1. The politics and economics of international relations: An introduction to globalization
Lars Niklasson, Deputy Professor
Political Science, Linköping University

2. What are the major challenges in the global context (politics and economics)?
What are the most desirable ends for global politics? My suggestions:
Handling environmental problems
Development of the global south: living conditions etc.
Is it ok to have cars and refrigerators in India?
Developing democracy and good governance in all countries
(Further development of the global north, a win-win situation?)
What instruments are available to reach these ends? Will the economy/society reach the goals? How are relations between countries regulated?
Global economic integration (globalization): a threat or an opportunity?
Trade, finance, labor standards, knowledge production
Global politics (1): the regulation of the economy
International organizations, governments, NGOs etc.
Global politics (2): specific support for development
Aid, global collaboration, security arrangements etc.

3. Three themes of the course
1. What is globalization?
Perspectives, theories
Explanations, old and new
2. What are the effects? Is it good or bad?
Economic development, jobs, quality of life, modernization
Environmental impact, equal opportunities
Values: Cosmopolitanism, localness, virtues etc.
3. What are the causes? (What can be done?)
Structural change: technology, the economy
The role of regulation: Who decides? How?

4. What is globalization? Economic integration of the world
Globalized firms, exporters, global value chains
How can we understand it?
Consequences: good or bad?
Causes: what can be done?
Who are the winners and losers?
Local firms?
Workers?
The uneducated?
The global south?

5. How can we evaluate globalization?
Many policies are ends to means:
Trade policy
Financial systems
What are the ultimate ends (values)?
Economic development, reduction of poverty
Environmental improvement
Quality of life, equality, fairness, autonomy, freedom?
Liberal, nationalist and critical perspectives
Local traditions AND modern cosmopolitanism?
Social science is mainly about ends to means
What can states, markets and communities do?
How can they work the best? What kind of regulation is needed?

6. Perspectives on globalization
Optimists (economists) vs pessimists (sociologists)
Economic theory predicts longterm gains for everyone (consequences)
Sociologists see struggles for power behind the scenes (causes)
Political scientists study the process of regulatory change (politics)
Methods and assumptions vary

7. Optimists/Economists
Economic theory predicts longterm gains for everyone
Win-win situation, potential harmony of interests
Consequences more important than causes?
More specific:
Highly mathematical theories
Abstract and general, ”ceteris paribus”, assumes rationality
Ignore short-term losers
A smart roadmap or a utilitarian religion?
A naive view of firms, markets and societies?
What does it take to achieve the desired end?

8. The globalizers Martin Wolf (2004): Why Globalization Works
Globalization ”has brought benefits to hundreds of millions of people and helped secure the biggest ever falls in the proportion of humanity in extreme poverty. The challenge remains to spread the opportunities of globalization more widely than ever before. For that we need better states and better policies.” (page ix)

9. Pessimists/Sociologists
Sociologists see struggles for power behind the scenes
Zero-sum, fundamental conflicts are unsolvable
Causes more important than consequences?
More specific:
Qualitative theories
Specific time and place, static, focus on values and struggles for power
US firms and third world governments vs the poor peasants? (Hegemony)
Focus on short-term winners and losers, ignore long-term gains (?)
Markets are socially constructed: politics and power
What is their alternative? A naive view of the state?
What does it take to achieve the desired end?

10. The anti-globalizers
The International Forum on Globalization: Alternatives to Economic Globalization, 2002:
Against corporate globalization: ”big firms get too much power and ruin the resources of the planet”
Local economies better than exports and integration
Cultural and economic diversity is needed
Local and national political power, democracy
= similar to the progressive movement in the 1890s?
= based on other values? Other economic theories?

11. What do they disagree about?
Consequences of policy (eg. free trade)
The long-term: gains for all or only for some?
The south: better or worse?
The environment: better or worse?
= liberalism vs socialism on how markets and states work
Causes of policy
By the rich, for the rich?
By liberals, against organized interests, to have a dynamic society?
Research methods
Abstract vs descriptive, quantitative vs qualitative

12. Can we find out who is right?
Values are normative
Only a personal choice?
Where do they lead? Logical testing?
Facts can be investigated empirically
How were the policies selected? What were the motives? (process-tracing)
Who decided? (different conceptions of democracy, global governance)
How are the policies meant to work? (program theory)
How do they work in practice? (implementation)
What are the effects of the policies? (evaluation)
General theories (economics)
Case-studies of particular situations (political science, sociology)

