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Comparative and International Political Economy and the Global Financial Crisis  

Alison Johnston

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.


Systemic Leadership, Energy Considerations, and the Leadership Long-Cycle Perspective  

William R. Thompson and Leila Zakhirova

System leaders, sometimes referred to as hegemons or world powers, emerge based on a foundation of technological innovation and global military reach. To this foundation energy is now added as a third leg of the power stool. It is not a coincidence that observers posit 17th-century Netherlands, 19th-century Britain, and 20th-century United States as the leading states in political-economy terms of their respective eras. The Dutch used peat and windmills, the British married coal to the steam engine, and the United States added petroleum and electricity to coal to fuel a host of new machines. The greater a country’s lead in technology and energy, the more impactful its tenure as the world economy’s lead economy. These leads, nonetheless, do not make their principal beneficiaries into dominant dictators of world politics. Instead, they focus on policing long-distance commercial routes and the global commons, as well as organizing coalitions to suppress perceived threats to the continued functioning of the world economy. Whether this process, which emerged slowly only in the second millennium ce, will continue into the future remains to be seen. It hinges on the prospects for abandoning carbon-based fuels, adapting renewable energy sources, and retaining the ability of one state to maintain a political-economic lead over its rivals for decades as in the past.


Domestic Coalitions: International Sources and Effects  

Etel Solingen and Peter Gourevitch

The centrality of domestic coalitions serves as transmission belts between the domestic and international realms. Despite its long lineage in international and comparative political economy and its relevance to the understanding of contemporary responses to globalization, coalitional analysis has been typically neglected when explaining outcomes in international relations. The analytical framework adopted here builds on two “ideal-typical” coalitions—an “inward-nationalist” and an “outward-internationalist” model—each advancing competing models across industrialized and industrializing contexts alike. Several applications illustrate the breadth and scope of this framework, spacious enough to explain economic responses in Europe from the repeal of the Corn Laws to the 20th century; the security implications of economic responses leading to World War I; the impact of internationalization on regional orders in the industrializing world since 1945; the relationship between coalitional approaches to the global economy and nuclear weapons proliferation since 1970; and the relevance of coalitional divides to outcomes regarding Brexit, Donald Trump’s election, and beyond. Coalitional analysis thus (a) offers important insights on wide-ranging empirical phenomena in comparative and international politics that institutional approaches alone fail to explain; (b) provides a unifying framework addressing trans-historical responses to globalization, nationalism, ethno-confessionalism, and their effects on interstate relations; (c) attends to political cleavages in political economy that intersect with security; (d) transcends dated level-of-analysis categories by linking subnational and global processes; (e) is flexible enough to accommodate wide variation in state–society relations and political institutionalization; (f) grounds politics in a dynamic framework able to explain both continuity and change; and (g) clarifies contradictory findings regarding interdependence and war by providing a mechanism explaining why, when, and how economic exchange with the world may or may not inhibit war.


