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631. The Limits of Offshore Balancing

Author:
Dr. Hal Brands
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
The Strategic Studies Institute of the U.S. Army War College
Abstract:
Is offshore balancing the right grand strategy for America? Is it time for Washington to roll back the vast system of overseas security commitments and forward military deployments that have anchored its international posture since World War II? This monograph argues that the answer to these questions is no. Offshore balancing represents the preferred grand strategy among many leading international-relations “realists,” who argue that significant geopolitical retrenchment can actually improve America’s strategic position while slashing the costs of its foreign policy. The reality, however, is rather different. The probable benefits of offshore balancing—both financial and geopolitical—are frequently exaggerated, while the likely disadvantages and dangers are more severe than its proponents acknowledge. In all likelihood, adopting this strategy would not allow America to achieve more security and influence at a lower price. The more plausible results would be to dissipate U.S. influence, to court heightened insecurity and instability, and to expose the nation to greater long-range risks and costs.
Topic:
Economics, International Security, and Geopolitics
Political Geography:
United States of America

632. China’s Rise and Reconfiguration of Central Asia’s Geopolitics: A Case for U.S. "Pivot" to Eurasia

Author:
Roman Muzalevsky
Publication Date:
07-2015
Content Type:
Working Paper
Institution:
The Strategic Studies Institute of the U.S. Army War College
Abstract:
China’s emergence as a global actor has questioned the position of the United States as the strongest power and the future of the Washington-led global order. To achieve the status of a truly global player wielding influence in all dimensions of power would require China to leverage its regional influence in Central Asia. This region is increasingly representing China’s western leg of economic expansion and development, and is of a growing strategic importance for Beijing. It is also a region that should be of greater strategic importance to Washington, which seeks to preserve its leading position in the international system and ensure China’s peaceful integration in the global political, security, and economic architecture.
Topic:
Economics, International Cooperation, International Trade and Finance, Hegemony, Global Markets, and Global Security
Political Geography:
China, Eurasia, and Asia

633. Constructing Quality: Producer Power, Market Organization, and the Politics of High Value-Added Markets.

Author:
Elizabeth Carter
Publication Date:
12-2015
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Economists assume increased producer flexibility creates production advantages. So why do inefficient French quality wine producers dominate their flexible, efficient Italian counterparts? French AOC wine producers created “corporatist” producer organizations which served three purposes: encouraged increased product quality information across the supply chain; allowed for the emergence of a unique production style; and enabled producers to define their production methods as “quality” via state regulation. Italian DOC wine producers have fragmented political structures at both the regional and national levels, causing producers to rely more on the price mechanism and less on political structures to coordinate supply chain transactions. Market asymmetries persist across the supply chain, making it difficult for producers to guarantee quality and adversely shaping their potential production and brand strategies. Solving supply chain problems through representative political institutions yields superior economic outcomes than uncoordinated market transactions because the former corrects market power asymmetries.
Topic:
Economics, International Trade and Finance, Markets, Politics, and Regulation
Political Geography:
France, Italy, and Global Focus

634. Quality of Government and the Relationship between Natural Disasters and Child Poverty: A Comparative Analysis.

Author:
Adel Daoud, Bjorn Hallerod, and Debarati Guha Sapir
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper explores the degree to which exposure to reoccurring natural disasters of various kinds explains seven dimensions of severe child poverty in 67 middle- and low-income countries. It also analyzes how certain institutional conditions, namely the quality of government (QoG), have moderating effects on the relationship between disasters and child poverty. Two main hypotheses are tested. The first is that disasters do have an adverse average effect on severe poverty. The second is that disasters reveal a positive coefficient (i.e., more disasters, more deprivation) but that higher levels of QoG negatively moderate this effect, i.e., the adverse effect of disasters is diminished by increasingly high QoG levels. From 70 possible combinations of relationships (7 types of deprivation combined with 10 types of natural disaster measures), 11 have the expected correlation between disasters and child deprivation and only one has the expected interactive correlation between quality of government, disasters, and child poverty. Several unexpected results could also be observed which are discussed in the paper along with recommendations for future research.
Topic:
Economics, Natural Disasters, Governance, Research, and Child Poverty
Political Geography:
Global Focus

