economists capitalists and the making of globalization north american free trade in comparative historical perspective why did globalization happen current explanations point to a variety of conditions under which states have made the free market policy changes driving international economic integration since the 1980s such accounts disagree however about the key actors involved this article provides a reconciliation showing how two different combinations of actors and two different political economic pathways have led to globalization in recent decades in developed countries mobilization by business has been central elsewhere technocrats both constrained and empowered by international finance have pursued globalization more independently of business in both contexts economists technical authority has helped legitimate liberalization despite the limited diffusion of their ideas the article validates and elaborates this model using a comparative historical study of how the united states canada and mexico proposed negotiated and ratified agreements for free trade in north america

corporate unity in american trade policy a network analysis of corporate dyad political action this essay examines factors that produce political unity among large u s corporations advocating free trade expanding on old debates these data and analyses validate the importance of organizational and class cohesion approaches to corporate political action methodologically the political unity of pairs dyads of firms in trade policy activism is analyzed with quadratic assignment procedure regression shared membership in prominent policy networks and board interlocks positively predict corporate political unity across three areas of trade policy influence from the executive branch to the legislature non network organizational indicators also significantly predicted corporate trade policy activism the findings support business unity accounts of corporate political action and suggest that higher levels of firm embeddedness within intercorporate networks facilitate collective corporate political action

evolution of international stock and bond market integration influence of the european monetary union abstract this paper examines the dynamic relationship between daily stock and government bond returns of selected countries over the past decade to infer the state and progress of inter financial market integration we proceed to empirically investigate the influence of the european monetary union emu on time variations in inter stock bond market integration segmentation dynamics using a two step procedure first we document the downward trends in time varying conditional correlations between stock and bond market returns in european countries japan and the us second we investigate the causality and determinants of this interdependent relationship in particular whether the various macroeconomic convergence criteria associated with the emu have played a significant role we find that real economic integration and the reduction in currency risk have generally had the desired effect on financial integration but monetary policy integration may have created uncertain investor sentiments on the economic future of the emu thereby stimulating a flight to quality phenomenon

are preferential trading arrangements trade liberalizing or protectionist preferential trade arrangements and especially free trade agreements have mushroomed in importance in the 1990s this has revived research on the effects of these arrangements both on the welfare of the member countries and those excluded and on the momentum for further liberalization of the open multilateral trading system this paper reviews the analyses and evidence to date as to these effects showing that analytically anything can happen and that to date there has been insufficient experience to draw conclusions from empirical evidence

resisting the protectionist temptation industry and the making of trade policy in france and the united states during the 1970s why were advanced industrial states able to keep their economies relatively open to foreign trade in the 1970s and the early 1980s despite declining u s hegemony and increasing economic difficulties this article argues that an international level change affected domestic trade politics and contributed to the maintenance of a liberal trading system examining the united states and france the argument proceeds in two steps showing first how domestic trade politics were changed and second how this change affected the policy process initially i argue that aspects of the increased international economic interdependence of the postwar period altered domestic trade politics by creating new anti protectionist preferences among certain firms firms with extensive international ties through exports multinational production and global intra firm trade have come to oppose protectionism since it is very costly for them evidence for these new preferences was apparent among both american and french industries despite different contexts firms in the two countries reacted similarly to the growth of interdependence next i ask whether firms preferences affected trade policy outcomes and show how these preferences were integrated into the policy process in both countries trade policy structures in neither country prevented firms preferences from affecting the policies adopted even in france a so called strong state firms preferences were a key influence on policy in the trade policy area then the french and american states did not appear to differ greatly in their susceptibility to industry influence even though their policy processes were different

corporate mobilization and political power the transformation of u s economic policy in the 1970s despite their otherwise divergent arguments pluralist state centered and neo marxist relative autonomy conceptions of political power in capitalist societies share the view that the capitalist class is generally incapable of unified political action yet a striking feature of policy struggles in the united states between 1974 and 1981 was the dominant influence of a well organized and unified business lobby i examine business unity and political influence in the context of recent u s policy history tracing the legislative histories of the unsuccessful labor law reform and consumer protection agency bills of the 1 970s and the successful economic recovery tax act of 1981 a class based corporate power structure perspective is supported the historical conditionsfostering the political mobilization and intraclass cohesion of business in the 1970s and the theoretical implications of the breakdown of business unity after 1981 are also examined

