Most people in human history have lived under some kind of nondemocratic rule. Political scientists, on the other hand, have focused most efforts on democracies. The borders demarcating ideal types of democracies from nondemocracies are fuzzy, but beyond finding those borders is another, arguably greater, inferential challenge: understanding politics under authoritarianism. For instance, many prior studies ignored transitions between different authoritarian regimes and saw democratization as the prime threat to dictators. However, recent scholarship has shown this to be an error, as more dictators are replaced by other dictators than by democracy.
A burgeoning field of authoritarianism scholarship has made considerable headway in the endeavor to comprehend dictatorial politics over the past two decades. Rather than attempting to summarize this literature in its entirety, three areas of research are worth reviewing, related to change inside of the realm of authoritarian politics. The two more mature sets of research have made critical contributions, the first in isolating different kinds of authoritarian turnover and the second in separating the plethora of authoritarian regimes into more coherent categories using various typologies. How do we understand authoritarian turnover? Authoritarian regimes undergo distinct, dramatic, and observable changes at three separate levels—in leaders, regimes, and authoritarianism itself. Drawing distinctions between these changes improves our understanding of the ultimate fates of dictators and authoritarian regimes. How do we understand the diversity of authoritarian regimes? Scholarship has focused on providing competing accounts of authoritarian types, along with analyses of institutional setup of regimes as well as their organization of military forces. Authoritarian typologies, generally coding regimes by the identities of their leaders and elite allies, show common tendencies, and survival patterns tend to vary across types. The third research area, still developing, goes further into assessing changes inside authoritarian regimes by estimating the degree of personalized power across regimes, the causes and consequences of major policy changes—or reforms—and rhetorical or ideological shifts.
The banking union is considered to be one of the main steps in economic integration in the European Union. Given the rather recent establishment of this policy, academic research on the banking union does not have a long lineage, yet it is an area of bourgeoning academic enquiry. There are three main “waves” of research on the banking union in political science, which have mostly proceeded in a chronological order. The first wave of scholarly work focused on the “road” to banking union, from the breaking out of the sovereign debt crisis in the euro area in 2010 to the agreement on the blueprint for the banking union in 2012, explaining why it was set up. The second wave of literature explained how the banking union was set up and took an “asymmetric” shape, whereby banking supervision was transferred to the European Central Bank (ECB); however, banking resolution partly remained at the national level, whereas other components of the banking union, namely, a common deposit guarantee scheme and a common fiscal backstop, were not set up. The third wave of research discussed the functioning of the banking union, its effects and defects. The banking union has slowly brought about significant changes in the banking systems of the member states of the euro area and in government–business relations in the banking sector, even though these effects have varied considerably across countries.
Hanna Niczyporuk, Marko Klašnja, and Joshua A. Tucker
Corruption—the misuse of public office for private or political gain—has a detrimental effect on a variety of economic and political outcomes. Unfortunately, reducing corruption is a difficult task. Persistent differences exist across and even within countries, which unfortunately appear to be quite sticky, which scholars have referred to as the “corruption trap.” This trap can be understood as an equilibrium arising from the inability—and unwillingness—of key stakeholders to coordinate on actions that would reduce corruption. A rich literature has focused on coordination challenges among bureaucrats or between bureaucrats and private actors. We argue, however, for the importance of considering political factors in perpetuating these corruption traps. From this perspective, corruption traps can arise from coordination challenges and breakdowns among and between three key sets of political actors: incumbent politicians, the pool of possible political entrants, and voters. There are challenges faced by each set of actors, their interactions, and ways in which these challenges could potentially be overcome. Three particular processes may help or hinder the ability to break out of corruption traps: (1) collective action and coordination among voters, (2) strategic obstruction by incumbents, and (3) mechanisms of political selection and the availability of non-corrupt challengers.
