, and optimise the delivery of the Commission’s programmes.
Topic:: Political Economy, Science and Technology, European Union, Business, and Digitalization
Political Geography:: Europe

55. Rethinking EU economic governance: The Stability and Growth Pact

Author:: Francesco De Angelis and Frederico Mollet
Publication Date:: 11-2021
Content Type:: Policy Brief
Institution:: European Policy Centre (EPC)
Abstract:: It is time to reimagine the EU’s economic governance. In early 2021, the EPC set out to do just that in its Rethinking EU Economic Governance Task Force. Drawing on insights from participating experts, academics and policymakers, this first Policy Brief in a series of EPC publications outlines how the debate on the Stability and Growth Pact (SGP), the EU’s framework for fiscal and macroeconomic surveillance, has evolved and the reform options that have surfaced. There is broad dissatisfaction with the SGP and how it has fared in an environment of prolonged low-interest rates, missed inflation targets and low growth. In February 2020, the European Commission launched a review of the SGP in an attempt to address its shortcomings, but it was quickly put on hold by COVID-19, when the fiscal rules were suspended. Half a year later, the Commission is finishing what it started. We are in a drastically different world since the European Commission launched the review. Not only has government debt increased significantly, but regional, economic and social divides have worsened, policymakers face inflationary pressures for the first time in decades, and the Recovery and Resilience Facility and accompanying EU-level bond issuance fundamentally changed the EU’s economic architecture. In parallel, there is a widespread acknowledgement that averting, as well as adapting to, the climate crisis requires a steep increase in public investment. Thanks to the EPC Task Force’s ongoing work, Francesco De Angelis and Frederico Mollet can pinpoint the SGP’s major flaws, post-COVID-19 challenges, and five broad categories of reform options: Interpretative flexibility to smooth fiscal adjustment paths and potentially place less emphasis on problematic indicators. Moderate non-treaty reforms to reduce complexity and procyclicality and increase enforceability. The ‘golden rule’ to exempt some public investments from the fiscal rules. Central fiscal capacity for macroeconomic stabilisation. Off-balance-sheet investments to increase public investment.
Topic:: Political Economy, Governance, European Union, Economic Growth, COVID-19, Economic Stability, and European Commission
Political Geography:: Europe

56. EfIP Online Panel: A New Macroeconomics?

Author:: Jón Steinsson
Publication Date:: 07-2021
Content Type:: Policy Brief
Institution:: Economics for Inclusive Prosperity (EfIP)
Abstract:: There is a narrative within our field that macroeconomics has lost its way. While I have some sympathy with this narrative, I think it is a better description of the field 10 years ago than of the field today. Today, macroeconomics is in the process of regaining its footing. Because of this, in my view, the state of macroeconomics is actually better than it has been for quite some time. The most important problem with macro over the past few decades has been that it has been too theoretical. When I say this, I don‘t at all mean to say that theory is useless. To the contrary, theory is an essential element of a healthy science. But a healthy science needs a balance between theory and empirical work. Macro lost this balance in the 1980s and is only regaining it now. Most narratives about the evolution of macro focus on the evolution of macroeconomic theory and the rational expectations revolution in particular. An under-appreciated part of this story is that the rational expectations revolution shifted the field away from empirical work. This was partly because building models that met the higher standards of rigor set by Lucas and his co-revolutionaries was a challenging and therefore highly absorbing task. But that isn’t the only reason. For reasons that are not entirely clear to me, a very substantial fraction of macroeconomists came to believe that the Lucas critique implied that quasi-experimental empirical methods could not be used in macro. The idea that changes in policy could radically alter empirical regularities (i.e., the Lucas critique) somehow came to be interpreted to mean that the only way to do empirical work in macro was to write down fully specified general equilibrium models of the whole economy and evaluate the entire model (either by full-information inference methods or moment matching). Sargent, for example, placed enormous emphasis on the idea of “cross-equation restrictions.“ It seems that this line of thinking led large numbers of macroeconomists astray in terms of how to think about empirical work in macro for several decades.
Topic:: Economics, Political Economy, and Macroeconomics
Political Geography:: United States