High Theory versus Grand Strategy in Guiding Foreign Policy  

Paul Carrese

Consideration of the relationship between political theory and foreign policy must confront stark realities a quarter century after the 1991 liberal-democratic victory in the Cold War, which established the first global order in history. The foreign policies of the liberal democracies, and the liberal global order, now are beset by confusion, division, and retreat in the face of illiberal powers. A wave of nationalism and suspicion of globalized elites compounds the failure by America, the leading liberal democracy, to forge a consensus grand strategy to replace the Cold War strategy of American internationalism and containment of Communism. While important scholarship in comparative political theory addresses foreign policy, and while there are other important foci for the theory-policy nexus, such as China or the Islamic world, this failure to develop a new strategy to undergird global order and manage globalization is the most pressing issue for political theory in relation to foreign policy. Scholars should inquire whether the policy failures of the past quarter century stem not only from policymakers but also from the divisions among schools of international relations and foreign policy—and especially from the abstract, dogmatic quality of these theories. A more productive theory-policy nexus is evident in the rediscovery of the transdisciplinary tradition of grand strategy, which offers a more balanced approach to theory and its role in guiding policy. A new grand strategy for our globalized era would manage and sustain the powerful processes and forces set in motion by liberal states that now are eluding guidance from any widely recognized and effective rules. Four important critiques since 1991 discern a disservice to foreign policy by the high theory of the international relations schools. These schools—including realism, liberal internationalism, and constructivism—and their policy guidance are discussed elsewhere. The first two critiques arise from contemporary international relations and foreign policy approaches: scholars addressing the gap between high theory and practitioners, and Chris Brown and David A. Lake assessing the extremes of high theory that prove unhelpful for guiding sound foreign policies and practical judgement. The final two critiques transcend recent social science to rediscover fundamentals presupposed by the first two, by quarrying the philosophical tradition on international affairs from the ancient Greeks to modernity. This line of analysis points to recent work by the leading embodiment of the theory-policy nexus in the past half-century, Henry Kissinger—because his book World Order (2014) turns from realism to a more balanced view of interests and ideals in the policies of liberal democracies. Kissinger confronts the vexing reality of the need for reasonable states, across civilizational traditions, to forge a basic global order to replace the crumbling liberal order. His approach is grand strategy, now made comparative and global, as both more profound and effective for theorists and practitioners. Further, the tradition of American grand strategy is an important resource for all the liberal democracies now committed to this policy effort. Since the Washington administration, a balanced approach of discerning America’s enlightened self-interest has been the core of its successful grand strategies. This is not pragmatism, given the philosophical roots of this liberal disposition in the moderate Enlightenment jurists Grotius and Montesquieu. An era of confusion and failure should provoke reconsideration of fundamentals. Rediscovery of enlightened self-interest and its call for statesmanlike judgement offers a fruitful theory-policy nexus for the liberal democracies and for restoration of a basic global order.


Hegemony in Foreign Policy  

Richard Ned Lebow and Simon Reich

American realists, liberals, journalists, and policymakers speak of American hegemony as if it were an established role, although a threatened one given the rise of China. They describe hegemony as essential to international political and economic stability, and a role that only America can perform. These claims are highly questionable, as there is no evidence that the United States is a hegemon nor that it has provided the benefits American international relations theorists attribute to a hegemon. To the extent these benefits are provided, it is the result of the collective efforts of numerous states, by no means all of them great powers. American assertions of hegemony are viewed with jaundiced, if not hostile, eyes by other states. Hegemony is a fiction, propagated by Americans to gain special privileges, justify an interventionist foreign policy, support the defense industry, and buttress national self-esteem. In practice, the quest for hegemony is a threat, not a prop, to the global order.


The Foreign Relations of Subnational Governments  

Samuel Lucas McMillan

Subnational governments are increasingly involved in foreign policy and foreign relations in activities usually labeled as paradiplomacy or constituent diplomacy. This phenomenon is due to the rising capacity of substate territories to act in world politics and has been aided by advances in transportation and telecommunications. National governments’ control of foreign policy has been permeated in many ways, particularly with globalization and “glocalization.” Since 1945, subnational governments such as Australian states, Canadian provinces, and U.S. states have sought to influence foreign policy and foreign relations. Subnational leaders began traveling outside their national borders to recruit foreign investment and promote trade, even opening offices to represent their interests around the world. Subnational governments in Belgium, Germany, and Spain were active in world politics by the 1980s, and these activities expanded in Latin America in the 1990s. Today, there are new levels of activity within federal systems such as India and Nigeria. Subnational leaders now receive ambassadors and heads of government and can be treated like heads of state when they travel abroad to promote their interests. Not only has paradiplomacy spread to subnational governments across the world, but the breath of issues addressed by legislatures and leaders is far beyond economic policy, connecting to intermestic issues such as border security, energy, environmental protection, human rights, and immigration. Shared national borders led to transborder associations being formed decades ago, and these have increased in number and specialization. New levels of awareness of global interdependencies means that subnational leaders today are likely to see both the opportunities and threats from globalization and then seek to represent their citizens’ interests. Foreign policy in the 21st century is not only affected by transnational actors outside of government, such as multinational corporations and environmental groups, but also governmental actors from the local level to the national level. The extent to which subnational governments participate in foreign policy depends on variables related to autonomy and opportunity. Autonomy variables include constitutional framework, division of power, and rules as determined by legislative action or court decisions. Opportunity variables include geography, economic interdependence, kinship (ethnic and religious ties), as well as partisanship and the political ambitions of subnational leaders. Political culture is a variable that can affect autonomy and opportunity. Paradiplomacy has influenced the expectations and roles of subnational leaders and has created varying degrees of institutionalization. Degrees of autonomy allowed for Flanders are not available for U.S. states. Whereas most subnational governments do not have formal roles in international organizations or a ministry devoted to international relations, this does occur in Quebec. Thus, federalism dynamics and intergovernmental relations are evolving and remain important to study. In future research, scholars should more fully examine how subnational leaders’ roles evolve and the political impacts of paradiplomacy; the effects of democratization and how paradiplomacy is diffused; how national and subnational identity shapes paradiplomacy, and the effects paradiplomacy has on domestic and international law as well as political economy. The autonomy and power of subnational governments should be better conceptualized, particularly because less deference is given to national-level policy makers in foreign policy.