13. Theoretical perspectives for evaluating and explaining regulation (policies)
International Political Economy
The politics of the economy (”political economy”)
National and international, a broad agenda
From International Relations
States as actors
Normative paradigms?
Nationalism, liberalism, critical perspectives
From Political science
Causal explanations: domestic and international politics
Interests, institutions, ideas
(The bureaucratic politics of international organizations)
Democracy as a norm: what kind is possible, feasible? (”Global governance”)
(Implementation studies)

14. Why do we need theories?
They interpret the facts, help us see patterns
Causality: why did it happen?
Evaluation: good or bad?
We can treat theories as hypotheses and search for falsification
We can understand the actors’ theories/ideas/motives
Theories help us make predictions
Theories can be used to mobilize support for action (=politics)
But: theories may be infused with assumptions and values
Is rationality a simplifying assumption or a norm?
Is constructivism an eye-opener or hidden marxism?

15. Three paradigms
Economic nationalism
Liberalism
Critical perspectives

16. Table 1.2 Comparing the perspectives
Aspect
Economic nationalist
Liberal
Critical
Historical origins
15th century
19th century
Major figures
Hamilton, List, Strange
Smith, Ricardo, Keohane
Marx, Lenin, Cox
Variants
Mercantilism, Realism
Free trade, Interdepend.
Marxism, feminism
Level
State-centric, atomistic
Pluralist atomistic
Global structure
Human nature
Aggressive
Cooperative
Malleable
Units
States
Firms, states, NGOs etc.
Class, gender, planet
View of the state
Unitary actor
Diverse intersts
Class interest groups
View of TNCs
Beneficial/harmful
Beneficial
Exploitative
Behavioural dynamic
State as rational actor
Rational actor, failure
Dominance, exploitation
Market relations
Potentially negative
Positive
System structure
Anarchy, conflict
Cooperative, interdep.
Hierarchy, conflict
Game metaphor
Zero sum
Positive sum
Hegemony
Dominant state
Cooperation
Hegemony in state society
International institutions
Not significant
Important
Serves wealthy interests

17. States versus markets: Neoliberals vs neomercantilists
Issue
Neoliberal
paradigm
Neomercantilist paradigm
Trade policy
Take away barriers
Use barriers strategically
Key value
Competition
Competitiveness
Key mechanism
Comparative advantage
Survival of the fittest
Infant industries
Innovation systems
Economic paradigm
Schumpeter, Ricardo etc.
The single market
Mercantilism: List
Strategic trade theory
Endogenous growth theory?

18. Causal explanations (”methods”)
A. Deductive (IR) vs inductive (pol sci)
Start from theory or build theory from data (cases)
Statistics, case studies & comparisons
Theories on a high level of abstraction or ”middle ground”

19. Causal explanations, cont’d
B. Pol sci: Rational abstractions (RC) vs Understanding processes
The logic of unintended outcomes (game theory) vs how did it happen?
Assuming preferences vs explaining change of preferences

20. Causal explanation, cont’d
C. Processes: The three I’s (Political science & Sociology)
Interests (winners/losers): a too quick explanation. Rationalists
Institutions (rules) shape the arena, explains variety. Liberals (?)
Ideas explain variety and where interests come from. Constructivists
Ideas: Liberalism, Nationalism and Critical perspectives!

21. Focus on politics What are the drivers for change? Who are the actors?
Structural change (technology, economy):
Winners and losers (interests)
Filtered through regulation (institutions)
Paths or unintended consequences
Interpretations, ideas (often from Economics)
How we think about globalization
Hegemonic power? (USA)
Bureaucratic power by the international organizations?
Who are the actors?
Firms, industry associations, NGOs, regulators, politicians
How are winning coalitions formed within and across governments?
Facts, values & rhetoric; more friends than enemies
Very complex processes behind the scenes

22. The role of ideas and their actors (from chapter 13)
Ideas are mental images, worldviews, ideologies, norms, identities
Constructivists in IR and Political Science: ideas influence behavior
Reality is socially constructed = dominant interpretation
”Another world is possible” (World Social Forum)
One step beyond rationalism: where do preferences come from?
Epistemic communities: experts and policy sectors, ”iron triangles”
Policy coordination and competition, coalition-building
Several versions:
Ideas represent interests (Gramsci, Cox), hegemony/dominance
Look for interests in dominant ideas & the missing perspectives (poststructuralism)
Ideas are promoted by actors to change policies
Ideas become embedded in institutions: institutions are biased

23. Old and new globalization
What explains change over time?
Structural factors like environment and geography (Jared Diamond)
Western dominance (”the global historical approach”) over the poor
Western culture for success (”the cultural approach”) – the poor are bad
”The institutional approach”: people are the same, but the institutions differ
Inventions in warfare, production, New technology
Good governance: the rule of law, ownership
Democracy, politics to balance the economy
Investments in human capital
Investments to catch-up
The development of cooperation