57. New Directions in Macroeconomics

Author:: Gillian Brunet
Publication Date:: 07-2021
Content Type:: Policy Brief
Institution:: Economics for Inclusive Prosperity (EfIP)
Abstract:: Without being overly prescriptive, macro research must meet two standards to keep the field moving in a productive direction: models must be tested empirically and researchers must think carefully about how underlying assumptions restrict the set of questions that can be answered with a given model. Models move knowledge forward through rigorous empirical testing. Matching moments in model calibration is not enough—nor should it be considered true empirics. When economics is done well, theory and empirics are complements: empirical research disciplines models and theory disciplines empirical research. In recent decades, macro research has tilted very heavily towards theory, forgoing the feedback generated by rigorous empirical testing and, as a consequence, dramatically reducing the ratio of insight to effort. Macro as a field must value empirical contributions to flourish fully. There has been significant progress in the last decade, but the balance still tilts heavily towards theory. Macroeconomists must stop dismissing empirical contributions as trivial for macro theory to reach its potential. It’s not an accident that many of today’s best macroeconomists stand out for their work in both theory and empirics: empirical work disciplines their theoretical research. Over the past 40-50 years, research in short-run macroeconomics has focused on the goal of creating unified, internally consistent models of the macroeconomy. While this is a worthy goal, it has perhaps become too dominant—and imposes hidden costs on research. The emphasis on developing a central baseline model to which idiosyncratic features are added for addressing a specific problem discourages many researchers from considering the suitability of the underlying model to the specific question being asked. As economists we are taught that every model is a simplification, so that the relevant question is not whether a model is good or bad but whether it is good or bad for answering a specific question. Yet choosing a single baseline model of the macroeconomy tends to obscure the closeness of the relationship between the model and the question it is used to answer. Often macroeconomists think carefully about the relationship between their question and the idiosyncratic features they add to the baseline model, but many of the assumptions underlying the baseline model become invisible and thus unquestioned. This is understandable given the complexity of modern macro models, but it has high costs. More careful consideration of the assumptions underlying baseline models and their appropriateness to individual research questions can help move the field forward.
Topic:: Economics, Political Economy, Macroeconomics, and Models
Political Geography:: United States

58. The Political Economy of India’s Transition to Goods and Services Tax

Author:: Chanchal Kumar Sharma
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: German Institute of Global and Area Studies
Abstract:: What kept the Goods and Services Tax (GST) from becoming a reality in India for a quarter of a century after the adoption of the structural adjustment programme in 1991? What made it possible in 2016? To what extent the Indian model of GST reflects a compromise between the need to keep fiscal federalism intact and to respond to a more global economic imperative? To what extent India’s transition to a concurrent dual GST has brought about a change in the principles, rules, frameworks, and institutions guiding intergovernmental fiscal interactions? This paper investigates these issues and shows that the shifts in the indirect tax regime in India since independence have taken place within the structural context of constitutional rules, the economic policy paradigm and political dynamics. Party congruence after 2014 helped to facilitate the introduction of the GST, but the shape thereof was strongly marked by path-dependent logics and the role of state governments as institutional veto players. In addition, the paper examines the ways in which India’s transition to a concurrent dual GST has brought about a fundamental change in the principles, rules, frameworks, and institutions guiding intergovernmental fiscal interactions.
Topic:: Development, Political Economy, Governance, Tax Systems, Institutions, and Services
Political Geography:: India and Asia

59. When the wolf guards the sheep: confronting the industrial machine through green extractivism in Germany and Mexico

Author:: Alexander Dunlap and Andrea Brock
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: Deploying an anarchist political ecology approach, this paper compares coal mining in Germany with wind energy development in Mexico. The paper outlines some principles from green anarchy to develop important values for anarchist political ecology, illuminating neglected issues that highlight the colonial nature of the industrial system responsible for the present state of ecological and climate crisis. After highlighting the normalizing and self-reinforcing nature of industrial systems, we turn to examine RWE’s mining operations in the German Rhineland. Here, we discuss the example of RWE’s Hambach mine, the world’s largest open-cast lignite coal mine that—while strongly resisted—is slowly destroying large parts of the Hambacher Forest every year. This destruction is justified by RWE’s deployment of green economic recultivation or ‘offsetting’ initiatives and legitimized by their corporate social technologies that attempt to marginalize and pacify militant resistance in the area. After delving into RWE’s attempts at ‘sustainable’ mining, we then turn to explore wind energy development in one of the greatest wind energy generations sites in the world, the Isthmus of Tehuantepec region of Oaxaca, Mexico—known locally as Istmo. Regarded as a climate change mitigation strategy, wind energy in the Istmo is having similar impacts to traditional extractive industries, not only in how developers acquire land, but also how local indigenous groups that contest the construction of these operations are repressed. The following section will compare and discuss the similarities, differences and relationships between coal and wind energy extraction. Here, we coin the “renewable energy-extraction nexus” to describe how conventional and so-called renewable energy systems are dependent on each other, collaborate, and together expand and intensify industrial development and socio-ecological degradation in a rush to grab all the vital energies of the earth. We conclude by arguing that the green economy is renewing destruction, not only by ‘greening’— thus legitimizing — inherently unsustainable industrial activities but by expanding such activities and relationships at the cost of social health and ecological diversity.
Topic:: Energy Policy, Political Economy, Renewable Energy, Wind Power, Coal, Sustainability, and Anarchism
Political Geography:: Germany and Mexico

