bluuebunny/crossref_metadata_2025 huggingface dataset:
Bargains Old and New: Multinational Corporations in Global Governance
Authors: Levy David L. , Prakash Aseem
Published: December 2005

This paper outlines an approach for understanding the role of multinational corporations (MNCs) in global governance. We develop a typology of regime types with two dimensions, the goal of the regime, which can be market enabling or regulatory, and the location of authority, which can be national, regional, or international, with public and private elements. MNCs tend to support the creation of market enabling regimes at the international level, and prefer to keep social or environmental regulation under national or private authority. However, these are only generalizations and MNCs develop preferences based on their relative influence in various arenas, the costs of political participation, and competitive considerations. We argue that institutions of global governance represent the outcome of a series of negotiations among corporations, states, and non-state actors. The preferences and power of MNCs vary across issues and sectors, and from one negotiating forum to another, accounting for the uneven and fragmented nature of the resulting system. Our approach differs from the traditional FDI bargaining framework in that it recognizes the multi-party nature of negotiations and multiple sources of power. Moreover, the complexity and dynamic nature of the process results in a somewhat indeterminate process.
Slip Sliding Away? The Changing Politics of European Car Distribution
Authors: Akbar Yusaf
Published: December 2005

This paper examines the development of EU regulations in the car distribution sector. In the span of approximately fifteen years, the sector has shifted from being regarded by its critics as being one of the most protected havens of European industry to one faced with open competition. The paper claims that the inability of the car industry to resist liberalization in this sector is related to several factors. First, there was declining support from member states for their national producers, in part explained by global shifts in ownership and production which rendered concepts of “national producer” problematic. Second, technological changes combined with the impact of globalization on in the industry undermined the case for a link between sales and service of cars. Third, DG competition, led by Mario Monti, wished to push through the ability of consumers to make cross-border purchases of cars. Fourth, a more general logic embedded in the Single European Market programme (SEM) had led to several decisions to prosecute EU car producers for infringing SEM rules and thereby undermining the ability of EU member states to protect their “national producers.” This has implications more broadly: will increasing globalization of industrial ownership further undermine the state-firm nexus in the EU, thus reducing the propensity of national industries to resist liberalization? In this context, will member states be prepared to give the EU Commission a freer hand in forcing through liberalization in the remaining sectors that remain problematic?
A Learning-Centered View of Business Associations: Building Business-Government Relations for Development
Authors: Perez-Aleman Paola
Published: December 2005

The problems of rent seeking and state captured by business associations have been prominent among the concerns of economic development theory. This paper argues that firms and the state can make possible the building of new institutions that foster improvements in economic performance through arrangements that emphasize goal setting, problem solving, and continual evaluation of progress toward defined goals. The paper reviews key ideas on the learning-centered approach and builds on them to analyze the kinds of government–business relations that contribute to economic development. It uses case study material based on Chile's agro-industry business association FEPACH. It illustrates how innovative state policy coupled with private firms' efforts led to the discovery of group-based coordination that fostered rapid diffusion of new technology and production organization among Chilean enterprises. This work discusses the institutional reshaping of the business association and business–state relations to encourage learning and advance a process of development.
Toward A Positive Theory of State Supreme Court Decision Making
Authors: Spiller Pablo T. , Vanden Bergh Richard G.
Published: December 2005

State Supreme Courts have grown in importance during the last thirty years in the formation of public policy. Their judgements determine many aspects of constitutional law, tort reform, judicial selection, and campaign finance reform, among others. A vast body of literature has been developed that analyzes State Supreme Court decision making, which emphasizes the conditioning effects of the legal and institutional environment. This article expands on this previous work by incorporating the interaction of the judiciary with other government institutions, and applies the Positive Political Theory approach to law and legal institutions to the State Supreme Court. In addition, the neo-institutionalist literature of the selection process is incorporated to defend a systematic approach towards decision making. Towards that end, this article explores how judicial decisions are conditioned by institutional rules, resulting in a formal modeling of how the State Supreme Courts interact with political actors to form constitutional interpretation. This model includes the judicial selection process'retention or competitive reelection—and is extended to constitutional amendment rules, explaining how these two interact rather than acting independently. Finally, the hypothesis is tested that when State Supreme Court judges face retention elections and political preferences are homogeneous, the probability increases of observing constitutional amendment prosposals.
From Protectionism to Regionalism: Multinational Firms and Trade-Related Investment Measures
Authors: Chase Kerry A.
Published: December 2005

