40043 - Politics of The World Economy

Course Unit Page

SDGs

This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

No poverty Decent work and economic growth Reduced inequalities Partnerships for the goals

Academic Year 2018/2019

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 institutions in global economic governance, with a focus on financial stabilization and main development issues in North-South relations. 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 writing a short essay (max 2500 wds,
including ftnotes and references) on 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 6.Inter-organizational relations in development policymaking.
Students will be assessed based on 1. a short essay on the topic of choice (Part 3) and 2. a final oral exam on all the
compulsory readings indicated in this syllabus. Class attendance is mandatory (verifcation policy – roster signing -
requires that at least 70% of classes be attended –with active involvement in class discussion- for the student to be
admitted to the oral exam and for the short essay to be graded).
Students who wish to complement their background on selected topics discussed in class may do so through the
suggested readings, or by consulting the following IPE handbook, John Ravenhill (ed), Global Political Economy, Oxford
University Press, Oxford, 2014, fourth edition.

Readings/Bibliography

First Part

1.Introduction to the study of International political economy

Required readings:

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

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

 

Suggested readings:

-M. Watson, ‘The Historical Roots of Theoretical Traditions in Global Political Economy', in Ravenhill, J. (ed) Global Political economy, Oxford, Oxford University Press, 2014, pp. 25-49.

 

2. The Mercantilist Tradition

Required readings:

- 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.

 

Suggested readings:

-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

Required readings:

- 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, Interdependence, and International Organizations, 1885-1992”, World Politics, 52, 1, 1999, 22, pp. 1-36.

 

Suggested readings:

- 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)

 

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

Required readings:

-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.

 

Suggested readings:

-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.

 

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

Required readings:

- 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.

 

Suggested readings:

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

 

6. Domestic determinants: preferences and institutions

Required readings:

- 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”, American Political Science Review, 94, 2000, pp.305-321.

 

Suggested readings:

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

-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

Required readings:

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

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

 

Suggested readings

-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;

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

 

8. Global Economic Governance: the IMF, the WB and the EU

Required readings:

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

- Baroncelli, E. (2019) The European Union, the World Bank and the Policymaking of Aid, New York, Routledge, Ch.1, Ch.3

 

Suggested readings:

-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.

-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:

Required readings:

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

-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.

 

Suggested readings:

-Mosley, L. (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.

-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

Required readings:

- 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.

 

Suggested readings

- 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

Required readings:

-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.

 

Suggested readings:

-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

Required readings:

-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'.

- Baroncelli, E. (2019) The European Union, the World Bank and the Policymaking of Aid, New York, Routledge, Ch.2, 5 and 6.

 

Suggested readings:

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

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

- Movie: ‘The Inside Job’, (C.Ferguson, 2010)

- Class discussion

Required readings:

-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.

 

Suggested readings

-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.

 

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, Ch.1.

-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 Quarterly48 (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' inInternational 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.

 

6. Inter-organizational relations and development policymaking

- Baroncelli, E. (2019) The European Union, the World Bank and the Policymaking of Aid: Cooperation among developers, New York, Routledge.

Reference:

- Lipson, M. (2017) Organization Theory and Cooperation and Conflict Among International Organizations, in Bierman, R. and Koops, J. (2017) Palgrave Handbook of Inter-Organizational Relations in World Politics, pp. 67-96

Teaching methods

Taught classes and class discussion, divided in two modules, with the help of visual tools (ppt, movies, web resources). Class discussion is not mandatory towards the final grade.

Assessment methods

Assessing the students' acquisition of expected knowledge and abilities is based on the following three levels: 1. Short essay (max 2500 wds, including ftnotes and refs, worth 50% of the final grade) on the topic of choice (Part III). Essays must bear name-surname-registration number of the Author on page 1 - all pages must be numbered clearly 2. Final oral exam (worth 50% of the final grade) on the overall program.

Active participation to class discussion is welcome but it is not mandatory towards the evaluation of the student’s overall performance. If positive (i.e. advantageous), such evaluation may however be used to round up the final grade achieved through the short essay and the final oral exam.

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, providing the student with an opportunity to show her/his ability to critically reassess such material.

Students enrolled in academic years preceding the IPM curriculum activation will be assessed on the basis of a short essay, prepared according to the above guidelines, and an oral exam on the whole program as indicated above (excluding suggested readings) and on the Handbook J.Ravenhill, Global Political Economy, Oxford University Press (2014).

Teaching tools

Ppt, various visual tools, web resources.

Office hours

See the website of Eugenia Baroncelli