40043 - Politics of The World Economy

Learning outcomes

This graduate course provides the students with the key elements to interpret and understand the interaction between political and economic processes at the international level. At the end of the course, the students will be familiar with the orthodox tripartition of IPE,, the contested nature of such trifurcation and seminal debates in the discipline (First part). Students will have acquired an advanced knowledge of the main actors, processes and issues at stake in global political-economic relations (trade-security, trade-democracy nexuses, multinational investment and its geo-political implications, political and economic risk, the politics and performance of poverty reduction, financial crises and the management of power asymmetries in the international system, global governance issues) (Second Part).

Course contents

The first part of the course covers the most relevant theoretical approaches to the study of IPE. In addition to the three orthodox approaches (Mercantilism, Liberalism, Marxism), the course will focus on the role of domestic and international political determinants in the explanations of different economic outcomes, as well as on the complex relation between security and economic interdependence.

The second part of the course will be devoted to the study of international monetary, trade and financial systems. Against their historical and institutional backgrounds, classes will cover, respectively, the role of international financial institutions in systemic crises and in managing power asymmetries, main development issues in North-South relations and the debate on globalization and the new financial architecture. Attention will be specifically devoted to the role of non-state actors, with a focus economic and social actors in the private sector (MNCs, advocacies from civil society-NGOs, credit rating agencies, large private investors, financial networks).

Finally, students will deepen their knowledge on particular issues of interest by preparing ONE of the topics listed in the third section of this syllabus (‘Topics of choice'): 1.Risk, 2.FDI, growth, institutions and policies, 3. Micro-credit and financial inclusion, 4.MNCs, NGOs and corporate social responsibility, 5. Advocacies, NGOs and development promotion.

First Part

1.Introduction to the study of International political economy

-B.J. Cohen, International Political Economy, Princeton University Press, Princeton & Oxford, 2008, Introduction and Chapters 1-2.

-M. Watson, ‘Theoretical Traditions in Global Political Economy', in Ravenhill, J. (ed) Global Political economy, Oxford, Oxford University Press, 2011, pp. 27-66.

- R. Rogowski, “Political Cleavages and Changing Exposure to Trade”, American Political Science Review, 81, 4, 1987, pp. 1121-1137;

- R. Wade. (2009), ‘ Beware what you wish for: Lessons for international political economy from the transformation of economics', in Review of International Political Economy, 16, 1, pp. 106-121

 

2. The Mercantilist Tradition

- D. Irwin, Against The Tide: An Intellectual History of Free Trade, Princeton University Press, Princeton, NJ, 1996, pp. 116-137 (The Infant Industry Argument);

- A.O. Hirschman, National Power and The Structure of Foreign Trade, Berkeley, University of California Press, 1945, trad. it. Potenza nazionale e commercio estero , Bologna, Il Mulino, 1987, pp. 63-74 and pp. 75-124;

-R. Findlay e K. H. O'Rourke, ‘World Trade 1650-1780: The Age of Mercantilism', in Power and Plenty, Oxford and Princeton, Princeton University Press, 2008, Capitolo 5, solo pp. 227-294 e 304-310.

 

3.The Liberal Tradition

- I. Kant, Per la pace perpetua, [1795], traduzione di Roberto Bordiga, prefazione di Salvatore Veca, Milano, Feltrinelli, 2002, 8 edizione, pp.53-68 (Primo, Secondo e Terzo Articolo);

- D. Irwin, Against The Tide: An Intellectual History of Free Trade, op. cit., pp.75-86 (Adam Smith's Case for Free Trade), e pp.87-98 (Free trade in classical economics);

-R. Keohane, After Hegemony, Princeton, Princeton University Press, 1984, pp.49-64, pp. 85-109 e pp.243-259;

-J. R. Oneal, e B. Russett, “The Kantian Peace: The Pacific Benefits of Democracy, nterdependence, and International Organizations, 1885-1992”, World Politics, 52, 1, 1999, 22, pp. 1-36;