Trade-related investment measures (TRIMs) have been a key issue in regional and multilateral trade negotiations, but they have received little attention in theoretical work to date. This article analyzes the political economy of TRIMs to illuminate why regional arrangements have been a popular framework for eliminating them. The main argument is that multinational firms often demand safeguards when TRIMs are being liberalized, particularly if they have large sunk costs due to asset specificity. In general, regional arrangements are better equipped than multilateral rules to incorporate the safeguards these firms demand: regionalism requires governments to make binding commitments, and it creates opportunities to discriminate against outsiders. A case study of lobbying by U.S. companies with FDI in Canada from the early twentieth century to the negotiation of the Canada-United States Free Trade Agreement illustrates these points. The article concludes that regional arrangements are likely to remain more active, and more successful, than multilateral discussions in managing the commitment problems inherent in liberalizing TRIMs.
Market and Nonmarket Barriers to Internet Wine Sales: The Case of Virginia
Authors: Wiseman Alan E. , Ellig Jerry
Published: December 2005

We discuss the political and legal environment surrounding Internet wine sales, and consider the arguments in the debate over direct shipment bans on wine by investigating the wine market in the Northern Virginia suburbs of Washington, DC. Using a sample of wines identified by Wine and Spirits magazine's annual restaurant poll, we find that 15 percent of wines available online were not available from retail wine stores within 10 miles of McLean, Virginia during the month the data were collected. Our results also indicate that Virginia's direct shipment ban, which was in place until 2003, prevented consumers from purchasing some premium wines at lower prices online. Aggregate cost savings depends on the consumer's shopping strategy, the price per bottle, the quantity of wine ordered, and the shipping method chosen. For the entire sample, online purchase could result in an average savings of as much as 3.6 percent or an average premium of as much as 48 percent. A comparison shopper who considers both online and offline retailers could save an average of 1.6-9.7 percent. These results help explain why consumers and producers have found it worthwhile to challenge interstate direct shipment bans, which tend to benefit wine wholesalers.
Firms' Choice of Regulatory Instruments to Reduce Pollution: A Transaction Cost Approach
Authors: Delmas Magali , Marcus Alfred
Published: December 2005

This paper compares the economic efficiency of firm-agency governance structures for pollution reduction using transaction costs economics. Two governance structures are analyzed with the transaction costs approach: command and control regulation (CCR) and negotiated agreements (NAs). We propose that the choice of governance structure depends on the strategies firms pursue given the attributes of their transactions and their market opportunities. The application of transaction cost economics analysis leads to different choices of regulatory instruments. Firms in more mature, stable industries are likely to choose command and control, while firms in new, dynamic sectors are more likely to opt for negotiated agreements. Frequency of transactions is a key factor in firm choice.
East Asian, European, and North American Multinational Firm Strategies in Latin America
Authors: Casanova Lourdes
Published: December 2005

Over the past decade, multinationals (MNCs) have followed three main objectives while entering Latin America: efficiency seeking, growth seeking, and resource seeking. Efficiency seeking MNCs aim to reduce costs in their global production process through access to cheaper labor, and proximity to destination markets such as the United States. Growth seeking firms enter Latin American markets to grow and/or acquire new markets. They are by nature more dependent on the macroeconomic conditions in local markets for their success. Resource seeking firms enter Latin America in the search of minerals, metals, and hydrocarbons. This paper introduces the concept of “natural markets” to explain the relative successes of MNCs from different regions – Europe (mainly Iberian), USA, and Asia. ‘Natural markets’ for a MNC are defined as those markets sharing a common history or language or having a high level of physical proximity with the country of origin of the MNC. This paper proposes that a firm focusing on natural markets has a comparative advantage, and thus increases the probability of its success. The paper also draws upon the experiences of successful MNCs in Latin America to infer some lessons for East Asian MNCs wishing to operate in the region.
The United States' Race to Certify Sustainable Forestry: Non-State Environmental Governance and the Competition for Policy-Making Authority
Authors: Cashore Benjamin , Auld Graeme , Newsom Deanna
Published: December 2005

In recent years a range of public policy (Howlett 2000) and international relations (Cutleret al., 1999; Hurd, 1999; Haufler, 2001) scholars have devoted attention to the emergence of voluntary (Kernaghan 1999; Prakash 1999), market-based, and “private” regulatory regimes that have emerged to address matters of concern to global civil society that previously were largely addressed through state-centered public policy instruments and processes.
Political Representation in Concentrated Industries: Revisiting the “Olsonian Hypothesis”
Authors: Hart David M.
Published: December 2005