60. An Analysis of Adjustment Challenges of Academia Returns Migrants: An Evidence from South Asia

Author:: Syed Anwaar UI Hassan, Sadaf Mahmood, Muhammad Shabbir, and Uzma Niaz
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: South Asian Studies
Institution:: Department of Political Science, University of the Punjab
Abstract:: The principal objectives of this research were to analyze their reintegration challenges and to dig out the way to use their social and human capital for getting benefit from the international political economy. Qualitative data were obtained from sixteen highly qualified return migrants in the universities of Faisalabad. Purposive and snowball sampling techniques were adopted to reach the respondents and in-depth interviews with them were conducted with the help of an interview guide. Thematic analysis was applied on the bases of case studies. The return migrants were facing multiple challenges at the institutional, political, and economic levels. They were less paid as they can get better salaries internationally. There is no channel to utilize their human and social capital appropriately that can be beneficial for enhancing the role of the country in the global political economy. The difficulties in the diffusion of new ideas, mismanagement at the professional level, cultural shock, lack of proper infrastructure, and political interference in academic institutions remained challengeable for them. The country should better utilize the capital of the highly qualified return migrants to uplift the political economy of the country.
Topic:: Migration, Political Economy, Immigrants, Academia, and Social Capital
Political Geography:: South Asia and Asia

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

81. Volume 71 Issue 2

Author:: Gökhan Karabulut
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, Globalization, International Trade and Finance, Oil, Political Economy, Natural Resources, Exchange Rate Policy, and Industry
Political Geography:: Europe, Turkey, and Asia

82. Beyond a Single Model: Explaining Differences in Inequality within Latin America

Author:: Diego Sánchez-Ancochea
Publication Date:: 05-2020
Content Type:: Working Paper
Institution:: Kellogg Institute for International Studies
Abstract:: This paper studies the determinants of income inequality in Latin America over the long run, comparing them with explanations of why the whole region is unequal. I first show how land inequality can account for differences between Latin America and other parts of the world but how it does not explain within-region differences. Using qualitative comparative analysis, I then consider how political institution and actors interact with the economic structure (i.e., type of export specialization) and with the ethnic composition of the population. The paper has several findings. A low indigenous/afrodescendant population is a necessary condition for relatively low inequality. I identify two sufficient-condition paths, both of which include the role of democracy, political equality, and a small indigenous and afrodescendant population. The first path also includes a favorable export specialization, while the second one includes the presence of leftist presidents instead. The paper calls for more explicit comparisons between our analytical models for the whole region and our explanations of between-country differences. Hopefully, the paper can also trigger more research on how the interactions between ethnicity, politics, and the export structure shape inequality in Latin America.
Topic:: Civil Society, Development, Political Economy, Poverty, Race, Social Movement, Democracy, Inequality, and Ethnicity
Political Geography:: Latin America

83. The Dominance of Terrorism: Aspects of the Socio-Political Challenges in Post-Independence West AfricA: Nigeria, Burkina Faso and Mali

