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Article

International trade is a dynamic and powerful force that affects nearly every individual, business, and nation in the world. Its scope and scale have also made international trade an immense, intense, and perennial subject of interest and inquiry. Some of the foundational works on international trade can be traced back to Adam Smith and David Hume, whose theories sought to debunk the commonly held idea of international trade at the time: mercantilism, which viewed exports as beneficial because they generated an increase in foreign currency and a nation’s wealth, and imports as detrimental because they were thought to decrease a nation’s wealth. Today, the general idea of comparative advantage informs almost all neoclassical economists’ models of international trade. However, neoclassical economists tend to assume that the theoretical benefits of international trade are clear, and thus, often ignore or dismiss the negative impacts of international trade and the studies that challenge their theories. In fact, many countries have not seen the benefits predicted by neoclassical economic theories. This is particularly evident when comparing the effects of international trade across developed and developing countries. Furthermore, there is evidence that international trade has developed along patterns that are not predicted by the traditional theories of comparative advantage. Given these, the practice of trade and its international impact can be much murkier.

Article

Trade governance rests upon certain economic assumptions and the ensuing political compromises made possible by the growth of an incremental legal consensus. The main economic assumptions are that trade will deliver upon the objectives of socio-economic development, stable, long-term employment opportunities and poverty reduction. These assumptions are theoretically sound, but are increasingly challenged by the complex political realities of global trade. The study of trade in the field of international political economy (IPE) has deep roots in the postwar disciplines of economics and political science. The literature on the history of trade regulation places the current system, with its emphasis on the legitimizing imprimatur of political power and the significance of binding treaty, into a more nuanced context in which present practices, while sometimes novel, are frequently older than most policy makers realize. In the two decades since the finalization of the Uruguay Round and the creation of the World Trade Organization (WTO), a host of significant issues have arisen as scholars and policy makers attempt to implement the WTO’s mandate and navigate the political waters of trade regulation as it relates to domestic law and policy. These include the set of issues raised by the broadening of trade regulation post-Uruguay Round to include trade related intellectual property rights and trade in services, the contentious issue of trade and economic development, and the issue of WTO reform.

Article

Marc L. Busch and Edward D. Mansfield

A survey of the literature on trade has revealed that it is becoming more difficult for elected officials resist protectionist pressures by citing constraints imposed by global pacts and supply free trade. There are two main reasons why. First, the literature on the design and politics of international institutions increasingly emphasizes how they build in slack that can undermine government claims of being constrained. Second, as states accede to an ever-growing list of overlapping international institutions, there is often a choice among, or uncertainty over, which institution’s obligations apply. Where this situation creates more policy space for government officials, it also will make it more difficult for them to credibly tie their hands and supply free trade in the face of interest group pressures for protection. Currently, the literature is somewhat at a turning point. Questions about the design and politics of international institutions, and the growing thickness of the market for them, are very much in vogue. These questions have profound implications for the supply of free trade. The credibility of elected officials’ hands-tying strategies is likely undermined where institutions anticipate the political reactions of their members, or where members can shop for different rules on trade to accommodate domestic preferences. The irony is that the proliferation of international institutions may lead scholars of trade policy to renew their focus on domestic interest groups.

Article

Russell Alan Williams and Jeff Loder

Compared to trade in goods, there hasn’t been much attention given to international exchange in services and efforts to promote liberalization of those exchanges. Despite considerable efforts to promote global and regional services liberalization since the 1980s, much of the study of “trade in services” remains somewhat underdeveloped. Governments maintain foreign direct investment (FDI) restrictions on the ownership and operation of financial services and media companies, and most countries continue to insist on strict limitations on the rights of workers to trade their services across borders. While the revolution in communications and transportation technology in recent decades has intensified interest in services, services are still highly regulated and the removal of traditional trade barriers is inadequate to promote liberalization. The initiatives undertaken to promote the removal of service trade barriers include the World Trade Organization’s (WTO) General Agreement on Trade In Services (GATS); the European Union’s (EU) Services Directive; and the ASEAN Framework Agreement on Services (AFAS) signed by member states of the Association of South Eastern Asian Nation members (ASEAN) in 1995. These initiatives have generated a range of academic controversies and investigation, which has explored three themes: explaining the process by which the issue of liberalization came to the forefront of the global trade agenda, deploying a range of theoretical perspectives; assessing the impact and effectiveness of services liberalization agreements; and explaining why it has proven more difficult to promote liberalization in the services sector.

