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1021. The Case for a New International Monetary System

Author:
Judy Shelton
Publication Date:
06-2018
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
How often do we hear references to the notion that we live in a rules-based global trading system? Addressing the World Economic Forum at Davos in January 2017, British Prime Minister Theresa May praised liberalism, free trade, and globalization as “the forces that underpin the rules-based international system that is key to our global prosperity and security” (Martin 2017). Chinese President Xi Jinping likewise extolled the virtues of a rules-based economic order at Davos, winning widespread praise for defending free trade and globalization (Fidler, Chen, and Wei 2017). But could someone please explain: What exactly are those rules? Because if we are going to invoke the sentimentality of Bretton Woods by suggesting that the world has remained true to its precepts, we are ignoring geopolitical reality. Moreover, we are denying the warped economic consequences of global trade conducted in the absence of orderly currency arrangements. We have not had a rules-based international monetary system since President Nixon ended the Bretton Woods agreement in August 1971. Today there are compelling reasons—political, economic, and strategic—for President Trump to initiate the establishment of a new international monetary system.
Topic:
Economics, International Cooperation, and Monetary Policy
Political Geography:
Global Focus

1022. Toward a Rules‐​Based International Monetary System

Author:
John B. Taylor
Publication Date:
06-2018
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Over the past few years I have been making the case for moving toward a more rules-based international monetary system (e.g., Taylor 2013, 2014, 2015, 2016a, 2016b, 2017). In fact, I made the case over 30 years ago in Taylor (1985), and the ideas go back over 30 years before that to Milton Friedman (1953). However, the case for such a system is now much stronger because the monetary system drifted away from a rules-based approach in the past dozen years and, as Paul Volcker (2014) reminds us, the absence of a rulesbased monetary system “has not been a great success.” To bring recent experience to bear on the case, we must recognize that central banks have been using two separate monetary policy instruments in recent years: the policy interest rate and the size of the balance sheet, in which reserve balances play a key role. Any international monetary modeling framework used to assess or to make recommendations about international monetary policy must include both instruments in each country, the policy for changing the instruments, and the effect of these changes on exchange rates. Using such a framework, I show that both policy instruments have deviated from rules-based policy in recent years. I then draw the policy implications for the international monetary system and suggest a way forward to implement the policy.
Topic:
International Cooperation, International Trade and Finance, Monetary Policy, and Central Bank
Political Geography:
Global Focus

1023. Extending the Economic Freedom of the World Index to the Cold War Era

Author:
Ryan Murphy and Robert A. Lawson
Publication Date:
01-2018
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This article uses newly gathered and available data and autoregressive methods to create an economic freedom index for the 1950s and 1960s for up to 95 countries. The resulting index allows not only for a longer time series but also for a larger sample of countries than has been previously available.
Topic:
Economics, History, and Economic growth
Political Geography:
Global Focus

1024. Monetary Policy in an Uncertain World: The Case for Rules

Author:
James A. Dorn
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Since monetary policy operates in an uncertain world, discretionary policymaking relying on macroeconomic models of the economy is a weak reed upon which to base policy. The complexity of economic systems and constant changes in the underlying data mean errors may occur in a discretionary regime that can lead to monetary and financial instability.1 The 2008 financial crisis is a case in point: central bankers and their expert staffs failed to anticipate the crisis, and may have worsened it by keeping policy rates too low for too long (Taylor 2012). Moving to a rules‐​based regime would not eliminate radical uncertainty, but it could decrease institutional uncertainty—or what Robert Higgs (1997) has called “regime uncertainty”—and thus reduce the frequency of policy errors. Higgs focused on the uncertainty caused by fiscal and regulatory policies that attenuated private property rights by decreasing expected returns on capital. A discretionary monetary regime increases uncertainty about the future purchasing power of money and thereby undermines an important property right.
Topic:
Economics, Monetary Policy, Economic structure, and Macroeconomics
Political Geography:
Global Focus