Capitalist peace theory (CPT) has gained considerable attention in international relations theory and the conflict literature. Its proponents maintain that a capitalist organization of an economy pacifies states internally and externally. They portray CPT either as a complement or as a substitute to other liberal explanations such as the democratic peace thesis. They, however, disagree about the facet of capitalism that is supposed to reduce the risk of political violence. Key contributions have identified three main drivers of the capitalist peace phenomenon: the fiscal constraints that a laissez-faire regimen puts on potentially aggressive governments, the mollifying norms that a capitalist organization creates; and the increased ability of capitalist governments to signal their intentions effectively in a confrontation with an adversary. Defining capitalism narrowly through the freedom entrepreneurs enjoy domestically, this article evaluates the key causal mechanisms and empirical evidence that have been advanced in support of these competing claims. The article argues that CPT needs to be based on a narrow definition of capitalism and that it should scrutinize motives and constraints of the main actors more deeply. Future contributions to the CPT literature should also pay close attention to classic theories of capitalism, which all considered individual risk taking and the dramatic changes between booms and busts to be key constitutive features of this form of economic governance. Finally, empirical tests of the proposed causal mechanism should rely on data sets in which capitalists appear as actors and not as “structures.” If the literature takes these objections seriously, CPT could establish itself as central theory of peace and war in two respects. First, it could serve as an antidote to the theory of imperialism and other “critical” approaches that see in capitalism a source of conflict rather than of peace. Second, it could become an important complement to commercial liberalism that stresses the external openness rather than the internal freedoms as an economic cause of peace and that particularly sees trade and foreign direct investment as pacifying forces.
The 2008 Global Financial Crisis (GFC) and subsequent European Debt Crisis had wide-sweeping consequences for global economic and political stability. Yet while these twin crises have prompted soul searching within the economics profession, international political economy (IPE) has been relatively ineffective in accounting for variation in crisis exposure across the developed world. The GFC and European Debt Crisis present the opportunity to link IPE and comparative political economy (CPE) together in the study of international economic and financial turmoil. While the GFC was prompted by the inter-connectedness of global financial markets, its instigators were largely domestic in nature and were reflective of negative externalities that stemmed from unsustainable national policies, especially those related to financial regulation and household debt accumulation. Many in IPE take an “outward looking in” approach to the examination of international economic developments and domestic politics; analysis rests on how the former impacts the latter. The GFC and European Debt Crisis, however, demonstrate the importance of a (CPE-based) “inward looking out” approach, analyzing how unique policy and political features (and failures) of individual nation states can unleash economic and financial instability at the global level amidst deepened economic and financial integration. IPE not only needs to grant greater attention to variation in domestic politics and policies in a time of closely integrated financial markets, but also should acknowledge the impact of a wider array of actors beyond banks and financial institutions (specifically more domestically rooted actors like households) on cross-national variation in the consumption of foreign credit.
Robert J. Franzese
The basic economics of international trade imply that globalization will have driven in the developed democracies of the Western world an increasing divergence between the material advancement of human, physical, and financial capitalists—a minority of the population—and the material stagnation or even decline of labor—a majority. This article reviews that theory and the strong comparative-historical empirical record substantiating those effects, and explains how the rise of xenophobic, nationalistic, anti-elite populism has its complementary roots in these economic developments.
Christina J. Schneider
How does domestic politics affect international cooperation? Even though classic work on international relations already acknowledges the central role of domestic politics in international relations, the first generation of scholarly work on international cooperation focused almost exclusively on the international sources of cooperation. Theories that explicitly link domestic politics and international cooperation did not take a more prominent place in the scholarly work on international cooperation until the late 1980s.
Recent research analyzes how interests and institutions at the domestic level affect the cooperation of governments at the international level. The analysis is structured along a political economy model, which emphasizes the decision making calculus of office-motivated political leaders who find themselves under pressure by different societal groups interested in promoting or hindering international cooperation. These pressures are conveyed, constrained, and calibrated by domestic institutions, which provide an important context for policy making, and in particular for the choice to cooperate at the international level. This standard political economy model of domestic politics is embedded within models of international cooperation, which entail decisions by governments about (a) whether to cooperate (and to comply with international agreements), (b) how to distribute the gains and costs from cooperation, (c) and how to design cooperation as to maximize the likelihood that the public good will be provided.