gaining access by doing good the effect of sociopolitical reputation on firm participation in public policy making this paper examines the role of firms sociopolitical reputations as proxied by their perceived engagement in socially responsible practices in public policy makers decisions to grant access in the policy making process i argue that policy makers dependencies motivations and decision making processes lead them to evaluate firms by using sociopolitical reputation as a differentiating heuristic i hypothesize that firms that construct stronger sociopolitical reputations will be granted greater access and that firms existing political activity and policy makers partisanship will moderate this relationship i test these hypotheses using an 11 year panel on congressional testimony reputation and political and financial characteristics for the s p 500 and find support for all three these findings support the existence of a sociopolitical dimension to firms reputations that affects how public policy makers evaluate firms demonstrating that corporate social responsibility pays political benefits this paper was accepted by jesper sorensen organizations

defense against recession u s business mobilization 1950 19701 the unexpected investment decisions of companies during recessions often frustrate commentators and policy makers who view the economy from the top down companies may act against immediate market signals during recessions because of uncertainties about strategy and the future direction of the economy a mesolevel sociological model of how firms interpret and respond to economic conditions in uncertain times improves understanding of firms variable responses to recessions which cumulatively shape macroeconomic trajectories examining firm level employment during four recessions from 1950 to 1970 the author generates results from dynamic panel models to show that firms set their employment levels against profits and market share and in alignment with peers and political affiliations firms manage uncertainty by imitating peers but also by endeavoring to construct their environment collectively through business associations this article s counterintuitive economic findings and the evidence of social and

firms and tariff regime change explaining the demand for protection although it is commonly argued that there is a connection between tariff levels and business conditions this hypothesis has not been subjected to systematic empirical analysis or given any theoretical basis the author presents two complementary theories of the movement of tariff levels in response to changing business conditions both explain tariff changes in terms of the changing political demands of business firms and both rely on the business cycle to drive these changing demands one theory is a conventional argument about changing opportunities for entry and exit the other treats firms as satisficers the theories yield similar predictions preliminary empirical analysis while consistent with both does not differentiate between them

does the organization of capital matter employers and active labor market policy at the national and firm levels does the organization of business matter for social policy development in the advanced capitalist democracies conventional welfare state analysis has given this significant question scant attention we argue however that the representational power of business coordination across business interest units and integration of associations in corporatist policy making forums or what we call the social corporatist organization of business should result in greater support and participation by employers in social policy formation and implementation we test our arguments with models both of 1980 98 pooled time series data on withinand across country variation in spending on active labor market programs and of extensive firm level survey data from denmark and the united kingdom we find that the centralization and coordination of employers as well as the integration of employer organizations in corporatist policy making forums are strongly associated with shares of national income devoted to active labor market policy we find moreover that the degree of employer organization conditions active labor market policy responses to de industrialization and increases in general unemployment at the firm level membership in an employer association has a significant positive effect on employer participation in active labor market programs in corporatist denmark but not in the pluralist united kingdom

constituency interests and delegation in european and american trade policy trade policy in the eu and the united states is to a large extent delegated to executive agents existing explanations claim that legislators delegate because they wish to liberalize but are unable to achieve this on their own the authors show that legislators delegate powers to obtain foreign market access for exporters and protection for import competing interests confronted with heterogeneousdemands from both groups principals delegate to two sets of agents to confer concentrated benefits on these constituencies and install control to avoid concentrated losses while maintaining the flow of resources from lobbying the authors derive the empirically observable implication that with the increase in the share of tradables in the overall economy delegation as well as control should steadily increase with time they then test the validity of this proposition for u s trade policy since 1916 and for european trade policy since 1958

how do policy and information shocks impact co movements of china s t bond and stock markets abstract we investigate the impacts of policy and information shocks on the correlation of china s t bond and stock returns using originally the asymmetric dynamic conditional correlation dcc model that allows for the coexistence of opposite signed asymmetries the co movements of china s capital markets react to large macroeconomic policy shocks as evidenced by structural breaks in the correlation following the drastic 2004 macroeconomic austerity we show that the t bond market and the bond stock correlations bear more of the brunt of the macroeconomic contractions we also find that the bond stock correlations respond more strongly to joint negative than joint positive shocks implying that investors tend to move both the t bond and stock prices in the same direction when the two asset classes have been hit concurrently by bad news but tend to shift funds from one asset class to the other when hit concurrently by good news however the stock stock correlation is found to increase for joint positive shocks indicating that investors tend to herd more for joint bullish than joint bearish stock markets in shanghai and shenzhen