This paper considers whether highly concentrated industries are better represented in the political process, as Olson's Logic of Collective Action suggests, and, if they are, whether this is so for the reasons that the Logic claims. It begins with a review and critique of the quantitative literature that has largely tried and failed to substantiate Olson's view. The bulk of the paper consists of five longitudinal case studies of firms that dominate or have dominated industries: IBM, Intel, Microsoft, America Online, and Cisco. The cases suggest that there is merit to the Olsonian view, but that alone it does not constitute an adequate political theory of the concentrated industry or the dominant firm. Additional variables drawn from organizational and institutional theory need to be incorporated into such a theory, including variables that bear on the allocation of attention, threat perception, and information flow within dominant firms.
Actors and Motives in the Internationalization of Health Businesses
Authors: Holden Chris
Published: December 2005

The increasing trend towards the internationalization of the world economy coupled with the liberalizing agenda of international institutions and Western governments has profound implications for the delivery of health and other welfare services. As governments pursue policies which extend the scope for the involvement of private companies in the delivery of welfare services, processes of internationalization are likely to become increasingly important to such services as multinational providers emerge. This article begins the process of developing a systematic understanding of the relationships between the structure of welfare states, the social and economic policies of governments and international institutions, and the strategies and interests of private companies. It is argued that it is the particular mix of direct state provision, tax/subsidy, and regulation in the welfare state formation that provides the opportunities for, or barriers to, the expansion of internationalizing private providers of healthcare. This argument is illustrated through a case study of the current process of reform in the British healthcare system, where a relative shift away from direct state provision towards subsidizing and regulating private providers is facilitating a process of internationalization.
Multinational Firms' Responses to Integration of Latin American Markets
Authors: Frischtak Claudio
Published: December 2005

This paper discusses how MNCs reacted to NAFTA and MERCOSUR in terms of their investment and operations patterns in three sectors - automotive, electronics, and apparel - and assesses the likely impact of the upcoming Free Trade Agreement of the Americas (FTAA). It shows that NAFTA functioned – at least in its first years - as an investment relocation engine, while MNCs' reaction to MERCOSUR was significant only in the automotive sector. The emergence of China and other Asian economies, with their low cost and vast markets, and the progressive enlargement in the scope of MNCs operations, seem to diminish the economic relevance of NAFTA and MERCOSUR. FTAA may provide a new impetus to the integration of the automotive industry in the Americas, and a stronger rationale for a slowdown of plant relocation to Asia in light industries such as electronics and garments. But it is unlikely that it will reverse current trends which point to Asia – with China at the epicenter – as the global magnet for manufacturing and exports.
The Political Economy of Trans-Pacific Business Linkages
Authors: Henisz Witold
Published: December 2005

The current level and future evolution of trans-Pacific business linkages are tightly linked to domestic politics in Latin American countries. Where the structure of a nation's political institutions offer credible checks and balances against discretionary policymaking, external linkages including those with Pacific partners are stronger. Future liberalization including the formation of an FTAA is more likely when new policymakers arrive in office or when existing policymakers feel strong internal or external pressure to shift the course of their trade policy. A given liberalization is more likely to be sustained when coupled with short-term observable improvement in social and economic indicators. Countries with political institutions that fail to limit policymakers' discretion are particularly sensitive to a failure to demonstrate clear and immediate results. An analysis of the potential of an FTAA to influence trans-Pacific business linkages based on these arguments suggests that adoption is far from certain and that northern and southern countries alike will have to design an agreement with particular attention to social and economic consequences in Latin American countries.
ASEAN and FTAA: External Threats and Internal Institutional Weaknesses
Authors: Huang Yasheng , Morck Randall K. , Yeung Bernard
Published: December 2005

ASEAN countries perceive the possible formation of the FTAA as a potential threat on the grounds that it may divert export markets and foreign direct investment (FDI) capital to the FTAA region. This effect, together with the “China factor” and the hangover from the 1997 financial crisis, posts a concern to the ASEAN countries' economic growth. We show that, with Singapore as an exception, ASEAN countries are afflicted with state activism, poor property rights protection, and under-developed corporate governance. We argue that a poor institutional environment may exacerbate the effects of an external shock – such as that of FTAA – and thus we need to explicitly incorporate the role of institutional environments in our analysis. We further argue that while FDI flows to locations with market opportunities, a location's institutional environment affects the composition of FDI. Due to ASEAN countries' institutional weakness, its substantial inward FDI has mainly substituted, rather than complemented, local entrepreneurship. As FTAA may divert FDI flows into ASEAN countries, their appropriate response is to improve institutional quality so that the share of the more productive complementary FDI will increase in the total FDI inflows.
The (Sometimes Surprising) Consequences of Societally Unrepresentative Contributors on Legislative Responsiveness
Authors: Bailey Michael
Published: December 2005