Arto Laitinen

Solidarity is widely held to be an under-theorized, elusive, or vague notion, and there is no clear-cut canon of theories of solidarity, but there are some core intuitions on this subject that rival theories try to capture in different ways. One such core intuition is that solidarity concerns people who share their lives and whose fates are tied together—social solidarity, civic solidarity, or group solidarity are related to the strength of ties of dependency and mutual support of people who are “in the same boat.” Another core intuition is that solidarity can be extended even beyond one’s own society, community, or group—maximally to the whole of humankind. Nonexclusive human solidarity can play a vital role in sustaining moral standards and for example in the collective measures against climate change or a pandemic. A third core intuition is that solidarity can be needed and expressed in struggles against injustice or wrongs of various sorts. If the first core idea of solidarity concerns the normal stages of society, the third concerns the even revolutionary struggles to change important aspects of the existing forms of life. The metaphor of “being in the same boat” may seem suspect and misleading when attention is paid to the injustices of current arrangements—instead, what is needed is political solidarity in the attempt to fight those injustices. A fourth core intuition is that the dark side of solidarity raises suspicion: An internally solidary group may be repressive of the individuality of the members, it may be parochial and sometimes even lead to a dehumanization of outsiders, and it may be exercised in pursuit of unjustifiable ends. These forms of solidarity are discussed in the introduction (“Solidarity: Toward More Detailed Conceptions”). Among the theoretical questions concerning solidarity are, first of all, what exactly is it? Is it a specific type of relationship one can have (like friendship), or can any relationship, group, or way of acting be more or less solidary (like being friendly toward anyone, not just one’s friends)? Is solidarity a certain kind of action or a motivational basis out of which one can act? What sorts of things can be solidary (acts, attitudes, relationships, groups, practices, etc.), and can solidarity be realized or expressed via coercively sanctioned institutions? When macro phenomena are explained by microfoundations, is solidarity something to be explained or something that explains? Is solidarity a descriptive or evaluative notion, or both? Can solidarity be something bad? (“The Nature of Solidarity”). Normative questions concerning solidarity include: What kind of reasons or duties are there for being solidary? What is their relation to universalistic modern morality? What is human solidarity? (“Moral Solidarity”). What does thicker societal or in-group solidarity add to the universal demands of human solidarity? What is the relationship of solidarity to justice, democracy, social freedom or welfare state institutions? (“Perspectives on Societal Solidarity”). What is solidarity in the context of political struggles and social movements for change? (“Political Solidarity”). In what sense can these forms of solidarity be global? (“Solidarities in Global Contexts”).