1025. Disrupted: The Post-Colonial Issue

Author:
Katie Washington
Publication Date:
07-2018
Content Type:
Special Report
Institution:
Centre for Feminist Foreign Policy
Abstract:
The aim of this journal is to disrupt the ‘single-story’ of mainstream foreign policy. Through highlighting both experienced and emerging voices from across the globe, we seek to understand, challenge, and critique foreign policy. This issue focuses on the theme of post-colonialism and foreign policy, which was chosen by our members and supporters. Through a post-colonial analytical lens, our contributors challenge the unquestioned objectivity of elitist, Western-centric foreign policy, and unpack the complex connections between gender, race, ethnicity, sexuality that are embedded in the everyday actions and politics of people from across the world. Alongside our written contributions, you will find artwork and poetry engaging with this theme. A feminist foreign policy brings all voices to the table, through whichever medium they choose to express themselves, challenging the academic and un-inclusive paradigm it is embedded in. Thank you for supporting this publication. CFFP is a non-profit volunteer-run organisation and we are proud to lead the way in making foreign policy more feminist, more transparent, and more intersectional. With your support, we’re amplifying a different and more nuanced conversation that can better inform policy decisions and begin to alleviate global inequality. We hope you enjoy and learn from this journal, but we also encourage you to consider contributing to our next issue. From articles to artwork, we are always looking for new contributors and we are eager to hear (and see) new voices and fresh perspectives.
Topic:
Foreign Policy, Gender Issues, Post Colonialism, Political Theory, Women, Feminism, LGBT+, and Indigenous
Political Geography:
Global Focus

1026. Financialization, Trade, and Investment Agreements: Through the Looking Glass or Through the Realities of Income Distribution and Government Policy?

Author:
Alex Izurieta, Pierre Kohler, and Juan Pizarro
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
This paper assesses the effects of trade and investment agreements on income distribution and government policy. The critical process underpinning these effects is the rise of ‘financialization’. Global patterns of greater financialization and of worsening functional income distribution as well as tighter fiscal stances are identified in the data. Tests are conducted by combining financial statistics with databases of bilateral investment agreements and free trade agreements, as well as data generated by the UN Global Policy Model that encompasses several fiscal policy instruments. The empirical validation of these relationships brings to the fore the policy-oriented debate about the purported benefits of modern-era ‘comprehensive’ trade and investment agreements such as TTIP, TTP and CETA. The authors corroborate the findings of their respective earlier studies of these agreements and reiterate their call for caution. To preserve policy space and to avert increases of inequality, policy-makers should resist pressures to get their economies locked in such agreements and should look instead for sustainable forms of international policy coordination.
Topic:
International Cooperation, United Nations, Investment, and Trade
Political Geography:
Global Focus

1027. Do Trade and Investment (Agreements) Foster Development or Inequality?

Author:
Pierre Kohler and Francis Cripps
Publication Date:
10-2018
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
This paper proposes to revisit the debate on trade and investment agreements (TIAs), development and inequality, looking at the role of Global Value Chains (GVCs) and trans- national corporations (TNCs). It first presents stylized facts about trade and investment (agreements), declining global economic growth and rising inequality under the latest round of globalization. It then provides a long-run perspective on the mixed blessings of external opening, summarizing some key contributions of the mainstream literature, which are converging with long-standing research findings of more heterodox economists, and the eroding consensus today. Based on this stock-taking, it takes a fresh critical look at the TIAs-GVCs-TNCs nexus and their impact. Using data on value-added in trade and new firm-level data from the consolidated financial statements of the top 2000 TNCs going back to 1995, it examines whether the fragmentation of production along GVCs led to positive structural change or rather stimulated unsustainable trends in extractive and FIRE sectors. It then turns to the role of TNC-driven GVCs as a vehicle for economic concentration. Finally, it presents evidence linking TIAs and their correlates to rising inequality. Key findings include the fact that the ratio of top 2000 TNCs profits over revenues increased by 58 percent between 1995 and 2015. Moreover, the rise in top 2000 TNCs profits accounts for 69 percent of the 2.5 percentage points decline in the global labour income share between 1995 and 2015, with the correlation coefficient between annual changes in both variables as high as 0.82. The paper concludes by calling for a less ideological policy debate on TIAs, which acknowledges the mixed blessings of external financial and trade opening, especially their negative distributional impact and destabilizing macro-financial feedback effects, which both call for policy intervention. As an alternative to short-sighted protectionism, it further discusses possible options for anticipating undesirable effects arising from TIAs (e.g. rising carbon emissions, economic instability, inequality, etc.) and addressing those in TIAs themselves.
Topic:
Inequality, Investment, Trade, and transnationalism
Political Geography:
Global Focus