The conventional view of private campaign contributions is that they distort policy to the detriment of society. Formal models consistent with such views, however, are based on restrictive assumptions about the nature of campaigns, interest groups and policy dimensionality. This paper relaxes those assumptions and allows for informative campaigns, multiple interest groups and multiple issue dimensions. It uses analytical and computational methods to demonstrate that private campaign contributions from societally unrepresentative contributors can, under reasonable conditions, improve social welfare. Multidimensionality is important because politicians need to be responsive on salient issues to prevent opponents from raising money based on less salient issues and using the money to publicize positions on salient issues.
The Double Punch of Law and Technology: Fighting Music Piracy or Remaking Copyright in a Digital Age?
Authors: Bach David
Published: December 2005

The battle between the recording industry and those illegal sharing music over the Internet has gripped headlines over the last few years like few others related to the digital age. At its core, it is a battle about the meaning of property and thus a battle over the heart of the emerging information economy. This article critically examines the double punch of law and technology – the simultaneous and interwoven deployment of legal and electronic measures to protect digital content – and asks whether it is merely a defense strategy against piracy, as the industry asserts, or rather an attempt to fundamentally redefine the producer-consumer relationship. Based on some initial evidence for the latter proposition, the article analyzes reasons for concern, outlines the current politics of copyright policymaking that have given producers the upper hand, and sketches elements of a strategy to fight music piracy that does not infringe on basic consumer rights.
Meta-Strategic Lobbying: The 1998 Steel Imports Case
Authors: Brook Douglas A.
Published: December 2005

In 1998, the domestic steel industry in the United States devised and executed a complex and sophisticated effort to achieve an effective non-market response to a sudden, persistent, and damaging surge of imported steel. This campaign lasted until 2002, when President George W. Bush invoked Section 201 of the U.S. trade laws to impose tariffs on imports of most steel products. This case of the steel industry's trade policy campaign provides an opportunity to examine selected models of protection-seeking industries and lobbying to ask why and how the steel coalition achieved this extraordinary governmental response. These questions are explored though a descriptive case of the steel industry's protection-seeking campaign followed by a comparative examination of previous models of protection-seeking firms, and lobbying to achieve protectionist policies. A comparison with selected models of the determinants of protection-seeking and factors affecting lobbying strategies show that most, almost all, were present in the steel case. In fact, a meta-strategic approach that transcends the customary understanding of lobbying is suggested in a complex policy environment. Such an environment can be characterized by: the need to influence multiple governmental entities – legislative, regulatory, executive; the desire for multiple outcomes with varying levels of specificity – laws or resolutions, administrative rulings, policy choices; interactions between different levels and branches of government; employment of coordinated interrelated lobbying techniques; and simultaneity of these factors.
Adjusting to Liberalization: Tracing the Impact of the WTO on the European Textiles and Chemicals Industries
Authors: Lawton Thomas C. , McGuire Steven M.
Published: December 2005

Rulings made by the World Trade Organization (WTO) dispute settlement body have, since the organization's creation in 1995, significantly advanced global economic liberalization. The response of business has been varied and far from uniformly supportive of the WTO agenda. The reason stems from the fact that adjusting to liberalization measures is easier in some industries than in others. The response is premised on the strategic alternatives available within an industry. Through examining antidumping (AD) elements of the European Union (EU) trade policy regime in the context of two European industries - chemicals and textiles - we find that both are under severe competitive pressure, due to WTO-induced market liberalization. However, the responses taken by companies within the respective industries are very different. We suggest that while WTO activity catalyzes industry evolution, the form of that adjustment is highly industry specific. In the case of textiles, the disaggregation of the industry value chain allows for a variety of product and locational adjustment strategies. In contrast, the chemicals industry is nationally based, reliant on intellectual property for competitive advantage and structurally limited in its ability to adopt a wide range of adjustment strategies. Therefore, in the absence of alternative strategy options, EU chemical companies lobby for rule harmonization in the WTO.
The Economic Analysis of International Production/Distribution Networks in East Asia and Latin America: The Implication of Regional Trade Arrangements
Authors: Kimura Fukunari , Ando Mitsuyo
Published: December 2005