Domestic politics is significant to explain all aspects of international cooperation. The likelihood that governments engage in international cooperation does not only depend on international factors, but is also and sometimes predominantly driven by the demands of societal groups and variations in institutional structures across countries. Domestic factors can explain how governments behave in distributive negotiations, whether they can achieve advantageous deals, and if negotiations succeed to produce an international collective action. They also contribute to our understanding about whether and how governments comply with international agreements, and consequently, how the design of international institutions affects government compliance. More recently, scholars have become interested in the democratic responsiveness of governments when they cooperate at the international level. Whereas research is still sparse, emerging evidence points to responsive conduct of governments particularly when international cooperation is politicized at the national level.
The topic of fiscal politics includes taxation and spending, budget balances and debt levels, and crises and the politics of austerity. The discussion often focuses on how some variable—such as the international environment, or political institutions—constrains “politics” in this realm. Almost omnipresent concerns about endogeneity run through this research. While this is a “big” policy area that deserves study, tracing causation is difficult.
Globalization, or increased interconnectedness between world regions, is a dialectical and recursive phenomenon that consequently tends to deepen through time as one set of flows sets off other related or counterflows. This is evident in the history of the phenomenon in Africa, where transcontinental trade, and later investment, were initially small but have grown through different rounds including slavery, colonialism, neocolonialism, and the early 21st-century era of globalization. However, globalization on the continent, as in other places, is not unilinear and has generated a variety of “regional responses” in terms of the construction of organizations such as the African Union and other more popularly based associations. The phenomenon of globalization on the continent is deepening through the information technology “revolution,” which also creates new possibilities for regional forms of association.
Benjamin Helms and David Leblang
International migration is a multifaceted process with distinct stages and decision points. An initial decision to leave one’s country of birth may be made by the individual or the family unit, and this decision may reflect a desire to reconnect with friends and family who have already moved abroad, a need to diversify the family’s access to financial capital, a demand to increase wages, or a belief that conditions abroad will provide social and/or political benefits not available in the homeland. Once the individual has decided to move abroad, the next decision is the choice of destination. Standard explanations of destination choice have focused on the physical costs associated with moving—moving shorter distances is often less expensive than moving to a destination farther away; these explanations have recently been modified to include other social, political, familial, and cultural dimensions as part of the transaction cost associated with migrating. Arrival in a host country does not mean that an émigré’s relationship with their homeland is over. Migrant networks are an engine of global economic integration—expatriates help expand trade and investment flows, they transmit skills and knowledge back to their homelands, and they remit financial and human capital. Aware of the value of their external populations, home countries have developed a range of policies that enable them to “harness” their diasporas.
How Did American International Political Economy Become Reductionist? A Historiography of a Discipline
W. Kindred Winecoff
First-wave international political economy (IPE) was preoccupied with the “complex interdependencies” within a world system that (it believed) was rapidly devolving following the 1971 collapse of the Bretton Woods system of fixed exchange rates. The original IPE scholars were more dedicated to theorizing about the emergence and evolution of global systems than any strict methodology. As IPE developed, it began to emphasize the possibility that institutions could promote cooperation in an anarchic environment, so IPE scholarship increasingly studied the conditions under which these institutions might emerge.
Second-wave IPE scholars began to focus on the domestic “level of analysis” for explanatory power, and in particular analyzed the role of domestic political institutions in promoting global economic cooperation (or conflict). They also employed a “second-image reversed” paradigm in which the international system was treated as an explanatory variable that influenced the domestic policymaking process.
In opening up the “black box” of domestic politics, in particular as it pertained to foreign economic policy, the “American school” of IPE thoroughly explored the terrain with regression-based statistical models that assume observational independence. As a result, complex interdependencies in the global system were increasingly ignored. Over time the analytical focus progressively shifted to micro-level units—firms and individuals, whenever possible—using neoclassical economic theory as its logical underpinning (with complications for political factors). This third wave of IPE, “open economy politics,” has been criticized in the post-crisis period for its narrow focus, rigid methodology, and lack of systemic theory. Leading scholars have called modern IPE “boring,” “deplorable,” “myopic,” and “reductionist,” among other epithets.
A “fourth-wave” of IPE must retain its strong commitment to empiricism while re-integrating systemic processes into its analysis. A new class of complex statistical models is capable of incorporating interdependencies as well as domestic- and individual-level processes into a common framework. This will allow scholars to model the global political economy as an interdependent system consisting of multiple strata.