Article

The terms “region,” “regionalism,” and “regional integration” are often used synonymously in the academe. For instance, one author refers to Pacific Asian regionalization, North American regionalism and regional integration in Europe. Some authors view “regionalism” as the analytically broader term. Since the mid-1990s, there has been a more general movement toward “economic regionalism or regional trade agreements,” building on the concept of “new regionalism” and coinciding with the notion of “preferential trading arrangements.” This implies only those integration schemes which have an economic purpose, are in geographical proximity to each other, and consist of more than two states qualify for inclusion. There are five stages in the deepening of formal regional integration: free trade area, customs union, common market, economic union, and political union. From the late-1950s to the late 1990s, two approaches have attempted to explain the process (rather than the origins) of regionalism: neofunctionalism and liberal intergovernmentalism. Scholars argue whether there is a causal connection between regional integration and Global Political Economy (GPE), or whether they are simply correlated. Three themes from the literature on regionalism and GPE can be identified. First, the numerous studies since the late 1990s that have taken a decidedly comparative approach, irrespective of their level of analysis, agree that there is some “logic” to regional arrangements. Second, confusion occurs with domestic causality. Third, large membership has become a concern for the European Union.

Article

Marc D. Froese

After World War II, a body of rules and institutions have emerged for the purpose of regulating global flows of goods and services. These are known as world trade law, classified under international economic law, an expanding body of transnational regulatory treaties and institutions. World trade law has evolved within the global trading system following the Second World War, beginning with the General Agreement on Tariffs and Trade (GATT), which came into force in 1948. The most-favored nation and national treatment principles are the most prominent principles that give world trade law its distinctive form. The World Trade Organization (WTO) provides a vast store of literature, which covers the waterfront of legal and political issues that animate the global political economy of trade. The WTO’s predecessor, the GATT, also contributed extensively to the growing body of literature on world trade law. The WTO’s inclusion of agreements on the liberalization of services, investment, and intellectual property have begun lively debates about the possible trajectories of governance in new issue areas, such as anti-dumping and intellectual property rights. In addition to the issues raised by the inclusion of many small economies in the institutions of global trade governance, the rise of world trade law has simultaneously highlighted the many areas of importance to national publics in developed economies where trade overlaps with social priorities.

Article

Economic sanctions are a versatile instrument of statecraft used by states to try to influence the behavior of foreign actors by threatening or restricting customary cross-border trade or financial flows to an intended target. Examples of economic sanctions are retaliatory tariffs imposed in trade disputes and the complete cessation of economic flows aimed at undermining a certain regime. The importance of economic sanctions to policy makers has spawned a substantial amount of scholarly work dominated by two questions: whether sanctions “work” and whether states should use them. The long-running scholarly debate about whether sanctions work is essentially a dispute over how to classify cases. However, comparing cases of success and failure is problematic, in part because the very notion of what constitutes the successful use of sanctions is not clear and policy makers rarely seek to influence a single target or pursue a single policy goal when using sanctions. One of the most promising developments in the literature has been the increasing use of game theory to analyze sanctions, but this approach does not adequately determine the appropriateness of sanctions as a policy instrument. Sanctions research should focus instead on the basic strategic dynamics of the sanctions episode in order to identify those factors that contribute most strongly to the effective use of sanctions and to enable policy makers to understand more about the consequences of using sanctions as an instrument of statecraft.

Article

The creation of the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs) in the mid-1990s altered the regulation of intellectual property under international law. Prior to the TRIPs Agreement, intellectual property regulation consisted of a patchwork of international treaties and conventions coordinating reciprocal national treatment of signatory states’ domestic intellectual property protection. Generally, those agreements strove for minimum standards of protection, but left levels and types of protection to member states’ national discretion. TRIPs’s strict uniformity represented a momentous change. Development theorists who have examined the practical implications of intellectual property regulation under international law have echoed critical theorists’ assertions of TRIPs as a watershed moment. However, they have expressed concerns over the domination exercised by developed countries over developing countries within the current international intellectual property regulatory system. Of particular importance are international impositions into developing countries’ national legal systems via TRIPs, and efforts of developed countries to extract from developing countries intellectual property concessions over and above those contained in TRIPs. A wide range of articles on intellectual property regulation under international law have also been published in legal journals and periodicals. Three broad themes stand out: concerns about practice and practical applications (i.e., practice tips, reviews of cases and WTO decisions); concerns about policy aspects and consequences of intellectual property law; and exploration of the philosophical underpinnings of the law.