This paper applies an economic approach to empirically investigate differences in inward foreign direct investment (FDI) patterns between East Asia and Latin America and discusses the implication of regional trade arrangements. International production/distribution networks in East Asia effectively utilize the new economic logic of fragmentation, agglomeration, and optimal internalization and seem to greatly contribute to economic development. The paper examines statistical data for international trade as well as the activities of Japanese and U.S. multinational enterprises (MNEs) and argues that international production/distribution networks, particularly in machinery industries, are extensively developed in East Asia while remaining immature in Latin America. The impact of regional trade arrangements is substantially different depending on whether international production/distribution networks have already been developed or not. Our findings suggest that the impact of FTAA on FDI in Latin America by East Asian MNEs could be either positive or negative, depending on the content of FTAA and accompanying policies. If differentials between intra-regional tariffs and MFN-based tariffs are kept large, import-substituting FDI from East Asia may stagnate or even decrease. With a proper policy package to nurture international production/distribution networks, on the other hand, FDI from East Asia could be accelerated and contributed to deeper integration of Latin America.
Legislators v. Regulators: The Case of Low Power FM Radio
Authors: Hazlett Thomas W. , Viani Bruno E.
Published: December 2005

The Federal Communications Commission rule making for low power FM radio was widely reported as an instance where Congress sharply rebuked a regulatory agency for enacting rules too favorable to entrants. Theories of bureaucratic control generally agree that when such events occur, policy differences of Congress and the agency must be large. Because rival policy positions are quantifiable in this case, the preferences of Congress and the Commission can be directly evaluated. While the distance between the policy position of the Commission and Congress appear large, they signified a negligible increment in competition when compared to a benchmark efficient policy. A financial event study supports this interpretation, as radio broadcaster's equity values were not materially affected by either events in Congress or the Commission. Thus, even marginal differences may prompt a costly intervention by Congress to ostensibly discipline an agency.
Private Regulation Amid Public Disarray: An Analysis of Two Private Environmental Regulatory Programs in Argentina
Authors: Espach Ralph
Published: December 2005

In recent years programs of private regulation have spread from North America and Europe to developing countries around the world. Though central to debates over public versus private international governance, little is known about the actual operations of these programs, especially in developing countries where weak state regulation has failed for decades to control environmental degradation. This paper assesses the effectiveness in Argentina of two prominent global private environmental regulatory programs'the chemical industry's Responsible Care® program and the Forest Stewardship Council. Argentina presents an intriguing country case because, despite conditions and policies that should support such programs, their implementation there has been stunted when compared against other regional cases. A focus on the demand and supply factors that shape these programs in Argentina reveals that market demand is a necessary but insufficient condition for regime effectiveness. Supply-side factors such as industry characteristics, public policies, and the institutional culture of firms significantly influence program implementation. Some transnational corporations helped export these program to Argentina; however, many others have shown opposition or disinterest, stifling program development. Also, feckless and unstable state agencies have created an institutional environment unfavorable even for private initiatives aimed at bypassing government interference.
Strategic Experts and Improvising Regulators: Explaining the IASC's Rise to Global Influence, 1973–2001
Authors: Martinez-Diaz Leonardo
Published: December 2005

This article traces the ascent of the International Accounting Standards Committee (IASC) from an obscure group with little influence in the early 1970s to a pre-eminent position as global accounting standard-setter in 2001. I argue that the rise of the IASC can be explained by several factors, including the IASC's ability to build legitimacy through technical expertise, to embed itself in a network of international organizations, and to benefit from rivalries among developed and developing countries and among European and American regulators. But the most important reason for the IASC's success is that its core values aligned strongly with the interests of the most powerful regulator-the US Securities and Exchange Commission.
International Accounting Standard Setting: A Network Approach
Authors: Perry James , Nöelke Andreas
Published: December 2005

The article takes a political economy perspective on the current harmonization of accounting standards. It argues that the process not only signals a major shift in the mode of governance (towards private authority), but also in the substance of what is being governed. In political-economic terms, the most significant change which the International Accounting Standards Board (IASB) brings to accounting is an increased reliance on market values in the form of so-called Fair Value Accounting (FVA). The FVA paradigm represents a financial perspective on business operations. This perspective is matched by the process and structure of the institutions that govern international accounting standard setting, particularly the IASB and the European Financial Reporting Advisory Group which advises the Commission of the European Union on the adoption of IASB standards. A network analysis of the different committees and working groups of these two institutions demonstrates that financial sector actors wield substantially more influence than other categories of business actors within the governance of international accounting standard setting.
Crisis and the Consolidation of International Accounting Standards: Enron, The IASB, and America
Authors: Eaton Sarah B.
Published: December 2005