Margaret E. Peters
Immigration has largely been neglected as part of the study of International Political Economy (IPE) until recently. Currently, IPE scholars have focused on two questions regarding immigration: what explains variation in public opinion on immigration and what explains variation in immigration policy.
The scholarship on public opinion on immigration has largely been divided into two camps, those who argue that economic factors drive opinion and those who argue that cultural factors are the driver. Those who study the role economic factors have played in shaping opinion on immigration often start with the Stolper-Samuelson theorem. The Stolper-Samuelson theorem shows that while immigration increases the overall size of the economy, it has different distributional effects. Immigration increases the size of the labor pool and, thus, should increase the returns to capital while decreasing wages. As such, those who derive most of their income from capital should favor immigration while those who derive most of their income from wages should oppose immigration. Additionally, the Stolper-Samuelson model shows that openness to trade should have the same effects as open immigration; thus, people should oppose or favor both trade and immigration. Early scholarship examined these predictions and found that opposition to immigration was much higher than opposition to trade and that those who derive much of their income from capital also oppose immigration at high rates. In response, one set of scholars focused on the additional costs that immigration, but not trade, brings. Immigrants, unlike goods, may place a burden on the social welfare system and thus, opposition to immigration especially by the wealthy may be driven by these costs. Other scholars noted that immigrants work in many industries that are unaffected by trade—most notably the service sector—and this may explain opposition to immigration. Finally, a third group has argued that opposition to immigration is largely driven by cultural concerns and xenophobia. Currently, this debate continues with both sides examining more nuanced survey data.
Scholarship on immigration policy has similar divides. Immigration policy has become more restrictive since the late 19th and early 20th centuries, when most countries had very few restrictions on immigration. To explain these restrictions, one school of scholars has argued that labor unions oppose immigration, as it hurts the wages of their members. As unions gain strength, immigration should become more restricted. Others focus on the rise of the welfare state, arguing that immigration has been restricted to keep costs low. A third group has argued that greater political rights in the early and mid-20th century for the generally xenophobic working class has led to the restrictions. Finally, new scholarship argues that increased globalization—in the form of increased trade and increased foreign direct investment—has sapped business support for immigration, which has allowed anti-immigrant groups to have more say. Using a wealth of newly collected data, scholars are testing these different theories.
What does current scholarship suggest about the relationship between the rights of workers in the developing world and the global economy? Contemporary multinational production includes both direct ownership of manufacturing facilities abroad and arm’s length subcontracting and supply chain relationships. Thus far, political economists have paid greater attention to the former; there are various reasons to expect that multinational firms may have positive, rather than negative, effects on workers’ rights. For instance, some multinationals are interested in hiring at the top end of local labor markets, and high standards serve as a tool for recruitment and retention. Multinationals also could bring “best practices” from their home countries to their local hosts, and some face pressure from shareholders and consumers—given their visibility in their home locations—to act in “socially responsible” ways. Hence, while directly owned production does not automatically lead to the upgrading of labor standards, it can do so under some conditions.
Supply chain production is likely more mixed in its consequences for workers. Such production involves arm’s length, subcontracted production, in which multiple potential suppliers typically compete to attract business from lead firms. Such production often includes more labor-intensive activities; minimizing costs (including labor costs) and lowering production times can be key to winning subcontracts. We may therefore expect that subcontracted production is associated with greater violations of labor rights. It is worth noting, however, that research regarding the consequences of supply chain production—and the conditions under which such production may lead to improvements for workers—is less advanced than scholarship related to foreign direct investment.
The governance of labor rights in a supply chain framework is marked by several challenges. It is often difficult for lead firms, even those that wish to protect worker rights, to effectively monitor compliance in their subcontractor facilities. This becomes more difficult as the length and breadth of supply chains grow; private governance and corporate social responsibility have therefore not always lived up to their promise. Rather, achieving labor protections in a supply chain framework often requires both private and public sector efforts—that is, governments that are willing to privilege the rights of workers over the rights of local factory owners and governments that are willing to enact and implement legal protections of core labor rights. Such government actions, when coupled with private sector–based capacity building, codes of conduct, and regular monitoring, offer the most promise for protecting labor rights within global supply chains. Finally, governments of developed countries also may play a role, if they are willing to credibly link working conditions abroad with market access at home.