Author:: Osiomheyalo O. Idaewor
Publication Date:: 06-2020
Content Type:: Journal Article
Journal:: Brazilian Journal of African Studies
Institution:: Brazilian Journal of African Studies
Abstract:: The West African countries, namely, Nigeria, Burkina Faso and Mali, all gained independence in 1960. Since the attainment of independence, these countries have continued to witness peculiar socio-political and economic challenges. These include the contemporary menace of terrorist groups such as the Boko Haram, ISWAP (Islamic State West Africa Province), and their local and international affiliates. These challenges had been precipitated by both local and external socio-political and economic dynamics in the sub-region. Apparently, the challenge of terrorism has intensified in a way that it has overshadowed and compounded existing challenges in West Africa in the contemporary period. [...] Placed in perspectives, this paper gives an overview of the linkage between the post-colonial and post-independence periods, thereby under-scoring the contemporary intensification of terrorism. It further examines the contributions of the UN, ECOWAS, MINUSMA, G5-Sahel and other interventionists’ initiatives towards the development of the sub-region. It concludes by proffering some prospects for development.
Topic:: Security, Political Economy, Post Colonialism, Terrorism, Counter-terrorism, and Conflict
Political Geography:: Africa, West Africa, Nigeria, Mali, and Burkina Faso

84. Horrible Trade-offs in a Pandemic: Lockdowns, Transfers, Fiscal Space, and Compliance

Author:: Ricardo Hausmann and Ulrich Schetter
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: In this paper, we develop a heterogeneous agent general equilibrium framework to analyze optimal joint policies of a lockdown and transfer payments in times of a pandemic. In our model, the effectiveness of a lockdown in mitigating the pandemic depends on endogenous compliance. A more stringent lockdown deepens the recession which implies that poorer parts of society find it harder to subsist. This reduces their compliance with the lockdown, and may cause deprivation of the very poor, giving rise to an excruciating trade-off between saving lives from the pandemic and from deprivation. Lump-sum transfers help mitigate this trade-off. We identify and discuss key trade-offs involved and provide comparative statics for optimal policy. We show that, ceteris paribus, the optimal lockdown is stricter for more severe pandemics and in richer countries. We then consider a government borrowing constraint and show that limited fiscal space lowers the optimal lockdown and welfare, and increases the aggregate death burden during the pandemic. We finally discuss distributional consequences and the political economy of fighting a pandemic.
Topic:: Development, Government, Political Economy, Inequality, Economic Growth, Fiscal Policy, Pandemic, and COVID-19
Political Geography:: Global Focus

85. COVID-19 and External Shock: Economic Impacts and Policy Options

Author:: Miguel Jaramillo and Hugo Nopo
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Group for the Analysis of Development (GRADE)
Abstract:: Latin America is currently suffering from two independent but related shocks: the impact of COVID-19 and the shock of commodity prices. Peru, we argue, is a case in which the strongest impact comes from the pandemic. Peru was the first country in Latin America to react and implement sanitary and economic measures against the coronavirus. The country has been in mandatory quarantine since Monday, March 16. This carries very important challenges for all economic actors. Global and national activity has suffered a sudden stop with direct implications for: (i) the income generating capacity of independent workers, (ii) the jobs of formal and informal and informal workers, and (iii) the survival of small, medium and large companies. In this note we consider the situation of Peruvian households in the face of the pandemic, exploring their vulnerabilities through an analysis of their main source of income generation: work. We also consider the situation of the companies that employ the workers under analysis. We present an overview of what the government’s main action have been so far and offer some recommendations.
Topic:: Economics, Political Economy, Economic Policy, Coronavirus, Pandemic, and COVID-19
Political Geography:: Latin America and Peru

86. Not All Firms Are Created Equal SMEs and Vocational Training in the UK, Italy, and Germany

Author:: Chiara Benassi, Niccolò Durazzi, and Johann Fortwengel
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: Why do skill formation systems put SMEs at greater disadvantage in some countries than others vis-à-vis large employers? By comparing vocational education and training (VET) institutions and their differential effect on firms of different sizes across three countries (UK, Italy, and Germany), we show that the design of VET has profound implications for shap- ing the ability of SMEs to use institutions as resources. In particular, quasi-market institu- tions in the UK amplify SMEs’ disadvantage, while non-market coordinating institutions in Italy and Germany narrow the gap between SMEs and large employers. By unpacking the comparative disadvantage of SMEs, we offer important nuances to the argument that institutions help firms coordinate their business activities in different varieties of capitalism.
Topic:: Political Economy, Capitalism, and Vocational Training
Political Geography:: United Kingdom, Europe, Germany, and Italy