24. The world economy 1400-1800 Many powerful regions around 1400:
The Middle East, China, India, Africa, The Americas, Europe
European trade and finance: Italy, Flanders, The Hanseatic League
Trade, production, finance, shareholding
Culture and education, the renaissance
Political stability and rule of law
Sovereign territorial states, state formation
European domination: trade, wars, colonies
Triangular trade
Challenges: Poitiers 732, the Mongols 1241, the Turks at Vienna 1529 and 1683
What was the impact? South America (Spain) vs North America (England)

25. The world economy 1800-1945 The industrial revolution from ca 1750
Mechanized production, the factory system, a labor market
Foreign supply and demand were necessary
Why Britain? Why then? Scientific knowledge, liberal state, naval power
Structural forces, government action or institutions and entrepreneurs?
France, Germany, the US, Japan
Smith: specialization (against the East India Company)
Ricardo: comparative advantage (Box 4.4)
Marx: exploitation
Pax Britannica: similar to the present situation?
The gold standard, capital flows, unilateral free trade 1846
The empire, balance of power , gradually UK vs Germany
Imperialism inevitable?
Interwar economic failure
The League of Nations (Woodrow Wilson): utopian liberalism?

26. The world economy after 1945
The Cold War
Western alliances, multilateralism, ”embedded liberalism” (Ruggie)
Realists: competition brings stability (Carr)
Liberals: self-restraint by the winners is the key to peace (Ikenberry)
But: there are many actors within governments (Allison on the Cuban missile crisis)
The Eastern block
Decolonization in the south: French resistance
South East Asia: NICs
The Post Cold War Era
North: Varieties of capitalism
South: BRICS & Least Developed Countries
Technological change, economy etc.
After Bretton Woods: Unilateralism? Minilateralism? Weaker international organizations?

27. Focus on regulation How is globalization regulated? By whom?
Trade
Finance
Production
Labor, gender
Environment
Development
By whom?
How does it change?

28. Multi-level regulation
By whom?
International organizations: WTO, IMF, UN
Intergovernmental or supranational?
North vs south? Sector vs sector? (epistemic communities)
Regional organizations: EU, Nafta, Asean etc
Specific treaties: Kyoto
Transnational regulation, networks/epistemic communities, private actors
Regulation implemented/transposed by states
Actors:
States?
Politicians: domestic politics: winners vs losers? Institutions, discourses
Bureaucrats: self-interested or idealists? discourses, fashions
NGOs: who is organized?

29. Three possible scenarios for transnational governance: where do the ideas come from?
Source: Djelic & Kleiner 2006
Experts
(OECD)
Statist
(WTO)
Community (ICN)
Rule makers vs rule followers
Separate
Combined
Product of governance process
Standards
Binding rules
Beliefs
Mode, logic of rule making
Expert driven
Political negotiations
Negotiations,
Expert input
Mode, logic of rule monitoring
”Expert awe”
Coercion, constraints
Socialization
+/-
Presupposes legitimacy
Efficient
Easy to start

30. The global governance architecture: are the policies coordinated
The global governance architecture: are the policies coordinated? Yes/no!
Specific regulation of each area (trade, environment etc)
Fragmentation/Specialization, ”silos”
Conflicting goals! Agreement impossible?
Case: Clean tech (environmental protection + economic growth)
Implies competing epistemic communities
Who is invited? Only governments? NGOs?
Are ministries competing or collaborating?
Two-level games to win at home and abroad?
Two dimensions: the sector and the level
Implies that political factors are important in globalization

31. How are conflicting policies (”wicked problems”) implemented in various countries?
Joint projects, if possible (such as clean tech)
Separated (ignored?)
Different organizations, negotiations, decisions by courts?
Integrated, to be dealt with at a lower level
Multipurpose organizations, mainstreaming
Political: Local governments
Civil servants: multipurpose agencies
Synergies? Common values or ambitions?
Decoupling or deliberation (by politicians, civil servants, the public?)
Experimentalist governance?
Focus on particular situations
Key person to make the decision

32. What are the effects of international regulation? An empirical question!
How are the new rules implemented?
Are they implemented, resisted or taken advantage of?
National governments pick and choose
Are the new rules similar to the old ones?
Varities of capitalism: LME vs CME

33. Pressures on national politicians
A race to the bottom, convergence?
Or room for many strategies?
Still, a need to take action proactively
Germany
France