Renaud-Philippe Garner

Nationalism is a set of beliefs about the nation: its origins, nature, and value. For nationalists, we are particular social animals. On the one hand, our lives are structured by a profound sense of togetherness and similarity: We share languages and memories. On the other hand, our lives are characterized by deep divisions and differences: We draw borders and contest historical narratives. For nationalism, humanity is neither a single species-wide community nor an aggregation of individuals but divided into distinct and unique nations. At the heart of nationalism are claims about our identity and needs as social animals that form the basis of a series of normative claims. To answer the question “what should I do” or “how should I live,” one must first answer the questions “who am I” and “where do I belong.” Nationalism says that our membership in a nation takes precedence and ultimately must guide our choices and actions. In terms of guiding choice and action, nationalist thought proposes a specific form of partiality. Rather than treat the interests or claims of persons and groups impartially, the nationalist demands that one favors one’s own, either as a group or as individual persons. While nationalism does not claim to be the only form of partiality, it does claim to outrank all others: Loyalty or obligations to other groups or identities are subordinated to national loyalty. Together, these claims function as a political ideology. Nationalism identifies the nation as the central form of community and elevates it to the object of supreme loyalty. This fundamental concern for the nation and its flourishing can be fragmented into narrower aims or objectives: national autonomy, national identity, and national unity. Debate on nationalism tends to divide into two clusters, one descriptive and one normative, that only make partial contact. For historians and sociologists, the questions are explanatory: What is nationalism, what is a nation, how are they related, and when and how did they emerge? Philosophers and political theorists focus on the justification of nationalism or nationalist claims: Is national loyalty defensible, what are the limits of this loyalty, how do we rank our loyalties, and does nationalism conflict with human rights?


Postcolonial Approaches to the Study of African Politics  

Grace Adeniyi Ogunyankin

Postcolonial theory has been embraced and critiqued by various scholars since the 1980s. Central to the field of postcolonial studies is the examination of colonial episteme and discourse, European racism, and imperial dominance. Broadly, postcolonialism analyzes the effects, and enduring legacies, of colonialism and disavows Eurocentric master-narratives. Postcolonial ideas have been significant to several academic disciplines, largely those in the humanities and social sciences, such as cultural and literary studies, anthropology, political science, history, development studies, geography, urban studies, and gender and sexuality studies. The key scholars that are connected to postcolonial theory, Edward Said, Homi Bhabha, and Gayatri Spivak, have been critiqued for grounding their work in the Western theories of postmodernism and poststructuralism. Given the predominant association of these three scholars to postcolonial theory, Africanists have argued that postcolonial theory is dismissive of African theorizing. Moreover, some scholars have noted that Africanists have hesitated to use postcolonial theory because it is too discursive and has limited applicability to material reality. As such, the relevancy of postcolonial theory to Africa has been a repetitive question for decades. Despite this line of questioning, some scholars have posited that there are African thinkers and activists who are intellectual antecedents to the postcolonial thought that emerged in the 1980s and 1990s. Additionally, other Africanist scholars have engaged with the colonial discursive construction of African subjectivities and societies as inferior. These engagements have been particularly salient in women and gender studies, urban studies and studies of identity and global belonging.


Boko Haram and the Global War on Terror  

Abimbola O. Adesoji

Although the Boko Haram crisis started like other riots before it and was initially treated as such, its escalation and metamorphosis from ordinary religious protest to insurgency has given an air of notoriety and fatality to it in Nigeria and across the borders of Cameroon, Chad, and Niger. Despite being similar in orientation, philosophy, and modus operandi to the Maitatsine religious crises of 1980 to 1985 in Nigeria, the Boko Haram crisis is clearly marked out by its more virulent nature, its sophistication, the wider global attention it has attracted, its festering nature, and more significantly the seeming inability to bring it under control. Presented here are the views and perspectives of scholars on the origin and growth of the Boko Haram phenomenon in Nigeria, its philosophy and ideology, its strategies and tactics, and its progression from common religious crisis and eventual metamorphosis to insurgency. The highly volatile religious background from which the sect emerged and the central role played by Mohammed Yusuf in its nurturing and growth are discussed. Also discussed are the impact of Salafism and the writings of Ibn Taymiyya, among others, on the sect and the motivation it derives from the global jihad movement. The article examines and appraises the Nigerian government approach in seeking to contain the group and situate it in the context of the African states and global coalition against terror and discusses why the central government has struggled to firmly contain the group. The central role played by Mohammed Yusuf in the evolution and growth of the sect is brought out in the first part of the article. Pertinent was the influence of individuals and groups on Yusuf’s beliefs and activities aided by his demagoguery. His group’s abhorrence of Western education and lifestyle as well as rejection of democracy as a form of government and justification of violence, aided by Salafist thoughts and writings, form the kernel of the next section on philosophy and ideology. The third section, on transformation and changing strategies, discusses the factors in the escalation of the crisis, its various manifestations, and the growing global link of the sect resulting from its brutal suppression in 2009. The various measures devised to contain the sect and its effectiveness or otherwise are presented. A final section discusses the efforts made by the group to integrate itself into the global jihad movement as well as government response, particularly at the regional level, to defeat it.