87. Has the “External Constraint” Contributed to Italy’s Stagnation? A Critical Event Analysis

Author:: Lucio Baccaro and Massimo D'Antoni
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: Has the strategy of the “external constraint” (voluntarily limiting the country’s policy-mak- ing discretion by tying it to the European mast) contributed to Italy’s stagnation over the past twenty-five years? The existing literature is divided on this question. The dominant in- terpretation is that Italy’s stagnation is due to insufficient liberalization, and that the exter- nal constraint has had no negative and even a positive influence. An alternative interpreta- tion emphasizes the demand compression and supply-side effects of the external constraint. Based on three case studies of public debt management, privatization, and labor market policy, this paper reconstructs the process by which the external constraint has affected out- comes. It argues that it has had a negative impact, but more as a necessary condition than as a sufficient one. In other words, it would probably have been possible to manage the exter- nal constraint differently to produce better outcomes, but without the external constraint, the stagnation would likely have been less deep.
Topic:: Political Economy, European Union, Economic Growth, and Liberalism
Political Geography:: Europe, Italy, and Southern Europe

88. How ‘demos’ met ‘cracy’: debt, inequality, money

Author:: Andreas Antoniades and Ugo Panizza
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: The recurrence of ever more destructive economic crises and patterns of pervasive indebtedness and inequality threaten the social fabric of our societies. Our main responses to these trends have been partial, focusing on symptoms rather than causes, often exacerbating rather than improving the underlying socio-economic dynamics. To reflect on these conditions and on ‘what needs to be done’ this paper turns to a similar socio-economic malaise faced by the city-state of Athens in the 6th century BC. Most historical studies dealing with this crisis focus on the comprehensive debt relief policy (seisachteia) implemented by Solon. We argue that this debt relief, although necessary, was the least important of Solon’s reforms. Solon read the problem of debt as a problem of money so he went on to reform the monetary and exchange system. But he did not think that these reforms alone could restore socioeconomic sustainability. For this, a redefinition of what was counted as valuable economic activity and as income had also to take place. And for all these to work, citizens had to be involved more in the commons. Far from only achieving socioeconomic sustainability, these reforms gave rise gradually to the demos that we meet in the golden age of Democracy. It is indeed interesting that Democracy, in its ideal type of the 5th century BC, finds its origin in the way in which a society responded to a major socioeconomic crisis, characterised by pervasive indebtedness and destabilising inequalities. Such a broader historical horizon may help us grasp better the problems, stakes and challenges of our times.
Topic:: Debt, Political Economy, History, Democracy, and Global Political Economy
Political Geography:: Greece and Global Focus

89. Pandora’s Box in Syria: Anticipating negative externalities of a re-entrenching regime

Author:: Samar Batrawi
Publication Date:: 05-2020
Content Type:: Special Report
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: During 2019, the original Syrian conflict entered its closing phases, except for the battlefields of Idlib and in the north east. As a result, conflict dynamics have become somewhat easier to read, as the regime and its key allies have shifted towards a triumphalist ‘post-war’ narrative and corresponding governance styles, deal-making and decision-making. These developments can be witnessed in three interlinked spheres: security, civil, and political economic practices. Together, they largely form the Assad regime’s political economy, which – although poorly understood due to limited access – is crucial to understand to assess the negative externalities likely to result from its wartime survival and re-entrenchment. The paper analyses six such externalities: 1. risk of conflict relapse due to economic pressures 2. the politics of refugees 3. risks and instrumentalisation of terrorism 4. regional instability 5. humanitarian culpability 6. deterioration of the international legal order. These externalities are interconnected and emerge from the political economy of the regime – the accumulation of its security, civil and political economic practices. Their nature and volume suggest that the Syrian civil war will plague its neighbors, as well as Europe, for a long time to come. These externalities also focus our attention on the fact that adequate containment strategies should be designed as a matter of urgency, to limit their negative impact.
Topic:: Security, International Law, Political Economy, Terrorism, Refugees, Conflict, Syrian War, and Bashar al-Assad
Political Geography:: Middle East, Syria, and Idlib