the institutional foundations of hegemony explaining the reciprocal trade agreements act of 1934 in 1930 congress approved the highly restrictive smoot hawley tariff the textbook case of pressure group politics run amok four years later congress passed the reciprocal trade agreements act rtaa surrendering much of its tariff making authority to a policy process in which internationalists had increasing influence while the united states had used reciprocity to expand exports before the stick of discriminatory treatment took precedence over the carrot of liberalizing concessions with the transfer of tariff making authority to the executive the united states could make credible commitments and thus exploit its market power to liberalize international trade despite later modifications the rtaa set the fundamental institutional framework for trade politics

the transformation of trade the sources and effects of regime change regimes can be analyzed both as outcomes to be explained and as mediating social institutions that affect international transactions in the case of postwar trade the changing outcomes can be predicted simply and with rough accuracy by a hegemonic model yet that model cannot explain the continuing reduction of tariffs the development of new nontariff codes and the persistence of crucial norms rules and institutions these durable features of modern trade suggest that the logic of regime maintenance is distinct from that of regime initiation nor can the hegemonic model account for the regime s highly uneven weakening the most prominent trade barriers are in mature basic industries the least prominent are in industries with differentiated products and extensive research and development expenditures one explanation which usefully complements a hegemonic model is that sectors differ systematically in their capacity to adapt competitively to imports and hence in their need to preserve their position by trade barriers despite the regime s uneven weakening trade volumes have continued their secular growth in sectors where the regime remains strong it has stimulated two way trade in similar products intraindustry trade where the regime is weaker new nontariff barriers diminish hypothetical trade growth but rarely aim at a permanent rollback in market shares or trade volume

what percentage of innovations are patented empirical estimates for european firms abstract a 1993 survey on the innovative activities of europe s largest industrial firms obtained useable results on patenting activities for 604 respondents the data are used to calculate the sales weighted propensity rates for 19 industries the propensity rates equal the percentage of innovations for which a patent application is made the propensity rates for product innovations average 35 9 varying between 8 1 in textiles and 79 2 in pharmaceuticals the average for process innovations is 24 8 varying from 8 1 in textiles to 46 8 for precision instruments only four sectors have patent propensity rates for both product and process innovations combined that exceed 50 pharmaceuticals chemicals machinery and precision instruments regression results that control for the effect of industry sector show that patent propensity rates increase with firm size and are higher among firms that find patents to be an important method for preventing competitors from copying both product and process innovations the effect of secrecy is not so straightforward firms that find secrecy to be an important protection method for product innovations are less likely to patent as expected but secrecy has little effect on the propensity to patent process innovations the r d intensity of the firm has no effect on patent propensity rates for both product and process innovations the sector of activity has a strong influence on product patent propensities but very little effect on process patent propensities after controlling for the effect of other factors

the impact of terrorism on financial markets an empirical study the main focus of this paper is to previous termstudynext term empirically the previous termimpact of terrorismnext term on the behavior of stock bond and commodity previous termmarkets next term we consider terrorist events that took place in 25 countries over an 11 year time period and implement our analysis using different methods an event previous termstudynext term approach a non parametric methodology and a filtered garch evt approach in addition we compare the effect of terrorist attacks on previous termfinancial markets with the impactnext term of other extreme events such as previous termfinancialnext term crashes and natural catastrophes the results of our analysis show that a non parametric approach is the most appropriate method among the three for analyzing the previous termimpact of terrorism on financial markets next term we demonstrate the robustness of this method when interest rates equity previous termmarketnext term integration spillover and contemporaneous effects are controlled we show how the results of this approach can be used for investors portfolio diversification strategies against previous termterrorismnext term risk

macroeconomic consequences of terror theory and the case of israel abstract this paper analyzes the effect of terror on the economy terror endangers life such that the value of the future relative to the present is reduced hence due to a rise in terror activity investment goes down and in the long run income and consumption go down as well governments can offset terror by putting tax revenues into the production of security facing a tide in terror a government that acts optimally increases the proportion of output spent on defense but does not fully offset the tide thus when terror peaks the long run equilibrium with an optimizing government is of lower output and welfare next we show that this theory of terror and the economy helps to understand changes in trend and business cycle of the israeli economy the estimates show that terror has a large impact on the aggregate economy continued terror at the level of the death toll by about the same size as due to car accidents is expected to decrease annual consumption per capita by about 5 in 2004 had israel not suffered from terror during the last 3 years we estimate that the output per capita would have been 10 higher than it is today

interlocks pacs and corporate conservatism two alternative corporate political strategies are identified for political action committee pac contributions to candidates in the 1980 congressional elections 1 a pragmatic effort to promote a particular company s best interests and 2 an ideological effort to promote conservatism with the use of multiple regression this article examines three theoretical explanations of corporate political strategies the expectations of corporate liberal theory are not confirmed rather there is support for both state structure and interlock theories it is argued that at least in 1980 business political behavior was ideologically conservative which business understood to represent classwide rational interests