635. The Enduring Importance of Family Wealth: Evidence from the Forbes 400, 1982 to 2013

Author:
Philip Korom, Mark Lutter, and Jens Beckert
Publication Date:
12-2015
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The social science literature proposes two competing explanatory frameworks for the existence and longevity of super-fortunes: superstar or winner-take-all mechanisms, suggesting an increased dominance of new self-made billionaires; and mechanisms focusing on inherited advantages, suggesting an enduring importance of old family fortunes. Using panel data from the USA’s annual Forbes 400 ranking (1982–2013), this study analyzes factors that increase or decrease the likelihood of remaining listed among the American super-rich. We find initially that the percentages of self-made entrepreneurs among the highest wealth echelons of US society have increased significantly since 1982. Sectors that improved the most are finance (including hedge funds and private equity), new technology and mass retail. The decline of inheritance as a source of wealth and the rise of new tech and finance fortunes suggest low reproduction rates among superrich property owners. Family wealth, however, plays an important role if the longevity of fortunes is considered. While the literature predicts family fortunes to be taxed away, divided among a large number of heirs, or lost through incompetence, we find that scions of inherited great wealth (mostly up to the third generation) are more likely to remain listed in the Forbes 400 roster than self-made entrepreneurs. We conclude that even though entrepreneurship increasingly matters for becoming super-rich, it is first and foremost the ability of rich family dynasties to retain control over corporations and to access sophisticated financial advice that makes fortunes last.
Topic:
Economics, Science and Technology, Social Stratification, and Landpower
Political Geography:
United States of America

636. Players and New Rules of the Game Politics as Organized Combat: New in Sweden.

Author:
Stefan Svallfors
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
As Hacker and Pierson (2010) have observed, politics is primarily organization: “organized combat.” To understand the outcomes of politics, we have to look at how it is organized over time: by whom and with what resources? I take Sweden as an example of how politics as organized combat has changed quite dramatically in recent decades. Sweden is often cited as an opposite to the United States among the rich capitalist countries, but it has experienced many encompassing policy changes which have not received the attention they deserve. The paper specifies how Swedish organized politics has changed fundamentally, including the dismantling of corporatist arrangements, changes in the economic policy decision-making framework, increased income inequality, weakened political parties and changes in their social bases, the decline of blue-collar union strength, the growth of the policy professionals category, the increased impact of multilevel politics, and the mediatization of politics. Today’s amorphous, invisible mode of elite-driven policy-making diverges greatly from the old corporatist structures and is accompanied by dramatically increasing inequality. Even in Sweden, the impact of money on politics has become stronger. The paper discusses what this implies for current politics and policy-making in Sweden.
Topic:
Economics, Politics, and Labor Issues
Political Geography:
Sweden and United States of America