90. Widening the ‘Global Conversation’: Highlighting the Voices of IPE in the Global South

Author:: Melisa Deciancio and Cintia Quiliconi
Publication Date:: 07-2020
Content Type:: Journal Article
Journal:: All Azimuth: A Journal of Foreign Policy and Peace
Institution:: Center for Foreign Policy and Peace Research
Abstract:: The field of IPE has traditionally being conceptualized as an Anglo Saxon construct, in this paper we argue that it is critically important to reflect on the way IPE has developed outside the mainstream, in the periphery, focusing on the case studies of Africa – in particular South Africa; Asia – in particular China; and South America, in order to start a conversation that engages with the contributions of peripheral IPE. By bringing to light the way IPE has been approached in these regions of the world we identify problems, ideas, and concerns different from those in the North and which also call attention to the necessity of a conscious reading of these works and to opening a dialogue and comparison among them. The paper explores the contributions made by IPE in Africa, Asia and South America in order to discuss the possibility of widening IPE’s ‘global conversation’ including peripheral approaches.
Topic:: International Relations, Political Economy, Academia, and Dialogue
Political Geography:: Global South

91. Life and Death During the First Six Months of the COVID-19 Pandemic

Author:: Lykke E. Andersen and Alejandra Gonzales Rocabado
Publication Date:: 10-2020
Content Type:: Working Paper
Institution:: Institute for Advanced Development Studies (INESAD)
Abstract:: This study carries out a cross-country analysis of changes in quantity and quality of life during the first six months of the COVID-19 pandemic (11 March to 11 September 2020) for 124 countries. Changes in quantity of life are measured as life years lost to COVID-19, including excess deaths not officially reported as COVID-19 deaths. Changes in quality of life are proxied by the average change in daily mobility, compared to a pre-COVID baseline. We find a significant negative correlation between the two, meaning that the countries with the biggest reductions in mobility are also the countries with the biggest losses of life years. We calculate that about 15 million life years were lost during the first six months of the pandemic, corresponding to 0.006% of all expected life years. For comparison, at least three times more life years are lost every six months due to children dying of diarrhea. About 28 million life years are created every day from babies being born, so the first six months of the pandemic set us back about 14 hours in terms of quantity of life. The setbacks in terms of quality of life are several orders of magnitude larger. Some countries have suffered more than a 50% reduction in mobility sustained over half a year, with devastating effects on many aspects of quality of life. Globally, the equivalent of 400 million full-time jobs were lost. GDP is estimated to have been set back about three years, poverty about five years, and the tourism industry about 20 years. The already large inequalities in access to quality education have been further widened, leaving hundreds of millions of disadvantaged children farther behind. Even countries that have managed the pandemic relatively well are suffering large economic contractions due to the negative spill-over effects from other countries. We still have a long way to go before this pandemic is over, and we urgently need to course-correct in order not to cause even more harm than has already been done. The paper provides a series of recommendations on what needs to be done to minimize total harm.
Topic:: Political Economy, GDP, Mobility, Mortality, Coronavirus, Pandemic, COVID-19, and Quality of Life
Political Geography:: Latin America and Bolivia

92. The Political Economy of Industrial Policy in the European Union.

Author:: Fabio Bulfone
Publication Date:: 10-2020
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: The Great Recession renewed calls for a return of state activism in support of the European economy. The widespread nationalization of ailing companies and the growing activism of national development banks led many to celebrate the reappearance of industrial policy. By reviewing the evolution of the goals, protagonists, and policy instru- ments of industrial policy since the postwar period, this paper shows how state intervention never ceased to be a crucial engine of growth across the EU. It argues that the decline of the Fordist wage-led production regime marked a turning point in the political economy of industrial policy with the transition from inward-looking to open-market forms of state in- tervention. The main features of open-market industrial policy are then discussed referring to the cases of the internationalization of national champions in public service sectors and the proliferation across the EU of industrial clusters. Finally, the paper reviews postcrisis in- stances of state intervention and highlights how, rather than breaking with past tendencies, the Great Recession further accelerated the shift towards open-market industrial policy.
Topic:: Development, Economics, Political Economy, Regional Cooperation, European Union, Integration, and Industry
Political Geography:: Europe

93. An Obituary for Austerity Narratives? An Experimental Analysis of Public Opinion Shifts and Class Dynamics during the Covid-19 Crisis