“A Marriage of Convenience” became the best metaphor, coined in 1990 by distinguished American economist Sidney Weintraub to summarize the fundamentals under which NAFTA was built and understood, at least in mainstream analysis: the economic complementarities existing among the three countries of North America could work to the benefit of everyone involved if economic integration is well managed and geared toward the improvement of regional competitiveness. Thus, NAFTA became the privileged tool under which managed integration became implemented and assessed, at least in three major domains: as a foreign policy tool to advance the interests of each nation, as an economic device to reap the benefits of integration, and as the backbone under which a regional political and social bloc could eventually be constructed.
Scholars, intellectuals, and public officials engaged in the discussions around NAFTA in each of those fields shared ideas, built some consensus, and split on dissents following competing approaches and/or national cleavages. The current literature in those three major fields of discussion is rich, voluminous, and highly inspiring, sometimes making references to other integrative experiences. This article reviews these debates and highlights either the consensus or dissention witnessed in each of the three domains under which NAFTA has been discussed the most. Since NAFTA cannot be separated from the political and social contexts that the debates and discussions took place in, a reference to those political contexts can be made when explaining and summarizing the debates.
At a time when the mainstream consensus around NAFTA is being challenged by U.S. President Trump’s assumption that NAFTA is not about complementary economies but about economies competing against each other under a zero-sum game rationale, politics comes back to the forefront of North American affairs. The renegotiation of NAFTA will doubtless redefine the partnership among the three North American countries and the role that economic cooperation and integration entails for each.
Recent discoveries of oil in some African countries have rekindled a debate about its place in development and international politics. The debate has pitched those viewing oil as a catalyst for development and a more assertive Africa in global politics against others who point to the negative impact of oil on older established African oil-producing states. Oil as a highly priced geopolitical and strategic commodity will for the foreseeable future shape relations between African petro-states and other global actors, particularly international oil companies and energy-dependent established and emerging global powers. The structural position of specific African petro-states in the global political economy and history, and the nature of their leadership, are defining factors in the diverse aspects of local and international politics, including the prospects for development and a more assertive Africa in international politics.
The term ownership society is commonly used to describe a suite of policies promoted during the second George W. Bush administration that sought, among other things, to increase popular ownership of housing and financial assets. The ownership society was always in large part an attempt at social engineering. That attempt rests on two premises: first, that asset ownership pushes individuals’ politics to the right; and second, that governments can engineer a more right-leaning populace by promoting asset ownership.
While the term was novel, the ideas were not. Bush’s ownership society bore more than a striking resemblance to Thatcher’s “enterprise society,” for example, and similar ideas percolated in some quarters of Latin American neoliberalism of the 1980s and 1990s. But foreign referents are in this case not necessary; the ownership society was in large part an expansion of a preexisting American tradition of promoting private ownership explicitly for its capacity to transform the owner’s politics.
Despite its consistent appeal to right-of-center governments, political science has not come to any tidy conclusions about whether the ownership society exists or, if it does exist, how it works and how it interacts with financial and housing markets. Turmoil in those markets over the past 10 years, and the accompanying political fallout, underline the need to consolidate what we know about the ownership society and to set a course for theoretical and empirical development.
Two themes in the literature are particularly noteworthy as it moves forward. First, there is a substantial contrast between “static” and “dynamic” theories of ownership society politics. Static theories argue that the fact of asset ownership per se affects the owner’s politics; dynamic theories look more toward movements in asset markets, arguing that asset ownership’s political effects vary according to the financial consequences of that ownership on the individual. While the latter appears to better fit the empirical evidence, the relevant scope conditions—when should we expect a dynamic theory to obtain, and where should we expect a static theory to obtain—remain unclear. Second, the empirical study of the ownership society is made difficult by the fact that asset ownership is virtually never randomly assigned, and the political antecedents of asset ownership are difficult to convincingly control for using observational data. In lieu of a perfect research design, better communication between observational and experimental studies can help move the literature forward.