637. IN3 - Incubating a New Spain through the Promotion of Entrepreneurship

Author:
James Costos
Publication Date:
09-2015
Content Type:
Journal Article
Journal:
The Ambassador's Review
Institution:
Council of American Ambassadors
Abstract:
Helping entrepreneurs grow their businesses and achieve their full potential is in the interest of anyone who wants to foster prosperity worldwide—that’s why it’s an Obama administration priority. Growth anywhere does some good everywhere, and the fact is that entrepreneurs create jobs and drive economic growth both at home and abroad. In the United States, 40 percent of our $17 trillion economy is generated by companies that did not even exist 20 years ago. Two-thirds of our 65 months of consecutive job growth is driven by small businesses. The owners of those businesses—28 million and growing—employ over half of America’s workforce. As our missions work to expand the global economic recovery, one of the most effective tools we have at our disposal is the promotion of entrepreneurship—a quintessential American value. By deepening the connections between the entrepreneurial ecosystems of the United States and our partners overseas, we can grow our economies, create jobs, and support businesses that will have lasting impact and create prosperity. The good news is that this is easy to do, because the world is more interconnected than ever before. We benefit from unprecedented opportunities to help entrepreneurs access the capital, resources, and networks they need to succeed. We also have the strong support and leader­ship of President Obama, who is personally committed to promoting entrepreneurship worldwide. Spain is a country with a strong and growing entrepreneurial spirit, a plethora of talent, and solid business networks. Although it is starting to emerge from economic crisis, there is still much work to be done to ensure Spain’s continued recovery. The United States Mission is doing its part to consolidate the country’s economic progress by helping a new generation of entrepreneurs achieve their full potential, and generate jobs and eco­nomic growth. We have established a strong partnership with TeamLabs, an organization that teaches the concept of entrepreneurship and engages with thousands of high school students across all regions of Spain. We have produced animated videos for youth called You®Company which tell real life stories of Spanish and US entrepreneurs while exploring the values of motivation, innovation, corporate social responsibility, failure, and critical thinking. We have also organized an Alumni Mentoring Program that we use to link up business leaders, prominent entrepreneurs, and alumni of United States Embassy exchange programs to coach aspiring entrepreneurs and help them build their network of contacts. This past June, we took our entrepreneurship programs to a new level with the launch of IN3 (IN-cubed)—Innovators, Investors, and Institutions—in partnership with Google and Chamberi Valley, a Spanish entrepreneurship association. Aimed at promoting entre­preneur­ship and investment in Spain, IN3 was the first community event hosted at Campus Madrid, one of only a handful of Google spaces around the world where entrepre­neurs can learn, connect, and build companies that will change the world. In August 2015, the International Monetary Fund released a report stating that Spain has more obstacles to entrepreneurship than any other European country. IN3 directly addressed these challenges by bringing together Spanish and American innovators, investors, and institutions to discuss common challenges and solutions for scaling-up interna­tional companies. The event provided Spanish entrepreneurs the opportunity to hear from leading US counterparts and tech investors on how to overcome institutional and investment challenges that inhibit business growth. It also offered US entrepreneurs the chance to explore areas of potential collaboration with their Spanish counterparts and learn from their experiences expanding into other European and Latin American markets. It provided a forum where entrepreneurs and policymakers exchanged ideas on the best ways to promote the creation of new businesses and help successful companies grow. Finally, it allowed US and Spanish innovators the opportunity to discuss their experiences with senior Spanish government officials. Through these interactions, IN3 helped to equip entrepre­neurs with the tools they need to overcome the challenges of expanding their businesses—from finance, to mentorship, to regulations. I was honored to be joined at IN3 by the Administrator of the United States Small Business Administration Maria Contreras-Sweet, Google Executive Chairman Eric Schmidt, His Majesty King Felipe VI of Spain, and leaders from the Spanish government. With their support, we elevated the importance of entrepreneurship and the crucial role entrepreneurs play in driving growth and creating jobs in Spain. Our message reached an audience of 53 million people in Spain through local media exposure, another 3.25 million on Twitter, and became a top-trending topic on US social media. Not only did the conference promote entrepreneurship and bilateral investment opportunities to a diverse audience, but IN3 generated real investment and new business growth for Spanish and US firms. For example, Opinno, the consulting and events firm that produced IN3, established new ties with US design thinking firms and academic institutions and plans to partner with these organizations to propel their international expansion. Several new investments were made in small and medium-sized Spanish companies, totaling hundreds of thousands of dollars, and the Embassy continues to hear of additional business sparked by the conference.
Topic:
Economics, Entrepreneurship, Recovery, and IMF
Political Geography:
United States, Europe, Spain, and North America

638. Engaging the Swiss on Apprenticeships: Economic Diplomacy with Results Back Home

Author:
Susan G. LeVine
Publication Date:
09-2015
Content Type:
Journal Article
Journal:
The Ambassador's Review
Institution:
Council of American Ambassadors
Abstract:
One of the core priorities for the State Department and for the Obama administration overall is shared prosperity because, as Secretary Kerry frequently points out, “Economic policy is foreign policy.” The United States firmly believes that, by growing bilateral economic ties, the United States as well as the host country will prosper. The metrics around our economic relationship with Switzerland are a perfect example of that: Switzerland is one of the top ten foreign direct investors in the United States and number one in research and development; the United States has been the largest growth market for Swiss exports over the past five years; and Swiss companies generate almost half a million jobs in the United States—really great jobs with an average salary of $100,000 per year. With those ties in mind, I set out to meet with Swiss companies of all kinds to understand how they do business in Switzerland and how to deepen their investment in the United States. What I learned in the course of that exploration will, I believe, profoundly and positively affect both countries economically, and also have a positive effect on the world.
Topic:
Foreign Policy, Diplomacy, Economics, Economic Cooperation, and Job Creation
Political Geography:
United States, Europe, Switzerland, and North America