This paper examines the interplay between leading international and American accounting authorities over the span of a critical four-year period, 2001–2005. Historically, US regulators and private-sector accounting institutions have taken a cautious approach to International Financial Reporting Standards (IFRSs), citing the superior rigor and overall quality of their own Generally Accepted Accounting Principles (GAAP). During the past four years, however, the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) have each become markedly receptive to the International Accounting Standards Board's (IASB) efforts to harmonize accounting standards worldwide based on IFRSs. Why? This paper offers an explanation that highlights the role of the high-profile American corporate scandals (2001–2002) in precipitating a shift in US accounting authorities' views of the optimal form of accounting rules, an issue that has stood in the way of trans-Atlantic accounting standard convergence. Prior to the accounting scandals, the highly-detailed rules that are characteristic of US GAAP were widely seen to be the most effective form of accounting rule. Since 2002, a normative shift has taken place such that the SEC now endorses objectives-oriented rules that are conceptually aligned with the principles-based standards promulgated by the IASB. The analysis is framed by insights from contemporary International Relations theory which emphasize the influence of scope conditions on patterns of governance.
Private Authority, Technical Authority, and the Globalization of Accounting Standards
Authors: Porter Tony
Published: December 2005

This article starts by highlighting the significance of two forms of authority'private and technical authority'that are becoming increasingly important relative to public authority, which traditionally has been considered the only relevant form of authority in international affairs. It then suggests that public, private and technical authority are related to one another not by the erasure of one by another, but rather through a process of politicized functional differentiation. Functional differentiation involves the transformation of multi-functional units into a set of more autonomous units that are related to one another in specific limited ways. The article explores differentiation between and within each of the three types of authority in the globalization of accounting, and the role of power as well. It challenges the view that globalization necessarily involves a centralized exercise of power or an elimination of differences.
Introduction to the Special Issue: The Globalization of Accounting Standards
Authors: Nolke Andreas
Published: December 2005

We are currently witnessing the evolution of global accounting standards, as developed by the International Accounting Standards Board (IASB). This is a remarkable development, not only because accounting standards are relevant for all business operations. Whereas accounting standard-setting has previously been a task of national authorities, the process will now be managed internationally by a London-based organisation whose parent foundation is a private company incorporated in the US state of Delaware and mainly financed by the Big Four accounting firms. Furthermore, the US appear to be willing to accept foreign standards that are quite different from their own Generally Accepted Accounting Standards (GAAP). This does not only contradict a widespread perception that equals globalization with Americanization, but also offers a remarkable contrast to US unilateralism in other policy fields. Finally, we are also amidst a major change in the substance of accounting standards, as indicated by a shift from historic cost to fair value accounting within the work of the IASB. This special issue of Business and Politics is devoted to a systematic explanation of these developments, drawing on concepts from International Relations, International Political Economy and Systems Theory.
Globalization, Comparative Advantage, and Europe's Double Competitive Squeeze
Authors: Salvatore Dominick
Published: December 2005

The past decade has witnessed an increasingly rapid tendency toward globalization in the world economy, and this has significantly affected the comparative advantage and international competitiveness of nations. This paper examines the effect of globalization on the comparative advantage and international competitiveness of Europe in manufactured goods as a whole, in high technology goods, and in office equipment and telecommunications during the past two decades. In particular, the paper evaluates the view that Europe is facing a serious double competitiveness squeeze – in high-technology goods from the United States and Japan and from the bottom in simpler manufactured goods from emerging developing countries, especially the Dynamic Asian Economies. This view is based on the over-regulation and rigid labor markets prevailing in most European countries. The paper shows, however, that this view is not generally correct.
EU Enlargement and Anti-Globalization: New Paradox or Old Paradigm
Authors: Finel-Honigman Irene
Published: December 2005

This article will examine the dilemma which the European Union faces as it tries to reconcile expansion which is intrinsically Westernization under capitalism and democratization and the impact of US imposed globalization perceived as a potential loss of national and historic traditions and cultures. It will examine the equation of globalization and American acculturation, the EU anti-globalization movement's ambivalent positions against the WTO, multilateral organizations and EU multinationals and the rationale behind dialectics of anti-globalization at a time of EU enlargement.
Impact of Globalization on International Trade between ASEAN-5 and China: Opportunities and Challenges
Authors: Liu Yunhua , Luo Hang
Published: December 2005

This paper evaluates the impact of China's WTO entry and the establishment of a free-trade agreement between China and ASEAN on the ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore and Thailand). We examine the trade competition between the two regions using a market-share model and assess the impact of China's WTO entry on the ASEAN-5 with an exchange rate-tariff model, based on two-digit SITC data. It is found that for the period 1987 to 2000 the competition in trade only occurred between China and Singapore in manufacturing goods, while the competition between China and other four nations was in primary goods. The trade-widening opportunity between the two regions appears much larger than the competitive challenges for ASEAN-5 after the WTO entry of China and the establishment of FTA between ASEAN and China, impacts on different industries are evaluated.
The Hegelian Dialectic and Evolutionary Economic Change
Authors: Ozawa Terutomo
Published: December 2005