between free trade and protectionism strategic trade policy and a theory of corporate trade demands conventional theories of the political economy of trade argue that industries in import competing businesses favor protectionism while multinational firms and export dependent corporations advocate unconditional free trade however many multinational industries have recently advocated strategic trade policies that is they are willing to support free trade at home only if foreign markets are opened or foreign governments reduce subsidies to their firms if demands for strategic trade policy were adopted by the united states they could represent a threat to the general agreement on tariffs and trade gatt and the multilateral trading system this article seeks to explain the emergence of these new corporate trade demands and thereby broaden theories of the political economy of trade the article begins with the widely supported position that multinational and export oriented firms prefer unconditional free trade building on concepts from theories of industrial organization and international trade the article then hypothesizes that rising economies of scale and steep learning curves will necessitate that these firms have access to global markets via exports if growing dependence on world markets is combined with foreign government subsidies or protection the trade preferences of firms will shift from unconditional free trade to demands that openness at home be contingent on openness overseas the manner in which firm demands then get translated into industry demands will vary with the industry s structure if the industry consists of firms with symmetric strategies it will seek strategic trade policy but if the industry is highly segmented it will turn toward protectionism the article concludes with a preliminary test of these hypotheses in four brief studies of the politics of trade in the semiconductor commercial aircraft telecommunications equipment and machine tool industries

the price of terror the effects of terrorism on stock market returns and volatility abstract in this paper we investigate the effects of terrorism on the financial markets evidence from six different financial markets shows that terror has a significant impact on both stock markets and the stock market volatility and the magnitude of these effects are larger in emerging markets

habitual and occasional lobbyers in the u s steel industry an em algorithm pooling approach bernard yeung using u s steel firm data we find that lobbying for import protection appears to be habit forming to identify heterogeneity in lobbying behavior among firms we use an expectation maximization algorithm to sort our firms into groups with different propensities to lobby and estimate the determinants of lobbying in each group a two pool model emerges occasional lobbyers lobbying depends on their market performance and habitual lobbyers lobbying only depends on past lobbying the latter tends to be larger steel firms whose business is more focused in steel our evidence is consistent with dynamic economies of scale in protection seeking breeding protection dependent firms jel f13 1 introduction rent seeking activities plausibly have dynamic economies to scale past rent seeking experience should reduce the cost of further rent seeking and increase its return thus rent seekers may over time become more prone to further rent seeking and even become dependent on it given the large welfare losses theoretically associated with rent seeking e g bhagwati 1982 1988 and magee et al 1989 a better understanding of actual rent seeking behavior is required in particular empirical verification of the self sustaining nature of rent seeking is of fundamental importance lobbying for protection from import competition is a form of rent seeking this article uses data on lobbying for protection by firms in the steel industry in the 1970s and 1980s to show that a habit forming effect does exist in a preliminary investigation we pool all firm level data and find that past lobbying increases the current tendency to lobby however not all firms have the same propensity to lobby to allow heterogeneity among firms dependence on past lobbying we apply an expectation maximization em algorithm approach dempster et al 1977 to a lagged dummy model heckman 1982a 1982b this lets our firms sort themselves into groups according to the determinants of their lobbying activity our statistical results suggest that an acceptable division of our data is a division into two groups occasional lobbyers whose lobbying depends on the firm s market performance and habitual lobbyers whose lobbying is essentially unrelated to the firm s business situation and depends mainly on past lobbying firms that never lobby for protection end up in the first group greater firm size and greater focus in steel production are associated with increased lobbying in both groups but the influence is stronger for occasional lobbyers past sales growth and spending on modern equipment are associated with curtailed lobbying by occasional rent seekers but are unrelated to lobbying by habitual rent seekers changes in cash flow have no influence in either generally habitual lobbyers are larger firms whose business is more concentrated on steel they are naturally more inclined than occasional lobbyers to initiate lobbying however their lobbying appears to have become a habit divorced from their market pe rformance these results are consistent with the presence of economies of scale in rent seeking and with rent seeking being habit forming e g magee et al 1989 in the next section we describe the intensive lobbying for protection in the u s steel industry in the 1970s and 1980s we justify our contentions that lobbying for protection by steel firms in the sample period may be habit forming and that different groups of firms should have dissimilar propensities to lobby for protection in section iii we explain the em algorithm approach we explain the data in the fourth section and report our results in section v section vi concludes ii habitual and occasional lobbying in the u s steel industry in the united states domestic firms under import competition pressure often complain to the government about unfair foreign practice