34. Economic development: the most valuable end of globalization?
1. What has happened?
A big success? China and India vs the rest? Asia vs Africa?
New labels: Third World, Global South, Emerging Markets
What is development? How can we measure it?
GNP vs Social objectives, Human Development Index, considers distribution
: Keynesianism, weak and/or corrupt elites, domestic barriers
Redistribution, New International Economic Order, G77, (Cold War context)
NICs: market and state? Exports and protection? Global value chains
Japanese influence, authoritarian states
: Debt crisis, ”Washington Consensus”: structural adjustment, NGOs
Governance, democracy, sustainability, poverty reduction, debt relief, the rise of China and India
MDG 2015, greater emphasis on domestic enabling conditions, coordination
Present interpretation: Internal and external causes are linked

35. The rise and ”stall” of the Washington Consensus (from chapter 13)
: embedded liberalism = state and firms
: the state as problem, the market as solution
Why? The crisis of Keynesianism + an epistemic community = Thatcher, Reagan
Neoliberalism = the implementation of neoclassical economics
Market fundamentalism, neglect of inequality and poverty?
Effects?
Questionable effect: The NICs: success due to the market (or developmental states)?
Failures: Asian crisis 1997: premature liberalization? US crisis: Enron
No effect: Mexico, Argentina, Africa: structural adaptation but crisis or little growth
Was it implemented?
Internal disagreements: shock therapy or gradual change
A variety of implementation: the whole package vs pick and choose
Resistance prevented full implementation
Renewed focus on good governance: rule of law (=state!) How to get it?

36. What has happened, cont’d
Lesson learned?
Asia (NICs, China, India) vs Africa: institutional factors?
Integration in the global economy, value chains
Market and Developmental states
Good governance: authoritarian states
US support during the Cold War
Washington consensus too simple?
Disliked but successful?
Aid is difficult
Taking over vs supporting self-sustaining processes
Where to begin? Good governance? Economic integration?

37. Disagreement about causes and cures
Why are some contries poor?
Exploitation: colonialism
Bad starting position (resources, cheap labor)
Bad policies for catch-up?
Bad governance: colonialism?
Bad support (aid)
The exceptions: the NICs, China, BRIC, (Ireland)
Protectionism vs openness
The developmental state
Washington consensus

38. Economic development, cont’d
2. Are the policies good or bad?
Liberals: Policies have been bad, markets are key, modernization stages, the success of the NICs: exportoriented industrialization (EOI)
Nationalists: Developmental policies are needed (NICs), governance is key, import substitution (ISI), Latin America, NICs too? Confucianism?
Critics: Aim to control the third world, external exploitation, dependency, falling value of exports (terms of trade), vulnerable to external shocks
3. Why have policies changed?
Interests: North vs South? China. A variety of interests.
Abdelal 2007: French socialists + EU drive the liberal agenda & regulation by international organizations
Institutions: The World Bank, UNCTAD, WTO, G77/G20, NGOs
WB: US-dominated, secrecy, bureaucratic politics?
Ideas: Modernization vs dependency, NIEO vs Washington Consensus
4. Where will it lead?
Exploitation or development? Good governance? Will Africa change?

39. The post-2015 UN development agenda (Thematic think piece, 2013)
Aid for trade
External demand can raise incomes and living standards
Support productive capacity and trade-related bottlenecks
Climate change adaptation
Coherence in policy formulation is being sought between the international rules and policies underpinning human rights standards, the trading system and environmental protection efforts
Rio+20: The Future We Want
Green economy, technology transfers to LDCs, exemptions from TRIPS
= using the market to drive change

40. Four deeper investigations: write a paper on one, attend at least two
Glenn, John: Globalization. North-South perspectives, Routledge, 2007
Rudra, Nita: Globalization and the Race to the bottom in developing countries. Who really gets hurt? Cambridge, 2008
Walter, Andrew & Sen, Gautam: Analyzing the Global Political Economy, Princeton, 2009
Williams, David: International development and global politics, Routledge, 2012

41. The regulation of the environment: an end in itself and a restriction on other aims
1. What has happened? Global problems need global solutions?
”The tragedy of the commons”, but what are fair rules for all?
Can they have cars and refrigerators in India?
Environmental problems are cause and effect of other problems
Human-centered environmentalism vs ecologism (light-dark green)
Sustainability means many things: growth as problem or solution?
What should be sustained? Resources, production, living standards in the north and south?
Brundtland Commission: environmental, social and economic sustainability
A restriction and influence on other policies: ”intergenerational equity”
Overconsumption and irresponsible production: North or South? China!
Ecological shadows
Aid projects: environmental assessments, participatory development
Trade as problem or solution? Race to the bottom?