The Hegelian dialectic of thesis-antithesis-synthesis can provide a perspicacious framework for analyzing the evolutionary process of economic change as envisaged in many theories of growth and development from David Hume and David Ricardo to Joseph Schumpeter. An evolution of economic structure is a perpetual sequence of change with constant contradictions, self-transformation, and self-organization. The same dialectic is applied to the “flying-geese” paradigm of industrial upgrading (an emended version of Akamatsu’s original model) that explains Japan’s postwar process of structural transformation and upgrading, a process full of contradictory developments and incessant adjustments occurring at both the market (unconscious coordination) and the policy (conscious coordination) level.
Assessing the Need for Controls Over Inward Direct Investment in Developing Countries
Authors: Gray H. Peter
Published: December 2005

Singh’s arguments against the creation of a laissez-faire system governing international flows of foreign direct investment are broadened to recognize the implications for a laissez-faire system of the lesser degree of economic sophistication of host governments in developing countries. Given a close interface between foreign ways of doing business and the benefits of inward FDI, the paper addresses two areas in which government regulation may not be adequate to the tasks imposed: issues of worker and consumer safety; and issues of deliberate exploitation of the host country by executives of the parent company or of the local affiliate.
EMU Policies and the Stability and Growth Pact: Prospects of Macroeconomic Stability
Authors: Fogel Georgine K , Saxena Sweta C
Published: December 2005

One of the challenges of the Economic and Monetary Union (EMU) is achieving a balanced sustainable expansion of economic activity conducive to macroeconomic stability and financial sustainability of the EMU. In the paper, we evaluate the EMU policies for their effectiveness of smoothening economic cycles in the aggregate. We discuss the pros and cons of the policies and explore the extent to which the EMU institutional framework is likely to facilitate endurance for responding to potential economic shocks and future challenges of the EMU. The paper reveals that the EMU needs a system of credible coordination of monetary and fiscal policies that address economic goals other than price stability. The extent to which EMU policies allow for structural reforms of labor, capital, and product markets will mark the level of responsiveness of the system to handle potential economic disturbances and asymmetric shocks in the Euro region.
One Welfare State for Europe: A Costly Utopia?
Authors: Hennessy Peter , Warin Thierry
Published: December 2005

This paper addresses the question of the social policy harmonization in the European Union. In adopting a common monetary policy, Europe is faced with structural and fiscal concerns, as national growth levels differ. Another possible factor in output shocks are the levels of various social expenditures in the member countries. OECD data on the level of social program expenditures in four EU countries will be compared to fluctuations in GDP growth to identify existing relationships. Significant relationships between independent social expenditure policy and GDP growth shocks suggest structural harmonization as an improvement if Europe is to take full advantage of the common market. However, the effects of expenditure levels may be easier to identify and predict than the dynamic effects of policy change. As the effects of future policy changes are more difficult to ascertain, harmonization may not consistently appear to be a Pareto-optimum solution to asymmetric shocks.
Skill Formation, Outsourcing, and Craft Unionism in Air Transport
Authors: Bina Cyrus , Finzel Bart D.
Published: December 2005

The purpose of this article is twofold: (1) to rekindle old debates surrounding the efficacy of craft unionism (as opposed industrial unionism) in the age of globalization in order to provide insight into recent contentions by the Airline Mechanics Fraternal Association (AMFA) regarding the potential for craft strategy among mechanics in the air transport industry; and (2) to present a theoretical framework that combines the process of skill formation and technological change in a consistent and unifying manner. The theoretical framework offered here illuminates the transitory nature and meaning of skills in capitalism. Given the transitory meaning of skills and their extrinsic determination by the fast-pace of technology, to maintain reliance on the intrinsic value of skills alone—as AMFA seemingly does— should invite skepticism.Three global trends are identified that affect mechanics in air transport: the diminished role of major carriers, the change of fleet composition, and the growing use of outsourcing. These developments are discussed and their consequence for skilling and deskilling is examined. These tendencies align with the view that universal labor contingency is an aspect of contemporary globalization. In view of this fact, the article urges labor educator and union activists to carefully evaluate AMFA’s strategy.
Revealed Comparative Advantage Indexes for Regions of the United States
Authors: Clark Don P. , Sawyer W. Charles , Sprinkle Richard L
Published: December 2005