Article

Latin American foreign policy has drawn the attention of scholars since the 1960s. Foreign policy–related literature began to surge in the 1980s and 1990s, with a focus on both economic and political development. As development in the region lagged behind that of its northern neighbors, Latin American had to rely on foreign aid, largely from the United States. In addition to foreign aid, two of the most prevalent topics discussed in the literature are trade/economic liberalization and regional economic integration (for example, Mercosur and NAFTA). During and after the Cold War, Latin America played a strategic foreign policy role as it became the object of a rivalry between the United States and the Soviet Union hoping to expand their power and/or contain that of the other. This role was also explored in a considerably larger body of research, along with the decision of Latin American nations to diversify their foreign relations in the post–Cold War era. Furthermore, scholars have analyzed different regions/countries that have become new and/or expanded targets of Latin American foreign policy, including the United States, Canada, Europe, Asia, and the Middle East. Despite the substantial amount of scholarship that has accumulated over the years, a unified theory of Latin American foreign policy remains elusive. Future research should therefore focus on the development of a theory that incorporates the multiple explanatory variables that influence foreign policy formulation and takes into account their relative importance and the effects on each other.

Article

Philip Martin

There are three factors that persuade a migrant to cross borders: demand-pull in destination areas, supply-push in origin areas, and network factors that connect them. On the basis of this demand-pull, supply-push, and network framework, a distinction can be made between economic migrants who are encouraged to migrate because of a demand for their labor abroad and noneconomic migrants who cross national borders to seek refuge or to join family members living abroad. Many economists argue that trade and migration have similar effects on sending and receiving countries. However, there is no solid evidence showing that more migration accelerates economic development in migrant-sending countries. The effects of international migration on development are often grouped in the 3-R channels of recruitment, remittances, and returns, each of which can operate in ways that speed up or slow down economic development. Recruitment refers to who goes abroad, remittances are the amount of the money earned by migrants abroad that is sent home, and returns focus on what migrants do after a period of employment abroad. Majority of industrial countries have national laws that require all workers to receive minimum wages and migrants to receive the same wages and benefits as local workers. From the point of view of some developing countries, minimum and equal wages are a form of protectionism aimed at limiting the number of migrant service providers. A major challenge of the twenty-first century is how to resolve this trade-off between migrant numbers and migrant rights.

Article

Neoliberalism refers to a set of market-based ideas and policies ranging from government budget cuts and privatization of state enterprises to liberalization of currency controls, higher interest rates and deregulation of local finance, removal of import barriers (trade tariffs and quotas), and an emphasis on promotion of exports. While the effects of these policies have been quite consistent, they have sparked sharp criticism from the left. Critics pointed out the elites’ consistent failure in areas such as development aid, international financial regulation, Bretton Woods reform, the World Trade Organization’s Doha Agenda, and United Nations Security Council democratization. In the wake of the financial crisis of 2007–2008, the G20 held a summit in 2009 to discuss policy issues pertaining to the promotion of international financial stability. G20 leaders vowed to, among other promises, strengthen the longer term relevance, effectiveness and legitimacy of the International Monetary Fund and the World Bank, and to seek agreement on a post–2012 climate change regime. However, many intellectual critics of neoliberalism insisted that the G20 represented nothing new. Instead, they emphasize several urgent political priorities, such as: immediately recall and reorganize campaigning associated with defense against financial degradation; reconsider national state powers including exchange controls, defaults on unrepayble debts, financial nationalization and environmental reregulation, and the deglobalization/decommodification strategy for basic needs goods; and address the climate crisis by rejecting neoliberal strategies in favor of both consumption shifts and supply-side solutions.

Article

The Millennium Development Goals (MDGs), endorsed by 189 governments at the Millennium Summit, propose a concerted global effort to reduce the incidence of severe poverty and many of its most serious manifestations over a twenty-five-year period. The MDGs offer crucial insights into the politics of poverty and poverty reduction in international affairs. Their political dimensions can be analyzed in terms of agency, the nature and limits of accountability, the use and manipulation of quantitative goals for political ends, the dangerous illusion that MDG objectives can be accomplished in large part by mobilizing more development assistance, and the MDGs’ distinctly apolitical approach to the structural causes of poverty. The MDG initiative should be situated in three ongoing streams of debate and discussion: the debate over the relative priority of growth and of human development for poverty reduction; the tension between the assertion of rights and the enunciation of donor-driven goals as the political engine of poverty reduction; and the debate over the roles of markets and of state direction and regulation. While the MDGs concentrate on increasing aid flows to reduce the incidence of poverty and its manifestations, international trade and finance arrangements too often impede rapid progress. This is evident in water privatization, trade rules, and anti-retroviral medicines for HIV/AIDS patients. A way forward is to integrate the MDGs more deeply with human rights guarantees. Donors, for example, must take seriously the 2002 Draft Guidelines for the application of human rights to poverty reduction strategies.