42. The regulation of the environment, cont’d
2. Is it good or bad?
Liberals: Common interests, market solutions such as clean tech, the Kuznets curve, socialist exploitation, regulations open for government failure
Environmental economics: market failure, incentives or regulation
World Bank: Poverty as a root cause
Regulation by the market: eco-labels
Environmental standards: fair competition or unfair limitation on comparative advantage
Nationalists: Cooperation difficult, market failure, environmental standards improve competitiveness
Critics: Power, inequalities, capitalist exploitation
Ecologists: nature in focus, limited resources. Economics irrelevant. A need to add process standards to product standards in the WTO (eco-labels?)

43. The regulation of the environment, cont’d
3. Why has it happened?
Interests:
Environmentalism due to affluence, disasters & end of cold war
Victims & NGOs
Institutions:
International negotiations on climate change: US vs China, India
UN conferences Stockholm 1972, Rio 1992, Johannesburg 2002, Rio 2012
UN Framework Convention on Climate Change, Kyoto Protocol (COP)
IPCC Stern Review 2006: The economics of climate change vs sceptics
Green parties & activists normalized, co-opted, mainstreamed
Domestic regulation, IOs mainstreamed, firms are proactive
Ideas: Scientists and authors form epistemic communities (with ministries, NGOs, researchers): light and dark green
4. Where will it lead? Win-win solutions or conflicts?

44. Globalization is about a new logic of production: transnational production
1. What has happened? A new industrial revolution?
The logic of production has changed (= a structural factor)
From integrated firms to networks: global value chains
Post-fordist production, break-up/networking, outsourcing, collaboration
Changes in technology, transport, management, trust, consumer demand
To be near markets and inputs (cheap and skilled labor, technology, resources)
Nearness, skills, infrastructure rather than low cost (East Asia vs Africa!)
”Foreign Direct Investment” to get control over resources in other countries (vs portfolio investment)
Market-conforming regulation: open, more uniform
Fair competition, no subsidies, no protection?

45. Transnational production, cont’d
2. Is it good or bad?
Liberals: Long-run benefits, opportunities for all
TNCs bring resources, capabilities, taxes, productivity, dynamism, spillovers to local firms, better values. The success of East Asia
Nationalists: Support national champions, control TNCs. Loss of autonomy
Critics: Exploitation of labor and environment (TNC + third world gov’ts)
Transfers in the interest of the firm, avoid paying taxes, foreign rules, political influence
New International Economic Order 70s
An empirical question. Net effects depend on policy.
Gov’t control, technological upgrading? Protect infant industries?
Gov’t weak bargaining position
Attractiveness vs national interest. Changing attitudes
A need for more regulation?

46. Transnational production, cont’d
3. Why has it happened?
Structural factors: Better transport, new technology, global finance, demand
Interests: exporters
Exploit technological comparative advantage (Vernon) or foreign ownership (Dunning)
Oligopolistic business structure (Hymer)
Bigger sales & markets to invest in R&D
Institutions: USA + EU + WTO?
US Policy to support investments in non-communist countries
Policies: cold war, liberalization, Export Processing Zones
Lack of strong owners for American firms, weak unions, weak state?
Ideas: liberalism vs collectivism?
4. Where will it lead?
The competition state: focus on competitiveness
Depends on what the BRICs want?

47. The regulation of trade
1. What has happened? Trade and FDI explosion due to TNCs
Protectionism after WWI, freer trade after WWII
Reduction of tariffs and other barriers (NTB, non-tariff barriers)
”Embedded liberalism” (Ruggie)
Multilateralism: (ITO), GATT and WTO, UNCTAD
GATT principles: Non-discrimination, reciprocity, transparency
But Multifibre Agreement
Later focus on barriers beyond borders = competition policy
No agreements except Bali. Dispute Settlement Mechanism is operative
Regionalism: EU, Nafta etc (building blocs or stumbling blocks?)
Bilateralism: FTAs such as TTIP
Unilateralism: EU open for ”Everything but arms” from LDCs

48. The regulation of trade, cont’d
2. Is it good or bad?
Liberals: Growth for all, especially Asia
Nationalists: Strategic protectionism to protect or to force others
Critics: Exploitation, erosion of old life styles, labor, environment, social policy
Key issues
Comparative advantages, win-win? (Ricardo)
Labor productivity and factor endowments, origins irrelevant
Specialization and dynamic effects for growth, spread of technology
Cheap inputs from abroad and a push to increase productivity
Puzzling intra-industry trade and intra-firm trade
Employment-creating vs employment-displacing effects
Health standards (NTB) used to discriminate against imports
Is modernization good or bad? Effects on the environment?