This study identifies the pattern of comparative advantage for U.S. regions from actual trade performance as indicated by the industry composition of exports. Revealed comparative advantage patterns are also determined using production data. Dynamic changes in comparative advantage patterns are identified using a methodology developed by Kreinin and Plummer (1994a). Comparative advantage patterns and the degree of structural change in exports vary considerably across regions. Results will assist U.S. regions and states in formulating effective export promotion strategies.
Horizontal and Vertical Intra-Industry Trade: New Evidence from Korea, 1991-1999
Authors: Byun Jae Jin , Lee Sang-Hyop
Published: December 2005

This study tests the validity of the alternative hypotheses in the intra-industry trade (IIT) literature using information on Korea’s trade between 1991 and 1999. The study refines previous studies by breaking down IIT into horizontally and vertically differentiated products, controlling for country fixed-effects, and using more variables relevant to Korea’s industry data. The main results suggest that some conflicting results of previous empirical studies could be caused by the use of the aggregate approach itself. Most of all, variations of the level of IIT in Korea are better explained by vertical IIT. Furthermore, while the hypotheses derived from the theoretical models of horizontal IIT and vertical IIT are generally confirmed by the empirical analysis, the hypothesis of demand similarity was not supported. The results also favor the competitive market structure explanation for both types of IIT in Korea.
Can It Be Both Economically and Morally Rewarding to Invest in Developing Countries?
Authors: Gottschalk Ricardo
Published: December 2005

This paper argues that investing in developing countries can be both economically and morally very rewarding. It firstly shows that historically capital invested in developing countries has obtained higher returns than invested in developed countries. It secondly argues that there is also a moral case for investing in developing countries. It would accelerate economic development in the poorer areas of the world, thereby promoting global development. It finally suggests that the socially responsible investment (SRI)initiative could be broadened to incorporate development objectives more explicitly, thereby serving as a conduit to more investment to the developing world.
Feasible Limits for External Deficits and Debt
Authors: Makin Anthony J
Published: December 2005

Large current account deficits and foreign debt levels remain a source of concern for international financial markets and policymakers. Yet, exactly what an “excessive” external deficit or liability position for an advanced economy is at any time has never been adequately defined. This article addresses the question by proposing new methods for assessing the proximity of current account deficits and the associated foreign debt to their upper bounds. It contends that productive investment fundamentally sets the feasible limit for current account deficits, whereas the capital to output ratio ultimately sets the foreign debt to GDP limit. Benchmark estimates for the United States, Australia, New Zealand and the United Kingdom, advanced economies that have borrowed heavily since 1990, reveal external deficits have usually been well within limits, although recent United States experience is an exception.
Boeing-Airbus Subsidy Dispute: A Sequel
Authors: Carbaugh Robert J , Olienyk John
Published: December 2005

After intensifying in the 1980s and 1990s, the longstanding dispute between Europe and the United States over government subsidies for the commercial jetliner industry again heated up in 2004. This time, however, the stakes were higher because both nations sued each other at the World Trade Organization over government subsidies paid to their respective commercial jetliner companies. The dispute over subsidies has heightened trade tensions between the United States and Europe, as both companies spar for dominance in the highly competitive industry of commercial aircraft.

This paper provides a sequel to “Boeing-Airbus Subsidy Dispute: An Economic and Trade Perspective,” a paper written by these authors and published in the October-December 2001 issue of Global Economy Quarterly. The initial paper analyzed the trade frictions between Boeing and Airbus regarding governmental subsidies and its implications for the conduct and performance of the two companies in the commercial aircraft industry. This paper extends the analysis by discussing recent developments in the commercial aircraft industry, the subsidy dispute of Boeing and Airbus at the World Trade Organization, and the future health of the commercial jetliner industry.
Trade Prospects of the New EU Neighborhood Policy: Evidence from Hausman and Taylor's Models
Authors: Péridy Nicolas
Published: December 2005

One major objective of the new EU neighborhood policy is to move towards more trade integration between the enlarged EU and its new Eastern and Southern neighbors, i.e., Russia, Ukraine, Belarus, Moldova, as well as Southern Mediterranean and Caucasus countries. Using recent theoretical developments in gravity models, this paper derives an estimable equation, which particularly focuses on trade costs. This equation is then used to investigate the new neighbors' export potential towards the EU market. For this purpose, several Hausman and Taylor's models are implemented in order to consider the correlation between certain independent variables and the residuals which are used to calculate trade potentials. Results outline that the NNCs' export potential is generally significant, especially for the new Eastern neighbors. However, it seems that this potential is limited for Mediterranean countries, as they have already enjoyed preferential market access with regards to the EU. Finally, an extension of the analysis to Middle-East and Gulf countries also highlights significant trade potentials with the EU.