 

4. Security and economic interdependence (I). Systemic change: Hegemonic Stability Theory and its critics

-S. Krasner, “State Power and the Structure of International Trade”, World Politics, 28, 3, 1976, pp. 317-347;

-C. Kindleberger, “Dominance and Leadership in The World Economy: Exploitation, Public Goods, and Free Riders”, International Studies Quarterly, 25, 1981, pp.242-254;

-J. Conybeare, “Public Goods, Prisoners' Dilemma and The International Political Economy”, International Studies Quarterly, 28, 1984, pp.5-22;

- D. Snidal, “The Limits of Hegemonic Stability Theory”, International Organization, 39, 1985, pp.579-614;

 

5. Security and economic interdependence (II). Balance of power Theories: Relative gains, alliances and trade policies

- J. M. Grieco, “Anarchy and the limits of cooperation: a realist critique to the newest liberal institutionalism”, International Organization, 43, 2, 1988, pp.485-507;

- J. Gowa, e E.D. Mansfield, “Power Politics And International Trade”, American Political Science Review, 87, No.2, June 1993, pp.408-420;

- E. D. Mansfield e R. Bronson, “The Political Economy of Major-Power Trade Flows”, in Edward D. Mansfield, and Helen V. Milner, (eds.), The political economy of regionalism, Columbia University Press, New York, 1997, pp.188-208;

-J. Gowa, ‘The Democratic Peace after the Cold War', in Economics & Politics, 2011, 23,2, 153–171.

 

6. Domestic determinants:preferences and institutions

- D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two Level Games”, International Organization, 42, 3, Estate 1988, pp.427-460;

-M. Olson e M. McGuire, “The economics of autocracy and majority rule: the invisible hand and the use of force”, Journal of Economic Literature, 34, Marzo 1996, pp.72-96;

- E.D. Mansfield, H.V. Milner e  P.B. Rosendorff,  “Free to Trade: Democracies, Autocracies and International Trade”, Americal Political Science Review, 94, 2000, pp.305-321;

-H. Farrell and A. Newman, ‘ Making global markets: Historical institutionalism in international political economy', in Review of International Political Economy, 17, 4, 2010, pp.609-638.

 

 

Second Part

7. The International Monetary System

-J. Ruggie, "International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order", International Organization, 36, 2, Primavera 1982, pp.379-415;

-B. Cohen, “The Triad and The Unholy Trinity: Problems of International Monetary Cooperation”, J. Frieden and D.Lake, International Political Economy, London and New York, Routledge, 2009, p.255-266;

-M. Obstfeld, “The Global Capital Market: Benefactor or Menace?”, Journal of Economic Perspectives, 12, 4, Fall 1998, pp.9-30;

- R. Deeg and M. O'Sullivan, ‘Review Article: The Political Economy Of Global Finance Capital', World Politics , 61, 4, 2009, 731–63.

 

8. The role of international financial institutions

-R. Stone, “Institutions, Power and Interdependence”, in H. Milner e A.Moravcsik (eds), Power, Interdependence and Non-state Actors in World Politics, Princeton University Press Princeton, 2009, pp. 31-49.

-N. Woods, The Globalizers: The IMF, the World Bank, And Their Borrowers, Cornell University Press, 2006, 179-213.

-C. Murphy, The World Bank and Global Managerialism, Routledge, 2009, 53-73.

-J. Chwieroth, (2008) ‘Normative Change from Within: The International Monetary Fund's Approach to Capital Account Liberalization', International Studies Quarterly, 52, 129-158.

 

9. Private actors in financial policymaking:

-Biglaiser, G., DeRouen, K. Jr. (2007). “Sovereign Bond Ratings and Neoliberalism in Latin America”, International Studies Quarterly 51(1), pp. 121-138

-Mosley (2009) ‘Private governance for the public good? Exploring private sector participation in global financial regulation', in H.Milner and A.Moravcsik  (eds), Power, Interdependence and Nonstate Actors in World Politics, Princeton, Princeton University Press.