Interconnected Asian History and “Open” World Orders  

Manjeet S. Pardesi

Historical Asia was an interconnected system of “open” world orders. This is a crucial theoretical takeaway for International Relations (IR) theory from historical Asia. In other words, there has never been one single order covering all of Asia or any of its subregions. There were multiple, unevenly overlapping orders in historical Asia. This perspective, which is rooted in the global historical approach to IR, challenges the Eurocentric notion of the “containerized” version of Asian regional worlds and world orders that only came into meaningful contact with each other because of the early modern European expansion. At the same time, this global and historical perspective also challenges all essentialist views of the East Asian past that characterize that part of the world as living in splendid Sinocentric isolation for thousands of years until China and East Asia were “opened up” by the West. Two crucial periods and processes of Asian history show the deep and transformative impact of the entanglements between South Asia and East Asia for Asian world orders: the Indic-Buddhist impact on China in the 1st millennium (and into the early centuries of the 2nd millennium), and the role of India in the so-called opening up of China by the West in the 19th and 20th centuries. These processes provide two crucial insights. First, historical East Asia was not a China-centered system for 2,000 years. The Buddhist impact on China had a profound impact on both the Chinese worldview and the world order(s) that existed in (East) Asia. More specifically, the Buddhist interconnections across Asia demonstrate that the “international” (or the global) was larger than East Asia, and that China and its eastern neighbors knew that too. Second, and relatedly, pre-European East Asia was not a “closed” system. While the expansion of Europe may have “opened up” China and East Asia in the 19th century, this represented the “opening up” of that part of the world for the West, and not because East Asia lived in Sinocentric isolation from the rest of Asia. Furthermore, Indian resources played a fundamental role in that Sino-Western encounter, thereby demonstrating the interconnectedness of the world orders of South and East Asia. Asia and its subregions defy singular and all-encompassing orders, and Asian history points toward a plurality of open and overlapping orders. Notably, the emerging regional orders in Asia are also pointing toward such a configuration. Asia is not one, but Asia is not disconnected either.


State-Owned Enterprises: Structures, Functions, and Legitimacy  

Ian Thynne

State-owned enterprises are significant features of, and contributors to, the development and management of economies and communities around the globe. Their structures, the functions allocated to them, and the legitimacy of their activities, along with their privatization by divestment, are fundamental to the efficacy of government and governance. Critical issues in their existence and work include the design and choice of structures, the dispersal and performance of functions, and the securing and maintenance of legitimacy. How they fare, and how they are assessed and judged, are of immediate relevance to their continued use, change, and reform. Accordingly, they must be, and remain, important focuses of research, analysis and action.