49. Key issues, cont’d
What is ok to protect and support? (Mercantilists, nationalists)
Infant industries, technology, agriculture, culture
Unequal exchange? Unfair start, freezing status quo, concentration of power
Are critics captured by organized losers? (= the trade policy perspective)
Is the south weak in the WTO?
Doha development round failed
Against new issues, insist on implementation of old agreements
The like-minded group, G20, G90, Cotton-4, The Cairns group
Textiles move to China?
Patents/TRIPS/IPR makes medicine expensive
TRIMS/Investment protection: a necessary limit on governments?
Special and differential treatment not enough?
Legitimacy? A democratic deficit? Intergovernmental!
Transparency, accountability, participation

50. The regulation of trade, cont’d
3. Why has it happened?
Hegemony? Stability and economic interdependence
US policies to support non-communist countries
MNCs & Asia (cheap labor, stable societies) = interests
The development of GATT and breakdown of WTO = institutions
Increasingly difficult to reach agreement
The breakdown of Keynesianism, triumph of Monetarism = ideas
Driven by EU/France (Abelal 2007)
Bureaucratic politics of the WTO and EU?
What is the role of NGOs? (interests vs ideas)
4. Where will it lead?
Are policies implemented?
Increased conflicts?

51. The regulation of labor
1. What has happened?
From national to global division of labor
Gender, race and ethnic patterns vary over time
From mass production/Taylorism/Fordism/mass consumption…
Deskilled, replacable. Today: Call centers
…to flexible work organization/Diversified Quality Production/Post-fordism
Greater variety of skills, the role of teams, Lean production
From human capital to structural capital
Follow scripts/standardized procedures/software
Greater competition. Losers and winners (”project nomads”?)
Deindustrialization, greater ”flexibility”, migration

52. What has happened, cont’d
The rise of China and India: wealth and cheap products, social tensions
Production moved from other Asian countries, few Chinese brands, suppression of unions
Blue-collar jobs in China, white-collar jobs in India. To be Bangalored = outsourced
Workers’ rights: how to regulate firms?
Home state extraterritorial rules
Multilateral rules: WTO/ILO (unnecessary, profit reduction or protectionism?)
Codes of conduct, campaigns, select cases, Global Compact 2000
ILO created because of labor unrest 1919
US labor organizations have become critical of hegemony, used to be supporters
Peasants’ alliances
The Peoples’ Global Action against Free Trade and the WTO (PGA)

53. The regulation of labor, cont’d
2. Is it good or bad?
Liberals: specialization (and trade) drives growth (Smith), better to be poor in a rich country, Increased wealth will lead to higher standards
Nationalists: States must protect strategic sectors, various strategies/niches
Critics: Countries (and women) are depedent/locked-in, begins with European exploitation and protection.
3. Why has it happened?
Interests: US business vs labor & right-wing populism, NGOs, governments
Institutions: WTO is limited, ILO is weak
Ideas: ”Globaliztion demands lower standards”
4. Where will it lead? Who will put pressure on governments?

54. The regulation of gender, socially constructed roles of man/woman
1. What has happened?
IR and IPE are blind to gender, but gender helps understanding the economy:
Economic assumptions overlook important differences
Unpaid work in the home should be made visible
Different rates of participation in the workforce. Insecure work, lower pay
Feminization of poverty: single mothers, larger burden for supporting family
Globalization of reproductive work: prostitution, domestic services, brides
Women work in EPZs: smaller hands, more compliant
Is it better than rural work and the local culture?

55. The regulation of gender, cont’d
2. Is it good or bad?
Liberals: Trade creates jobs for women in manufacturing. Discrimination is a barrier to growth
Nationalists: The state should focus on wealth creation
Critics: Gender is a key axis of power in society, discrimination
3. Why has it happened?
Interests: Feminism as a movement. (Equality of the sexes vs women)
Institutions: UN conferences, normative commitment and institutionalization, International organizations: mainstreamed
Ideas: Feminism vs equality of the sexes
4. Where will it lead?
To change: measure all costs (unpaid reproductive work), equal pay, child care

56. The regulation of knowledge production (part of chapter 13)
1. What has happened?
The knowledge economy: the importance of R&D
Science and technology as drivers for innovations
Universities important sources for ideas and skilled labor: collaboration with firms
Patents encourage diffusion of technology and protects inventor and investor
Should medicine for HIV/AIDS be patented? WTO-TRIPS allows some copies
Knowledge-based services have the highest value
Information technology has many consequences
New organization of work: individual work and the break-up of firms
New solutions in areas like medicine
New markets for leisure products
The digital divide: across generations?
Half-truths, bad history and wishful thinking?