-Baker, A. (2010) 'Restraining regulatory capture? Anglo-America, crisis politics and trajectories of change in global financial governance' in International Affairs, 86, 3, 647-663.

-Wright, Christopher, (2011) 'Export Credit Agencies and Global Energy: Promoting National Exports in A Changing World', in Global Policy, 2, 1, 133-143

-Young, Kevin L. (2012) 'Transnational regulatory capture? An empirical examination of the transnational lobbying of the Basel Committee on Banking Supervision', in Review of International Political Economy, 19, 4, 663-688

 

10. The International Trade System

-R. Findlay e K. H. O'Rourke, ‘Reglobalization: The Late Twentieth Century in Historical Perspective', in Power and Plenty, Oxford and Princeton, Princeton University Press, 2008, Capitolo 9, pp.473-526.

- J. Whalley, ‘Why Do Countries Seek Regional Trade Agreements?', in Jeffrey Frankel, (ed.), The regionalization of the world economy, University of Chicago Press, Chicago, 1998, pp.63-87;

-J.Barton, J.Goldstein, T.E. Josling and R.H. Steinberg, The Evolution of the Trade Regime, Princeton University Press, Princeton, 2006, Chapters 2 and 5.

- B. Hoekman (2013) Sustaining Multilateral Trade Cooperation in a Multipolar Economy, RSCAS Working Paper 2013/86, EUI, San Domenico di Fiesole, pp.9-26  available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2377256

 

11.FDI and the political economy of the MNCs

-F. Schneider, B. Frey (1985). “Economics and Political Determinants of Foreign Direct Investment”, World Development 13 (2), pp. 161-175

-John H. Dunning (1988) ‘The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions', Journal of International Business Studies, 19, 1 , 1-31.

-Strange S. (1992), “States, Firms, and Diplomacy”, International Affairs, 68, 1, 1992, pp.1-15;

-N. Jensen (2003). “Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment”, International Organization 57 (3), pp. 587-616.

-N. Jensen (2005) ‘The Multinational Corporation Empowers the Nation-State', Perspectives on Politics, 3, 3, 548-551

12.The political economy of development: aid, growth, and poverty reduction

- C. Burnside, e D. Dollar, “Aid, Policies and Growth”, American Economic Review, 90:4, 2000, September, pp.847-868.

-Easterly, W. , The White Man's Burden, Oxford University Press, Oxford & New York, 2006, pp.33-49 ‘The Legend of the Big Push', e pp.99-138, ‘Planners and Gangsters'.

-F.Cleaver. The Inequality of Social Capital and the Reproduction of Chronic Poverty, in World Development, 33, 6, 2005, pp.893-906.

-Ban, C. and Blyth, M. (2013) ‘The Brics and the Washington Consensus: An Introduction', in Review of International Political Economy, 20, 2, 141-155.

 

13. The debate on globalization

-R. Findlay e K. H. O'Rourke, ‘Globalization at the Dawn of the Twenty-First Century', in Power and Plenty, Oxford and Princeton, Princeton University Press, 2008, Ch.10, pp.527-546.

-R.O. Keohane e J. S. Nye, “Globalization: What's New? What's Not? (And So What ?)”, Foreign Policy, 118, pp.104-119, 2000;

-M. Zürn, “From Interdependence to Globalization”, in W.Carlsnaes, Th.Risse and B.A. Simmons, Handbook of International Relations, Sage, London, 2002, pp. 235-254;

-T.Hale, D.Held, and K.Young, ‘ Gridlock: the growing breakdown of global cooperation', in Open Democracy, 24 May 2013, available at http://www.opendemocracy.net/thomas-hale-david-held-kevin-young/gridlock-growing-breakdown-of-global-cooperation

 

14. The crises of the global economy: Causes, consequences and policy implications.

-Reinhart, C. and Rogoff, K., ‘ This Time is Different: A Panoramic View of Eight Centuries of Financial Crises', NBER Working Paper No. 13882, now in Reinhart, C. and Rogoff, K. (2011) This Time Is Different: Eight Centuries of Financial Folly , Princeton, NJ, Princeton University Press.