Mexico and the European Union  

Roberto Dominguez and Marlena Crandall

The EU–Mexico relationship is symbolic of how a determined commitment to cooperation can lead to enduring partnerships between disparate and geographically distant states. The EU and Mexico have gradually institutionalized several frameworks for cooperation through a series of internationally significant agreements. In spite of major asymmetries in their levels of political, social, and economic development, the EU and Mexico have continually formalized their commitment to cooperation: both parties signed the Economic Partnership, Political Coordination and Cooperation Agreement (GA) in 1997 (in force since 2000), the Strategic Partnership (SP) in 2008, and modernization of the GA in 2018. Although the EU and Mexico have had relations since the 1970s, the first two decades of the 21st century have witnessed an intense alignment of policy goals in a variety of economic, political, and social areas, leading to the acceleration of mutual commitments and cooperation between seemingly unlikely partners. The implementation of the 2000 GA has been successful on several fronts: trade expanded, trust grew, and the European investment flow to Mexico increased with few interruptions. Therefore, it was not a lack of success that motivated the GA modernization process, but external global transformations and a relationship that had outgrown its defining framework. External global transformations—such as the rapid technological revolution, the subtly shifting international balance of power, and the degradation of the neoliberal economic model—required a more responsive agreement with updated legal frameworks. Further, the limitations of the original GA with respect to trade and economic imperatives required the inclusion of several new articles to address the expanded digital and service-based economies. With respect to political coordination and cooperation, the revised GA incorporated more disciplines into the formal High-Level Dialogues, and addressed a broadened international agenda increasingly focused on regulation, sustainability, and environmental concerns. While the EU–Mexico relationship is characterized by an entrenched belief in institutionalized, regular, and productive cooperation mechanisms, both parties agreed to modernize the GA in the late 2010s. The decades-long commitment to this ethos, despite their highly disparate starting point, is poised to promote several more decades of cooperation with the conclusion of the modernized Agreement in 2018.


The BRICS Countries and the European Union  

Bas Hooijmaaijers and Stephan Keukeleire

Brazil, Russia, India, China, and South Africa (BRICS) have, since the beginning of the 21st century, gained greater influence in global political and economic affairs and, since 2006, also steadily developed and increased their political dialogue and cooperation. South Africa joining the BRICS political grouping in 2011 was matched by a strengthening of the BRICS dialogue. This was reflected in the broadening range of issues covered, the increasing level of specificity of the BRICS joint declarations and cooperation, and the institutionalization of BRICS cooperation in various policy fields, including the creation of the New Development Bank (NDB). Notwithstanding the increased interaction between the BRICS states on the various political, economic, and diplomatic levels, the countries differ considerably in their political, economic, military, and demographic weight and interests and in their regional and global aspirations. China particularly stands out among the BRICS due to its political and economic weight. There are sufficient reasons to question the significance and impact of the BRICS format. Still, the BRICS countries have found each other in their commitment to counter the “unjust” Western-dominated multilateral world in which they are generally underrepresented. The EU did not develop a “BRICS policy” as such, which is understandable given the major differences between the BRICS countries and the ambiguous nature of the BRICS format. To deal with the various emerging powers and complement its predominantly regional partnerships, the EU instead institutionalized and deepened the political and economic bilateral relations with each of the BRICS countries, including through the objective of establishing a bilateral “strategic partnership” with each of these countries. However, the analysis of the EU’s relationship with the BRICS countries indicates that the label “strategic partnerships” mainly served as a rhetorical façade which belied that the EU failed to turn these relationships into real strategic partnerships and to behave strategically toward the BRICS countries. Another challenge for the EU appears when analyzing the BRICS within the broader context of various emerging power constellations and multilateral frameworks, including variations of the BRICS format (such as BRICS Plus, BASIC, and IBSA), multilateral frameworks with one or more BRICS countries at their center (such as the SCO, EAEU, and BRI), and regional forums launched by China. Taken together, they point to an increasingly dense set of partially overlapping formal and informal networks on all political, diplomatic, and administrative levels, covering an ever-wider scope of policy areas and providing opportunities for debate, consultation, and coordination. Whereas most of these forums are in and of themselves not very influential, taken together they have an impact on the EU and its traditional view on multilateralism in several ways. Seen from this perspective, the BRICS and other multilateral forums pose major challenges for both European diplomats and European scholars. They will have to make considerable efforts to understand and engage with these various forums, which are manifestations of an increasingly influential and powerful non-Western world wherein the role of Europe is much more limited.


The European Union Financial Crisis: A Critical Analysis  

Caner Bakir, Mehmet Kerem Coban, and Sinan Akgunay

The Global Financial Crisis, which originated in the United States, developed into a sovereign debt crisis in Europe, particularly the Eurozone. The Eurozone crisis was driven mainly by divergence in macroeconomic structures, fiscal indiscipline, and financial integration with fragmented regulatory and supervisory governance arrangements. The crisis also exposed flaws in the institutional design of the Economic and Monetary Union (EMU). The EMU lacked mechanisms of effective crisis prevention and management and fiscal coordination, had a centralized monetary policy despite divergence in the macroeconomic structure and institutional setting across member states, and adopted a “light touch” approach to financial regulation. In response, crisis-hit countries implemented structural reforms and public spending cuts. European Union (EU) leaders attempted to address these deficiencies with institutional reforms at the national and regional level. Policy responses and institutional reforms have led to populist backlash with declining trust in regional and domestic politics and organizations, with voters favoring more inward-looking, nationalist political parties. Within this context, the Eurozone and EU face further challenges to maintain macroeconomic and financial stability and to ensure intraregional policy coordination.