639. Economic Recovery in Somalia

Author:
Timothy Wilson
Publication Date:
01-2015
Content Type:
Journal Article
Journal:
Bildhaan: An International Journal of Somali Studies
Institution:
Macalester College
Abstract:
There were high hopes for a brighter future. After more than two decades of conflict, political uncertainty, multiple droughts and Soma- lia’s worst famine in sixty years, the landscape began to change. The Federal Government lost its transitional status and became officially of State, John Kerry. It appeared that the recovery was not just political. Economic for- tunes were improving as well. Trading activity began to increase again. Shops reopened, rising numbers of diaspora started return- ing and investment firms began opening in Mogadishu. The national post service resumed operations. The Central Bank Act was passed, which simultaneously gave the institution a stronger mandate as well 3 as preclude it from lending to the Government. A veritable construc- tion boom kicked off in Mogadishu, the city received its first ATM cash machine and in June 2015, an agreement between MasterCard and a Somali bank launched the first ever domestic issuance of debit cards. The Wall Street Journal wrote of ‘glimmers of hope’4 while Afri- can Development Bank wrote of a ‘turning point’ due to the ‘positive political and security developments as well as the commitment of the international community.’5 Emerging from the clamour of countless conferences, consultations, summits and high-level meetings, a belief was emerging that this time, something was different. This time, Soma- lia was recovering. Or was it? What turn did Somalia take? As the Federal Government approaches its fifth year, new developments have raised concern over the trajectory and pace of progress. The Prime Minister was dismissed by a no-confidence motion in December 2014. The new Prime Minister, Mr Omar Abdirashid Ali Sharmake, took three attempts to success- fully appoint a new cabinet endorsed by parliament. Concerns about corruption have threatened the steady flow of development finance. High profile attacks by Al Shabaab, both within Somalia and beyond, have raised questions about whether the organisation can be con- tained. Meanwhile, instability in Yemen has led to large numbers of refugees arriving into Somalia. It seems timely, therefore, to reassess the pace of progress and trajectory of recovery in Somalia. More than that, it is essential to examine whether economic recovery is occurring at the same pace and align- ment with political and social recovery. If this is not the case, as we will argue, peace-building gains may be temporary. The roots of conflict are grown in the fertile soil of economic desperation. The contribution of this article is to provide an overview of economic recovery in Somalia that is largely absent from the academic litera- ture. We collate and summarise the most recent quantitative statistics available and match these against qualitative information, including government reports and economic analysis. Our primary conclusion is a positive one; for the first time in more than two decades, Soma- lia’s economy is finally beginning to recover. Growth has returned. New market opportunities are being generated. The trade structure is diversifying and confidence is rising among investors, the diaspora and donors. To be clear, this trajectory is fragile. Political uncertainties and the looming arrival of oil exploration are threats that we discuss in this regard. Nonetheless, our primary thesis is that the five years since the establishment of the Federal Government has been, on balance, a positive period for economic reconstruction in Somalia. Our paper is structured as follows. We first make the case for the importance of economic development despite the massive social and political challenges that prevail in Somalia. We then outline the path- way to recovery that has been delineated by the Federal Government. We assess progress along this route and then identify some of the major threats to further progress.
Topic:
Economics, International Trade and Finance, Foreign Direct Investment, and Recovery
Political Geography:
Africa and Somalia

640. The Economic Impact of Huawei in the UK

Author:
Oxford Economics
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
In September 2012, Huawei commited to spending £1.3 billion in the UK. Almost three years later, the global information and communications leader is well on its way to doing just that—and with vast social and economic significance. In this report, Oxford Economics explores the contribution of Huawei to the UK economy over the three years 2012-2014, and assesses the company’s recent UK expenditure record over the five years 2013-2017, split equally between investment and procurement.
Topic:
Economics, Communications, and Investment
Political Geography:
United Kingdom and Europe