Article

Robert A. Denemark

World system history is a perspective on the global sociopolitical and economic system with a structural, long-term and transdisciplinary nature. The intellectual origins of the study of world system history can be characterized by three general trajectories, beginning with the work of global historians who have worked to write a “history of the world.” Attempts were also made by scholars such as Arnold Toynbee to write global history in terms of “civilizations”. A second pillar of world system history emerged from anthropology, when many historians of the ancient world, anthropologists, and archaeologists denied the importance of long-distance relations, especially those of trade. A third pillar emerged from the social sciences, including political science and sociology. One of the central ideas put forward was that sociopolitical and economic phenomena exhibited wave-like behavior. These various intellectual strands became self-consciously intertwined in the later 1980s and 1990s, when scholars from all of these traditions began to cross disciplinary boundaries and organize their own efforts under the rubric of world system history. This period saw Gunder Frank and Barry K. Gills questioning the value of identifying a uniquely modern system based on a transition to capitalism that was said to have occurred in the West. Frank and Gills introduced the “continuity hypothesis,” which suggests that too much scholarly emphasis has been placed on the search for and elucidation of discontinuities and transitions. World system history faces two important challenges from determinism and indeterminacy, and future research should especially address the implications of the latter.

Article

Donna Lee and Brian Hocking

Mainstream studies of diplomacy have traditionally approached international relations (IR) using realist and neorealist frameworks, resulting in state-centric analyses of mainly political agendas at the expense of economic matters. Recently, however, scholars have begun to focus on understanding international relations beyond security. Consequently, there has been a significant shift in the study of diplomacy toward a better understanding of the processes and practices underpinning economic diplomacy. New concepts of diplomacy such as catalytic diplomacy, network diplomacy, and multistakeholder diplomacy have emerged, providing new tools not only to recognize a greater variety of state and nonstate actors in diplomatic practice, but also to highlight the varied and changing character of diplomatic processes. In this context, two themes in the study of diplomacy can be identified. The first is that of diplomat as agent, in IR and international political economy. The second is how to fit into diplomatic agency officials who do not belong to the state, or to a foreign ministry. In the case of the changing environment caused by globalization, economic diplomacy commonly drives the development of qualitatively different diplomatic practices in new and existing economic forums. Four key modes of economic diplomacy are critical to managing contemporary globalization: commercial diplomacy, trade diplomacy, finance diplomacy, and consular visa services in relation to increased immigration flows. The development of these modes of economic diplomacy has shaped the way we think about who the diplomats are, what diplomats do, and how they do it.

Article

Matthias Finger and David Svarin

Transnational corporations (TNCs) refer to businesses that cross over borders, armed with capital as well as products, processes, marketing methods, trade names, skills, technology, and most importantly management. TNCs have drawn the interest of political scientists and specialists of international relations as they reflect a new, transnational, or even global economic reality. The shift towards trade liberalization and the expansion of market economies have enabled TNCs to grow in size and expand their operations all over the world. Thus, they also affect the natural environment. Three hypotheses or ideas have been put forward by various authors about TNCs’ relationships with the global environment: TNCs as “dirty industries” hypothesis, pollution haven hypothesis, and “business advantage of environmental standards hypothesis.” TNCs are said to operate in some sort of a political and legal vacuum, which they try to shape by defining private environmental standards and at the same time take advantage of this very vacuum to the detriment of the environment. However, they are obliged to deal with other actors such as environmental groups, governments, and consumers. TNCs are engaged in various environmental initiatives and activities relating to environmental protection, including voluntary initiatives, often mandatory environmental reporting, and private certification standards. Given their impact on the environment, it is important to engage TNCs in a global environmental governance processes and for states to adopt restrictive measures and foster international collaboration in order to regulate TNCs which neglect their environmental and social responsibilities.

Article

The literature on the political economy of the global environment is a hybrid of political economy, international relations (IR), and international environmental politics, looking at the formal and informal institutional factors which give rise to unsustainable habits. The physical environment has long been the subject of social scientists, who recognized that patterns of social activity might contribute to environmental degradation. One of the most common formulations of environmental issues as a collective action is through the metaphor of the Tragedy of Commons, which argues that overpopulation worldwide would undoubtedly contribute to extensive resource depletion. Following the formulation of the core properties of environmental issues as lying at the interstices of a variety of human activities, implications followed for how to conduct research on international environmental politics and policy. Realist and neorealist traditions in international relations stress the seminal role of power and national leadership in addressing environmental problems. Neoliberal institutionalists look at the role of formal institutional properties in influencing states’ willingness to address transboundary and global environmental threats. On the other hand, the constructivist movement in international relations focuses on the role of new ecological doctrines in how states choose to address their environmental problems, and to act collectively. Ultimately, the major policy debates over the years have addressed the political economy of private investment in environmentally oriented activities, sustainable development doctrines, free trade and the environment, environmental security, and studies of compliance, implementation, and effectiveness.