Financial Turbulence and Crisis  

Caner Bakir, Sinan Akgunay, and Mehmet Kerem Coban

Why do financial turbulence and crises occur? What are different types of financial crises? Why do different countries experience financial crises, while some are more resilient? These are intriguing questions that relate to financial turbulence and crisis. The financial system is inherently susceptible to turbulence and crises: The world has witnessed several rounds of financial turbulence since the early 2000s. The 2008 global financial crisis and the worldwide financial turbulence that took place following the impact of the COVID-19 pandemic are examples. Periods of financial turbulence relate to heightened uncertainty and volatility in financial markets, and some of those periods can trigger financial crises. It is puzzling that although some countries can weather financial turbulence without falling into a financial crisis, others do not. This was observed during the global financial crisis. For example, financial turbulence triggered a financial crisis in some of the liberal market economies such as the United States and the United Kingdom. In contrast, Australia and Canada remained relatively resistant to financial turbulence. The existing literature tends to justify how and why a period of financial turbulence resulted in a financial crisis by looking at individual structural-, institutional-, or actor-level factors. In addition to the independent (separate) effects of these three principal explanatory factors, there is a need for detecting and analyzing their individual; interactive; and/or cumulative structural, institutional, and agential explanatory factors at work. Thus, it is crucial to explore some of the interrelated dynamics informing agency behavior which generate socioeconomic outcomes. Specifically, we call for a rigorous and refined analysis of how and why complementarities and enabling conditions that stem from interactions between structural and institutional factors influence actors’ agency and socioeconomic/political outcomes.


Climate and Environmental Crises  

Victor Galaz

Climate change is increasingly being framed as a “climate crisis.” Such a crisis could be viewed both to unfold in the climate system, as well as to be induced by it in diverse areas of society. Following from current understandings of modern crises, it is clear that climate change indeed can be defined as a “crisis.” As the Intergovernmental Panel on Climate Change 1.5oC special report elaborates, the repercussions of a warming planet include increased food insecurity, increased frequency and intensity of severe droughts, extreme heat waves, the loss of coral reef ecosystems and associated marine species, and more. It is also important to note that a range of possible climate-induced crises (through, e.g., possible increased food insecurity and weather extremes) will not be distributed evenly, but will instead disproportionally affect already vulnerable social groups, communities, and countries in detrimental ways. The multifaceted dimensions of climate change allow for multiple interpretations and framings of “climate crisis,” thereby forcing us to acknowledge the deeply contextual nature of what is understood as a “crisis.” Climate change and its associated crises display a number of challenging properties that stem from its connections to basically all sectors in society, its propensity to induce and in itself embed nonlinear changes such as “tipping points” and cascading shocks, and its unique and challenging long-term temporal dimensions. The latter pose particularly difficult decision-making and institutional challenges because initial conditions (in this case, carbon dioxide emissions) do not result in immediate or proportional responses (say, global temperature anomalies), but instead play out through feedbacks among the climate system, oceans, the cryosphere, and changes in forest biomes, with some considerable delays in time. Additional challenges emerge from the fact that early warnings of pending so-called “catastrophic shifts” face numerous obstacles, and that early responses are undermined by a lack of knowledge, complex causality, and severe coordination challenges.