57. The regulation of knowledge production, cont’d
2. Is it good or bad?
Liberals: Entrepreneurs drive change, productivity and competitiveness
Nationalists: Subsidies needed for competitiveness
Critics: Privatization, deregulation, de-unionization, flexible labor markets. Job-less growth. Digital divide.
3. Why has it happened?
Interests: Big firms need input from the universities, which need funding
Institutions: Mission-oriented research councils, tax-deductions
Ideas: Knowledge is a key to competitiveness and a public good
4. Where will it lead? Support for new vs old firms (”lock-in”)

58. The regulation of finance: the monetary system & financial markets
1. What has happened in the monetary system?
Bretton Woods 1944: a need for stability and openness. Keynes
IMF (balance of payments) and IBRD/World Bank (investments for rebuilding)
US funds to buy American goods: the Marshall Plan, military spending, FDI
Organizations owned by the member states: voting rights etc.
Mundell & Fleming dilemma (1960): You can only have two of three
Capital flows/fixed exchange rates/autonomy
Currencies fixed to the dollar, fixed to gold. Adjustments for productivity
Outflow of dollars, more dollars than gold (Triffin dilemma).
Japanese and European currencies undervalued: 1971 floating dollar.
Led to inflation, higher interest rates, more FDI in the US + More domestic spending 80s
1985 G5 Plaza accord to reduce the value of the dollar, 1987 G7 Louvre

59. What has happened, cont’d
A change of paradigm in the 80s
Monetarism, the Washington consensus, deregulation of finance
European integration: the single market, the Euro
EMS (ECU, ERM) to avoid stronger DM & inflation in other countries
1992: Floating currencies in the UK and Sweden
EMU 1992, Euro 2002, ECB, SGP 1997.
OCA? No instrument for adjustment? Devaluation, transfer payments, labor mobility
Dollarization in other countries. Should the Chinese currency float?
The Euro crisis 2009: due to cheaper credit for the PIIGS
Greek debt underreported: 15% rather than 6% of GDP
Solutions: European bonds or reduced budget deficits?

60. What has happened, cont’d
USA and China: a risky relationship
The US spends on imported Chinese goods (Walmart etc.)
China invests in US bonds, the US can have low interest rates & large debt
American overspending: war in Iraq, tax cuts, housing boom
China dependent on exports for employment
The Chinese currency is undervalued
Benefits Chinese firms and American consumers
Difficult for American firms to sell to Chinese customers
More consumption, less investments in the US
Difficult for the US to repay loans
Chinese firms are rich; China needs to invest in pensions, the environment etc

61. What has happened, cont’d
What has happened in the financial system? deregulation, innovation, crises
”Eurocurrency market” = other currencies
New technologies, increasing capital flows
Deregulation from 1974: open to foreigners and other sectors
New instruments such as derivatives: reduced risks or increased betting?
Sovereign wealth funds by governments
Hedge funds: betting?
Pension funds, institutional investors

62. What has happened, cont’d
Third world debt: reinvested profits from oil, to industrialize or buy oil
1979: US higher interest rates to avoid inflation, reduced demand, led to recession
Third world: Higher interest rates and more difficult to sell.
Mexico 1982: Reduced demand for oil, unable to pay loans for industrialization
IMF Structural Adjustment Programs: liberalization, ”Washington Consensus”
NAFTA 1993 locked Mexico into liberal policies
Crises mid 90s Mexico, Thailand: A problem with the countries or the system?
1999 Financial Stability Forum, G20
The crisis in 2008: started in the US: bad regulation, shadow banks
”Ninja loans”, risks passed on to others, hidden risks
Subsidies to the banks, ”lender of last resort” = moral hazard
Stronger role for G20 and IMF. The dollar questioned as reserve currency

63. Financial deregulation and the crisis 2008 (from chapter 13)
Why crisis?
Too little regulation or badly executed?
Too rationalistic mathematical trading models? Bad economics?
Why deregulation and more risk-taking by the banks?
Galbraith: fading memory of 1929
Deregulation is a powerful idea
The financial community is a political actor for personal gain
Capture: over the long-term and at key events
Bad governments or bad markets?