Author:: Emanuele Ferragina and Andrew Zola
Publication Date:: 06-2020
Content Type:: Research Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: The Covid-19 pandemic is disrupting the international political economy context unlike any event since World War II. As a consequence, the French government has, at least momentarily, reversed decades of fiscal consolidation policies sedimented around austerity narratives by instating a costly emergency furlough scheme for a third of the workforce. This crisis provides a natural setting to investigate the relations among an emerging “critical juncture” in political economy, public preferences, and the salience of austerity narratives. We collected panel data and administered two experiments to test if citizens’ viewpoints are sensitive to the trade-off between health and economics, still receptive to austerity narratives, and conditioned by socioeconomic status in supporting them. We find public viewpoints were highly swayable between health and economic concerns at the first peak of the epidemic outbreak in April 2020, but they were not influenced by the austerity narratives during the phase-out of the lockdown in June, with the exception of the upper class. Overall, public support is shifting in favor of increased social spending, and austerity might no longer inhabit the majority’s “common sense.” We conclude with further implications for the study of class and conflict in a post-pandemic world.
Topic:: Economics, Political Economy, Public Opinion, Class, Macroeconomics, and Austerity
Political Geography:: Europe and France

94. The Great Separation: Top Earner Segregation at Work in High-Income Countries

Author:: Olivier Godechot, Paula Apascaritei, István Boza, Lasse Folke Henriksen, and Are Skeie Hermansen
Publication Date:: 06-2020
Content Type:: Research Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: Analyzing linked employer-employee panel administrative databases, we study the evolving isolation of higher earners from other employees in eleven countries: Canada, Czechia, Denmark, France, Germany, Hungary, Japan, Norway, Spain, South Korea, and Sweden. We find in almost all countries a growing workplace isolation of top earners and dramatically declining exposure of top earners to bottom earners. We compare these trends to segregation based on occupational class, education, age, gender, and nativity, finding that the rise in top earner isolation is much more dramatic and general across countries. We find that residential segregation is also growing, although more slowly than segregation at work, with top earners and bottom earners increasingly living in different distinct municipalities. While work and residential segregation are correlated, statistical modeling suggests that the primary causal effect is from work to residential segregation. These findings open up a future research program on the causes and consequences of top earner segregation.
Topic:: Economics, Political Economy, Labor Issues, Income Inequality, Class, and Labor Market
Political Geography:: Europe

95. A Surplus of Deficits

Author:: Amr Adly
Publication Date:: 03-2020
Content Type:: Journal Article
Journal:: Cairo Review of Global Affairs
Institution:: School of Global Affairs and Public Policy, American University in Cairo
Abstract:: From a political economy perspective, there are four key forces working against the peace and prosperity of Middle Eastern and North African states. To defeat them robust institutions are essential.
Topic:: Economics, Political Economy, Economic Growth, Peace, and Financial Institutions
Political Geography:: Africa, Middle East, North Africa, and MENA

96. Dealing With Construction Permits In Cameroon: Evaluation And Recommendations For Policymakers

Author:: Dr. Louis-Marie Kakdeu, Ulrich D’POLA KAMDEM, and Egoh Aziz
Publication Date:: 09-2020
Content Type:: Special Report
Institution:: The Nkafu Policy Institute
Abstract:: The building permit is an urban planning authorization issued by the City council of the municipality where the project is located. In Cameroon, it is issued to anyone wishing to engage in a construction initiative, change the location of an existing construction, modify its external appearance or volume, and even to create additional levels. To deliver the document, the technical services check that the planned constructions comply with the town planning regulations concerning the layout of the works, their nature, location, architecture, layout of their surroundings, and respect the general rules of construction in force. They also check whether the work plan has been drawn up under the responsibility of an architect who is a registered member of the National Order of Architects of Cameroon.
Topic:: Political Economy, Infrastructure, Governance, Regulation, and Local
Political Geography:: Cameroon

97. The Political Economy of Inequality in Chile and Mexico: Two Tales of Neoliberalism

Author:: Giorgos Gouzoulis and Collin Constantine
Publication Date:: 05-2020
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: This article offers a historical and econometric study on the determinants of functional income inequality in Chile and Mexico between 1980-2011. This is the first study on the determinants of the labour share in developing economies using single- country analysis that covers the historical period before 1990. We find robust evidence that government consumption is a positive driver of the respective wage shares. Since Chile has experienced persistent cuts in government welfare as opposed to Mexico, fiscal austerity is a fundamental explanation for its falling wage share. Private debt is the second most important explanation for why wage shares have fallen in Chile. We find no evidence of this channel in the Mexican case. However, globalisation has exposed Mexico’s labour-intensive industries to wage competition and this lowers its wage share. In contrast, Chile’s commodity exports and wage share have benefitted from trade globalisation. These comparative results demonstrate the importance of country-level studies as each country’s historical evolution and varied implementation of neoliberalism can tell unique distributional stories and provide more accurate policy insights for an inclusive growth strategy.
Topic:: Political Economy, Labor Issues, Inequality, and Neoliberalism
Political Geography:: South America, North America, Mexico, and Chile