-S. Claessens, M. Ahyan Khose, ‘Financial Crises: Explanations, Types and Implications', in IMF Working Paper 13/28, 2013, pp.1-59.

-E. Helleiner, ‘ Understanding the 2007–2008 Global Financial Crisis: Lessons for Scholars of International Political Economy', in Annual Review of Political Science, 14, 2011, pp. 67-87.

-W.Baumol, R.E.Litan and C.Schramm, Good capitalism, bad capitalism, and the economics of growth and prosperity, New Haven and London, Yale University Press, 2007, pp.60-92 and 272-276.

 

Third part

Readings for the topics of choice

 

1.Risk

-Simon, J. D. (1984). “A Theoretical Perspective on Political Risk”, Journal of International Business Studies 15 (3), pp. 123-143

-Erb, C. B., Harvey, C. R., and Viskanta, T. E. (1996). “Political Risk, Economic Risk, and Financial Risk”, Financial Analysts Journal 52 (6), pp. 28-46

-Bremmer, I (2005) 'Managing risk in an unstable world' , Harvard Business Review , 83, 6, 51-

-Best, Jacqueline (2008) 'Ambiguity, Uncertainty, and Risk: Rethinking Indeterminacy', in International Political Sociology, 2, 4, 355-374.

-Jensen, Nathan M.; Young, Daniel J (2008) 'A violent future? Political risk insurance markets and violence forecasts', in  Journal of Conflict Resolution , 52, 4, 527-547.

-Earle, Timothy C. (2009) 'Trust, Confidence and the 2008 Global Financial Crisis' , Risk Analysis, 29, 6, 785-792

-Kesternich, I., and Schnitzer, M. (2010) ‘Who is Afraid of Political Risk? Multinational Firms and their Choice of Capital Structure', Journal of International Economics, 82, pp. 208-218

 

2.FDI, growth, institutions and policies

-Frieden, J. (1991). “Invested Interests: The Politics of National Economic Policies in a World of Global Finance”, International Organization 45(4), pp. 425-451

Oneal, R. J. (1994). “The Affinity of Foreign Investors for Authoritarian Regimes”, Political Research Quarterly 47(3), pp. 565-588

-Borensztein, E., De Gregorio, J., and Lee, J. W. (1998). “How Does Foreign Direct Investment Affect Economic Growth?”, Journal of International Economics 45 (1), pp. 115-135

-Henisz, W. J. (2000). “The Institutional Environment for Economic Growth”, Economics and Politics 12, pp. 1-31

-Devereux, M. P., Griffith R. (2002). “The Impact of Corporate Taxation on the Location of Capital: A Review”, Swedish Economic Policy Review 9, pp. 79-102

-Jensen, N. (2013) ‘Domestic Institutions and the Taxing of Multinational Corporations', International Studies Quarterly, 57, 440-448.

 

3. Micro-credit and financial inclusion

-Moon, B. (2009) ‘The Great Divide in Microfinance: Political Economy in Microcosm', in Contemporary Studies in Economic and Financial Analysis , 92, 109-144

- Roodman, D. (2011) Due Diligence. An impertinent inquiry into microfinance, Washington, CGDEV, selected pages.

-Banerjee, A. (2013). 'Microcredit under the microscope: What have we learnt in the last two decades, what do we need to know?', in Annual Review of Economics 5.

-Garmaise, M.J. and Natividad, G. (2012) ‘Cheap credit and International Political Relations: The Case of Global Microfinance', mimeo 

 

4. MNCs, NGOs and corporate social responsibility

-McWilliams, Abagail; Siegel, Donald; Wright, Patrick M. (2006) 'Corporate Social Responsibility: International Perspectives', in  Journal of Business Strategies , 23,1,

-Jenkins, R. (2005) ‘ Globalization , Corporate Social Responsibility and poverty', International Affairs, 81: 525–540

-Siegel, Donald S. (2009).“Green Management Matters Only If It Yields More Green: An Economic/Strategic Perspective,” Academy of Management Perspectives, 23, 3, 5-16.