64. Table 1.1 Interpretations of the Asian financial crisis
Liberal
Nationalist
Critical
Causes
State capitalism,
Lack of transparency
Overrapid liberalization
Lack of regulation
Power of financial interests, systemic flaws
Key issie(s)
Corruption,
lack of liberal practices
Clash of Anglo-American vs Asian values
Human suffering due to financial collapse
Lessons
Increase transparency and good practice in developing countries
Limit financial speculation through state policies
Reform international financial system, defend national system

65. The regulation of finance, cont’d
2. Is it good or bad?
Liberals: Long-run growth, fiscal discipline reduces excess spending, makes it more difficult for governments to avoid fundamental problems
Nationalists: Loss of autonomy/democracy
Critics: Need to slow down (Tobin tax), Instability, inequality, costs shifted to taxpayers/the public
3. Why has it happened?
Hegemony? The role of the US (Bretton Woods, Washington Consensus)
Bureaucratic politics at IMF?
Interests: Investors, US, EU
Institutions: unable to handle crises
Ideas: Monetarism, political integration
4. Where will it lead? Regulation increases moral hazard?

66. The regulation of security (hegemony): more important than the economy?
1. What has happened?
US economic policy to further foreign policy goals at some times (high politics)
From Cold War bipolarity and military-industrial complex, to new perspectives
From states to individuals, from military to social issues, states are problems
Epistemic communities!
Humanitarian intervention and intervention in domestic conflict, R2P
Failed states, local warlords funded by valuable resources such as ”conflict minerals” for computers etc.
Global terrorism: marginalized fanatics with economic needs? (”human security”)
Clash of civilizations? War on terror: impacts?
Economic statecraft: Aid (carrots, conditionality) and sanctions (sticks)
Impact is dependent on the context and the clarity of the motives. Humanitarian effects.
Economic sanctions: Is it best to isolate or to boost interdependence?
Transnational crime: Latin America, Europe
Pandemics, viruses such as HIV/AIDS: WHO

67. The regulation of security, cont’d
2. Is it good or bad?
Liberals: Militarists & pacifists, economic interdependence and trade make peace
Nationalists: Industrial strength important for military strength. Defence procurement
Critics: Economic interests and power politics. Structural violence.
3. Why has it happened?
Interests: The military-industrial complex? Economy? Fanatics?
Institutions: NATO weak? WHO? Difficult to fund developmental aid?
Ideas: Traditional security vs human security
4. Where will it lead? Rebuilding of Iraq, Afghanistan?

68. The regulation of global governance, the system of world order
1. What has happened?
The whithering of states? Still the only legitimate representative of the people? NGOs, International organizations
From welfare to competition state, from national to international economy
Attractiveness to TNCs
The ”national security state”
From US hegemony to the BRICS
Major rules and organizations only change after wars. The post-WWII order
Governance/regimes: Multi-level, multi-actor
States create international organizations, which force states to comply (WTO, IMF) or influence them (ILO, OECD). WTO vs ILO (States in a Prisoners’ Dilemma)
Structural power: by whom? TNCs, business organizations? NGOs, Global civil society? ”Uncivil groups”, ”the covert world”. A variety of interests in each category!
Transnational networks too! (”private authority”) The UN Global compact 2000

69. The regulation of global governance, cont’d
2. Is it good or bad?
Liberals: Some global regulation is needed to protect the rule of law
Nationalists: Intergovernmental arrangements are acceptable
Critics: Global democracy is desirable but not feasible
3. Why has it happened?
Interests: Firms and politicians take initiatives, NGOs
Institutions: Intergovernmental organizations only change by consensus
Ideas: Democracy can only be national vs must be global

70. The regulation of global governance, cont’d
4. Where will it lead? Challenges:
Development and growth:
Material and social investments needed. Power and resources to the poor.
Environmental impact? Lack of coordination. The role of financial crises
Equality and justice (fairness or redistribution?):
Better or worse with globalization? (Asia vs Africa?) Winners and losers: right-wing populism
The fair trade movement: resource prices and labor standards
”Make poverty history”: against northern protectionism etc.
Democracy and regulation:
Are the IMF and other IOs undermining national democracy? (Why national debts?)
Should IOs be reorganized? More open to stakeholders?
Coleman & Porter (2000): Six criteria to judge the degree of democracy surrounding a regime/organization: transparency, openness to direct participation, quality of discourse, representation, effectiveness and fairness
Is supranational democray better than intergovernmental?
Is overlapping regulation good or bad? Lack of accountability vs pressures on governments

71. Conclusions What have we learned? Where will it lead?
The three paradigms help us understand positions
Conflict or win-win situation? Development + environment + the north?
Where will it lead?
Structural change will continue
International and domestic politics
Interests: winners vs losers? A variety of background characteristics
Ideas: liberals, nationalists and critics
Institutions: structures the conflict!
Epistemic communities build coalitions based on a story/interpretation