98. International Financial Regulation: Why It Still Falls Short

Author:: William White
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: While recent reforms are welcome in many ways, there are still significant reasons to doubt that the post-crisis tightening of international financial regulation guarantees future financial and economic stability. The most important reason is that the reforms have focused too narrowly on ensuring that an unstable financial sector will not aggravate downturns by restricting the supply of credit. More attention needs to be paid to ensuring that an overly exuberant financial system does not weaken other parts of the economy by encouraging a rapid buildup of debt during upturns. Some combination of time-varying monetary and regulatory policies (a macrofinancial stability framework) will be required to do this. In addition, many of the individual regulatory measures taken to date, both macroprudential and microprudential, have shortcomings. Their coherence as a package has also been questioned.
Topic:: Political Economy, Financial Crisis, Reform, Banks, and Subsidies
Political Geography:: Global Focus

99. Predicting United States Policy Outcomes with Random Forests

Author:: Shawn K. McGuire and Charles B. Delahunt
Publication Date:: 10-2020
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Two decades of U.S. government legislative outcomes, as well as the policy preferences of highincome people, the general population, and diverse interest groups, were captured in a detailed dataset curated and analyzed by Gilens, Page et al. (2014). They found that the preferences of high-income earners correlated strongly with policy outcomes, while the preferences of the general population did not, except via a linkage with the preferences of high earners. Their analysis applied the tools of classical statistical inference, in particular logistic regression. In this paper we analyze the Gilens dataset using the complementary tools of Random Forest classifiers (RFs), from Machine Learning. We present two primary findings, concerning respectively prediction and inference: (i) Holdout test sets can be predicted with approximately 70% balanced accuracy by models that consult only the preferences of those in the 90th income percentile and a small number of powerful interest groups, as well as policy area labels. These results include retrodiction, where models trained on pre-1997 cases predicted “future” (post-1997) cases. The 20% gain in accuracy over baseline (chance), in this detailed but noisy dataset, indicates the high importance of a few distinct players in U.S. policy outcomes, and aligns with a body of research indicating that the U.S. government has significant plutocratic tendencies. (ii) The feature selection methods of RF models identify especially salient subsets of interest groups (economic players). These can be used to further investigate the dynamics of governmental policy making, and also offer an example of the potential value of RF feature selection methods for inference on datasets such as this one.
Topic:: Political Economy, Elections, Public Policy, Money, and Political Parties
Political Geography:: North America and United States of America

100. A General Equilibrium Analysis of the Impact of the COVID-19 Outbreak on Turkey’s Economy and a Policy Alternative to Protect Labor Incomes

Author:: Ebru Voyvoda and Erinc Yeldan
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: The COVID-19 pandemic is being experienced as a multidimensional systemic crisis based on the simultaneous manifestations of the supply, demand, and financial shocks. These effects have already been realized in the exacerbation of deep inequalities in income distribution, in functional, regional, and gender terms; in access to public services that are commercialized; and therefore, in an environment where poverty is experienced with social exclusion due to severe inequalities of income. The crisis has hit the Turkish economy under a conjuncture where the adverse effects of the 2018 financial turbulence have not yet been alleviated, and the macroeconomic balances have not been resolved in a sustained fashion. Turkey has displayed already high rates of unemployment (at the rate of 13.6%) and inflation (11%) by the end of 2019. Projections by the IMF also reveal that as a result of the economic measures of isolation and employment disruption, Turkey’s GDP will likely contract by 5% in 2020. Given this background, our aim in this study is to analyze the upon-impact effects of the COVID-19 outbreak on Turkish economy and to investigate policy alternatives that can be implemented against these impacts. We utilize a macroeconomic applied general equilibrium model designed for this purpose; and examine the effects of the crisis conjuncture caused by the COVID-19 outbreak on sectoral production, employment, wages, and capital revenues, national income, and foreign trade balances. Then, we provide an analysis of defensive policies that can be developed against the crisis.
Topic:: Political Economy, Labor Issues, Economy, Finance outlook, and COVID-19
Political Geography:: Turkey and Middle East

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COLUMBIA UNIVERSITY PRESS