-Crespy, Charles T.; Miller, Van V. (2011) 'Sustainability Reporting: A Comparative Study of NGOs and MNCs', in Corporate Social Responsibility and Environmental Management, 18, 5, 275-284.1

- Andreas Wieland and Robert B. Handfield (2013): The Socially Responsible Supply Chain: An Imperative for Global Corporations. Supply Chain Management Review, Vol. 17, No. 5, pp. 22-29.

 

5. Advocacies, NGOs and development promotion

- M. Keck and K. Sikkink (1999)  ‘Transnational advocacy networks in international and regional politics', International Social Science Journal 51, 159, 89-101.

- Sell, S. and Prakash, A. (2004) ‘Using Ideas Strategically:  The Contest Between Business and NGO Networks in Intellectual Property', International Studies Quarterly 48 (1):143-75.

-Vachani, Sushil; Doh, Jonathan P.; Teegen, Hildy  (2009) 'NGOs' influence on MNEs' social development strategies in varying institutional contexts: A transaction cost perspective' in International Business Review, 18, 5, 446-456

-Aldashev, Gani; Verdier, Thierry (2010) 'Goodwill bazaar: NGO competition and giving to development', in Journal of Development Economics , 91,1, 48-63.

-Buthe, T., Mayor, S. and Souza, A. (2012) 'The Politics of Private Foreign Aid: Humanitarian Principles, Economic Development Objectives, and Organizational Interests in NGO Private Aid Allocation' in International Organization, 66, 571-607.

Teaching methods

Taught classes and class discussion, divided in two modules, with the help of visual tools (ppt and web resources).

Assessment methods

Assessing the acquisition of expected knowledge and abilities for the students who attend classes is based on the following three levels: 1.Contribution to class discussion (worth 20%  of the final grade); 2. Final written exam, multiple choice (worth 40%  of the final grade); 3. Final oral exam (worth 40%  of the final grade), on the whole program, excluding the Ravenhill handbook (2011), but including the topic of choice.

The written final exam is articulated through 10 multiple choice questions, with three answers, only one of which is correct. Each correct anwers is worth 3 points (10 correct answers corresponding to the maximum grade obtainable in the written exam, 30/30). No penalty is attributed for wrong answers. The student may sit the final oral exam as long as she/he has totaled at least 5 correct answers (i.e. a grade equal or above 15). The written exam is explicitly aimed at testing the student's acquired knowledge of the main IPE Schools, theories and models, as well as of the main empirical applications, as discussed in class. 

The oral exam lasts approximately 20 minutes, and  is articulated through three questions, suggested by the Professor, aimed at testing the student's ability to verbally articulate themes and methods discussed in class (2 questions), and the student's knowledge on the topic of choice (1question) offering the student the opportunity to show her/his ability to crtitically reassess such material.

Assessing the acquisition of expected knowledge and abilities for the students who choose not to attend classes is based on the following two levels: 1.Final written exam, multiple choice (worth 50% of the final grade) 2.Final oral exam (worth 50% of the final grade), on the whole program, including the Ravenhill handbook (2011) and the topic of choice.

For the students who choose not to attend classes the final written multiple choice exam is composed of 15 questions (2 pts for each correct answer, and no penalty for wrong answers) instead of 10, focusing on the readings indicated in the Syllabus and including the Ravenhill Handbook (2011). The final oral exam has the same format -and same evaluation criteria- adopted for the attending student (3 open questions), but focuses on the readings indicated in the Syllabus, the Ravenhill Handbook and the readings for the topic of choice.

Teaching tools

ppt, web resources.

Office hours

See the website of Eugenia Baroncelli