1028. Industrial Policy 4.0 Promoting Transformation in the Digital Economy

Author:
Padmashree Gehl Sampath
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
The rise of the fourth industrial revolution (IR) is deeply embedded in a wider context of privatization of knowledge, rising costs of innovation and uneven distribution of capacity between countries. But debates on a ‘balanced’ policy framework to tackle these issues have until now floundered to address some of the fundamental dilemmas of our times. Will the fourth IR render the manufacturing-led model of economic development a thing of the past? Are there new boundaries for innovation and industry in the fourth IR? What should policy do in such an uncertain technological era? This paper addresses these crucial questions and makes a case for comprehensive digital industrial policies that are differentiated and rooted in the broader reality of development and globalization in the fourth IR. The paper maps the new boundaries for innovation and industrialization, after which, it elaborates in detail the market and institution failures in the platform economy that arise from the highly complex nature of technological change and a lack of effective policy oversight. It offers evidence to the effect that although manufacturing as we knew it – with its effects on low and unskilled labour and employment creation - might not continue to exist, it will continue to thrive using high technology skills and R&D, within a new model of industrialization where the knowledge-component of all sectors – agriculture, manufacturing and services – will be on the rise. Countries therefore, need a more nuanced and differentiated industrial policy 4.0 framework that can: (a) sustain overall industrial performance, (b) in a way that helps close the gap to the frontier in a constantly evolving technological landscape, (c) while mitigating the adverse consequences for society, in terms of employment, privacy and latent social fabric. The paper proposes the components of such an industrial policy 4.0 in detail in its concluding section.
Topic:
Industrial Policy, Science and Technology, Employment, and Digital Economy
Political Geography:
Global Focus

1029. Peace-building and State-building from the Perspective of the Historical Development of International Society

Author:
Hideaki Shinoda
Publication Date:
01-2018
Content Type:
Journal Article
Journal:
International Relations of the Asia-Pacific
Institution:
Japan Association of International Relations
Abstract:
This article examines the relationship between post-conflict peace-building and state-building. In so doing, the article illustrates the process of the expansion and transformation of “world international society”. By comparing the process of the formation of sovereign states in modern Europe and state-building activities in post-conflict societies in the contemporary world, the article seeks to identify dilemmas of peace-building through state-building. First, it describes the dilemma at the level of overall international order concerning world international society and regional discrepancies of peace-building through state-building. Second, it also highlights the dilemma at the level of state-building policies concerning the concentration of power and the limitation of concentrated power. Third, it illustrates the dilemma concerning liberal peace-building and local ownership. Then, the article argues that post-conflict state-building needs to be understood in the context of the long-term state-building process.
Topic:
International Relations, Peace, and State Building
Political Geography:
Asia-Pacific and Global Focus

1030. Global Issues and Business in International Relations: Intellectual Property Rights and Access to Medicines

Author:
Yoshiko Kojo
Publication Date:
01-2018
Content Type:
Journal Article
Journal:
International Relations of the Asia-Pacific
Institution:
Japan Association of International Relations
Abstract:
In international relations, globalization transfers the location of governance from nation-states laterally to such private actors as nongovernmental organizations (NGOs) and multinational firms, as well as vertically to local governments and supranational organizations. The purpose of this article is to clarify how the competitions among firms affect the problem of global issues by examining the case of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) and public health. This study shows why most of least developed countries implemented the TRIPS despite the warning of NGOs not to implement earlier for the sake of access to medicines. In order to understand the positive attitude of least developed countries toward the TRIPS, we have to examine how the distribution of pharmaceutical firms capacities in developing countries affect the implementation of the TRIPS Agreement. The existence and different capacities of generic pharmaceutical companies in developing companies are important elements of state policy toward the TRIPS.
Topic:
International Relations, Globalization, International Trade and Finance, Intellectual Property/Copyright, Business, and Medicine
Political Geography:
Global Focus