The Political Economy of Taxation in Latin America  

Omar Sanchez-Sibony

While Latin America has augmented its tax effort significantly since 2000, tax revenues remain below the global norm given the region’s income per capita. Indirect taxes constitute a disproportionate portion of overall revenues, a manifestation of the political and technical difficulties inherent to taxing Latin American elites. Several structural factors characterizing the region hamper revenue collection, including mediocre economic performance, a large informal sector, high income inequality, the rentier status of some economies, and weak state infrastructural power, alongside feeble tax administration agencies, among other factors. Political scientists have deployed three main paradigms for understanding tax policy outcomes and tax reform: interest-based, ideational, and institutional accounts. Interest-based accounts, centered on the political power and resources that interest groups can wield, provide a useful first approximation to understanding tax outcomes; nevertheless, this theoretical lens under-predicts the prevalence of observed tax reform in Latin America. The ideational lens is indispensable to account for the overall contours of the taxation system in the region, because tax reform was informed by the neoliberal paradigm. In recent years, moderately progressive tax policy changes have been enacted by left- and right-wing governments alike, reflecting the increasing centrality of addressing inequality (the vertical equity objective) in the realm of ideas. Democracy, qua a system of institutions geared to enhance the public interest, has not spawned the taxation systems that the median-voter theory predicts in the context of high societal inequality, however. Democracy has not fulfilled the taxation and fiscal policy expectations placed upon it. Nonetheless, structural factors may yet produce a salutary fiscal result. The recent increase in the size of the region’s middle class has translated into greater societal pressures to enhance the quality and quantity of public services, which may portend the development of a more encompassing state–society fiscal pact.


Hegemony, Hierarchy, and Unipolarity: Theoretical and Empirical Foundations of Hegemonic Order Studies  

Carla Norrlof

Scholars of international political economy in the 1970s explored the relationship among a dominant power, leadership, and openness. The discussion soon centered on the concept of hegemony, meaning a situation in which a single state exercises leadership in creating and maintaining the fundamental rules of the international system. The scholarly arguments that ensued focused on the rationale for, and durability of, hegemony, and seemed relevant because of a shared assumption that U.S. dominance, so strong during the quarter-century after World War II, was declining. However, the debate was premised on a shared but incorrect empirical perception that American hegemony was declining. When similar questions arose again at the end of the 20th century, the terminology used was less that of hegemony than of unipolarity and hierarchy, and the key question was whether exercising continuing leadership would be so costly to the hegemon that its decline would be generated by its leadership. The issues of hegemony raised in this literature have taken on renewed relevance with the election of Donald J. Trump as President of the United States.


What Do We Know About Global Financial Crises? Putting IPE and Economics in Conversation  

Michael J. Lee

Since the 1970s, financial crises have been a consistent feature of the international economy, warranting study by economists and political scientists alike. Economists have made great strides in their understanding of the dynamics of crises, with two potentially overlapping stories rising to the fore. Global crises appear to occur highly amid global imbalances—when some countries run large current account deficits and others, large surpluses. A second story emphasizes credit booms—financial institutions greatly extend access to credit, potentially leading to bubbles and subsequent crashes. Global imbalances are, in part, the product of politically contested processes. Imbalances would be impossible if states did not choose to liberalize (or not to liberalize) their capital accounts. Global political structures—whether international institutions seeking to govern financial flows, or hierarchies reflecting an economic power structure among states—also influence the ability of the global system to resolve global imbalances. Indeed, economists themselves are increasingly finding evidence that the international economy is not a flat system, but a network where some states play larger roles than others. Credit booms, too, and the regulatory structures that produce them, result from active choices by states. The expansion of the financial sector since the 1970s, however, took place amid a crucible of fire. Financial deregulation was the product of interest group knife-fights, states’ vying for position or adapting to technological change, and policy entrepreneurs’ seeking to enact their ideas. The IPE (international political economy) literature, too, must pay attention to post-2008 developments in economic thought. As financial integration pushes countries to adopt the monetary policies of the money center, the much-discussed monetary trilemma increasingly resembles a dilemma. Whereas economists once thought of expanded access to credit as “financial development,” they increasingly lament the preponderance of “financialized” economies. While the experimentalist turn in political science heralded a great search for cute natural experiments, economists are increasingly turning to the distant past to understand phenomena that have not been seen for some time. Political scientists might benefit from returning to the same grand theory questions, this time armed with more rigorous empirical techniques, and extensive data collected by economic historians.