Lasse Aaskoven and David Dreyer Lassen
The political budget cycle—how elections affect government fiscal policy—is one of the most studied subjects in political economy and political science. The key theoretical question is whether incumbent governments can time or structure public finances in ways that improve their chances of reelection; the key empirical question is whether this in fact happens. The incentives of incumbents to engage in such electioneering are governed by political institutions, observability of political choices, and their consequences, as well as voter knowledge, and both theoretical and empirical studies on political budget cycles have recently focused on conditions under which such cycles are likely to obtain. Much recent research focuses on subnational settings, allowing comparisons of governments in similar institutional environments, and a consensus on the presences of cycles in public finances—and in the reporting of public finances—is beginning to emerge.
Studies of Western development assistance conclude that aid is effective only when recipients have good governance, measured as pro-investment policies, democratic institutions, and political stability, or when recipients lack strategic importance to donors. Underlying the theoretical frameworks in these studies is a common mechanism: compliance with conditions on aid agreements, which, in turn, depends on recipient incentives to comply. With the exception of donors’ emphasis on the quality of governance in the early 2000s, donors generally overlook recipient incentives to comply with aid agreements and thus fail to capitalize on opportunities for aid effectiveness suggested by the academic studies. A paucity of data has limited direct analysis of compliance with conditions, but studies have relied on their own data collection or have leveraged data from the World Bank to assess determinants of compliance with conditions. Importantly, these studies of compliance support the findings from the aid-effectiveness literature, indicating that the initial incentives to comply with aid agreements are the driving force in agreement compliance and therefore aid effectiveness.
Based on these findings, future research on compliance with conditions on aid is encouraged, beginning with study of the direct influence of compliance on economic development. In addition, future research should analyze whether certain types of aid influence compliance with Western aid agreements, including tied aid and aid from non-Western donors. The implication for policy is that donors should enthusiastically support recipients who face incentives to comply because compliance drives aid effectiveness. When recipients lack such incentives, donors should try to change the underlying incentive structure of recipients rather than adding conditions on aid.
Federico Maria Ferrara and Thomas Sattler
The relationship between politics and financial markets is central for many, if not most, political economy arguments. The existing literature focuses on the effect of domestic and international political interests, institutions, and policy decisions on returns and volatility in stock, bond, and foreign exchange markets. This research bears implications for three major debates in political science: the distributive effects of politics, globalization and state autonomy, and the political roots of economic credibility and its tensions with democratic accountability. While the study of politics and financial markets is complicated by several theoretical and empirical challenges, recent methodological innovations in political research provide a window of opportunity for the development of the field.
First-generation research in International Political Economy focused considerable attention on the relationship between hegemony and global economic stability. This focus was the result of a confluence of scholarly and policy concerns about the impact that the apparent decline of U.S. hegemony would have on international trade and investment regimes. Interest in this hegemonic stability hypothesis waned, however, as deeper explorations of the theoretical logic indicated that hegemony was not a necessary condition for international economic openness, and as the collapse of the Soviet Union and the consequent “unipolar moment” suggested that American hegemony was hardly in decline.
Interest in hegemony resurfaced in the wake of the 2008 financial crisis. The crisis triggered many scholars to proclaim the end of the era of American global hegemony. Scholars argued that the U.S. government’s attachment to a large budget and trade deficits and the resulting growth of foreign debt were likely to weaken foreign confidence in the dollar and encourage the shift to an alternative reserve currency such as the Euro. At the same time, China’s rapid industrialization and emergence as a large creditor nation was creating a new pole in the international economy that constituted a meaningful alternative to a global economy organized around the United States’ economy. Thus, a shift toward a Beijing hegemony was all but inevitable.
The predicted decline of American hegemony has yet to materialize. The U.S. economy remains the world’s largest, and the U.S. government continues to play the leading role in system making—creating new rules to govern international economic cooperation—and in privilege taking—manipulating these rules in ways that advantage U.S. public and private sector actors. Moreover, the U.S. government plays this role in all three economic subsystems: finance, knowledge, and production. Empirical scholarship conducted over the last decade encourages one to conclude by paraphrasing Mark Twain: Recent reports of the death of American hegemony are premature.