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251. Arms Away

Author:
Ethan B. Kapstein and Jonathan Caverley
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
For two decades, the United States has dominated the global arms trade, reaping a broad range of economic and geopolitical benefits in the process. But shortsighted decisions to produce expensive, cutting-edge weapons systems, rather than cheaper, more practical ones, are squandering this monopoly and letting other countries get into the market.
Topic:
Markets
Political Geography:
United States

252. Antiproliferation: Tackling Proliferation by Engaging the Private Sector

Author:
Ian J. Stewart
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
This paper exploits the concept of antiproliferation to analyze the potential for mobilizing the private sector in countering the proliferation of weapons of mass destruction. Illicit trade from the international marketplace plays a direct role in sustaining the nuclear and missile programs of several countries, including Iran, in defiance of UN sanctions. These programs also profit indirectly from trade-enabling services, such as insurance, financing, and shipping. It is argued that almost all firms will work to avoid direct involvement with proliferation for a variety of reasons, but that firms often lack the systems, expertise, and information required to identify illicit proliferation-related trade.
Topic:
Arms Control and Proliferation, International Trade and Finance, Markets, Nuclear Weapons, United Nations, Weapons of Mass Destruction, and Sanctions

253. The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

Author:
Robert N. Stavins and Richard Schmalensee
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system's cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.
Topic:
Climate Change, Environment, Government, Markets, Treaties and Agreements, and Law

254. Oil: The Next Revolution: The Unprecedented Upsurge of Oil Production Capacity and What It Means for the World

Author:
Leonardo Maugeri
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.
Topic:
Economics, Industrial Policy, Markets, and Oil

255. Drivers of Strategic Contestation in South America

Author:
Daniel Flemes and Leslie Wehner
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
The politics of contestation on the part of secondary regional powers such as Argentina, Chile, Colombia and Venezuela towards Brazil as the regional leader oscillate between competition and cooperation, inasmuch as the South American region has one regional power and is a zone of negative peace without aggressive rivalries. The secondary powers use different tactics, which constitute their respective foreign policy strategies, to soft balance Brazil. These tactics include alliance building, entangling diplomacy, binding, and omni‐enmeshment. This paper identifies, first, the specific drivers of contestation towards Brazil and, second, why the secondary powers' foreign policy strategies vary in how they directly or indirectly contest the rise of Brazil at the regional and international levels. The paper demonstrates that in a regional order such as that of South America, which is characterized by relative stability, domestic drivers of contestation are key to explaining secondary powers' varied strategic responses to the regional power.
Topic:
Development, Emerging Markets, Globalization, International Trade and Finance, Markets, Regional Cooperation, and Foreign Direct Investment
Political Geography:
Japan and South America

256. Does the Sun Shine Really Shine on the Financial Markets?

Author:
Manfred Fruehwirth and Leopold Sögner
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
After a series of papers has provided { partially ambiguous { results on the impact of weather variables on stock (index) returns, this article studies the impact of weather on a wide variety of financial market instruments, namely "risk-free" interest rates, the US corporate bond market, stock returns, stock index returns and the VIX volatility index. First, we construct a model that combines asset pricing and results from psychology to show how weather variables can affect asset prices in different market segments via mood. Second, in our empirical analysis we use several weather variables from the National Climatic Data Center (NCDC) and control variables motivated by economic theory. Applying various econometric techniques and using different market segments (motivated by differences in the risk level and institutional differences) allows to give a more detailed picture on the impact of weather on financial market prices. We demonstrate that on none of the market segments analyzed the weather has any significant impact.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis

257. Commission v. Gazprom: The antitrust clash of the decade?

Author:
Alan Riley
Publication Date:
10-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
It may well be that the Gazprom antitrust case launched by DG Competition on September 4th will turn out to be the landmark antitrust case of this decade, as Microsoft was of the last decade. The argument of this paper is that, for a host of political and economic reasons, this case is likely to be hard fought by both sides to a final prohibition decision and then onwards into the EU courts. In the process, the European gas market and the powers of DG Competition in the energy field are likely to be transformed.
Topic:
Economics, Markets, Natural Resources, and Law
Political Geography:
Europe

258. Business Groups, Innovation and Institutional Voids in Latin America

Author:
Fulvio Castellacci
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper presents an empirical analysis of the innovative activities of business groups in Latin America. It compares the innovativeness of group-affiliated firms (GAFs) and standalone firms (SAFs), and it investigates how country-specific institutional factors – financial, legal, and labor market institutions – affect the group-innovation relationship. The empirical analysis is based on the most recent wave of the World Bank Enterprise Survey (period 2010-2011), and it focuses on a sample of 6500 manufacturing firms across 20 Latin American countries. The econometric results point out two major conclusions. First, GAFs are more innovative than SAFs: we estimate the innovation propensity of GAFs to be 9% higher than that of SAFs. Secondly, across countries, the innovativeness of GAFs is higher for national economies with a better institutional system than for countries with a less efficient institutional set up.
Topic:
Economics, Globalization, International Trade and Finance, and Markets
Political Geography:
Latin America

259. The Consolidation of the Anglo-Saxon/European Consensus on Price Stability. From International Coordination to a Rule-Based Monetary Regime

Author:
Arie Krampf
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
During the 1990s, a consensus consolidated among policy makers and economists worldwide regarding the desirability of very low inflation targeting. So far, this process has been explained on the basis of a domestic- functional thesis, according to which commitment to very low inflation provides local economic gains with no costs. In this paper, I present an alternative explanation, according to which the global norm of very low inflation targeting was consolidated as a political solution to the problem of exchange rate misalignment and volatility. I argue that policy makers in Germany and the US believed that convergence of monetary policies and inflation rates, in addition to liberalization of financial markets, will stabilize exchange rates without the need for direct coordination. The paper employs the theory of liberal intergovernmentalism as a benchmark to explain the choice of the European and the G-5/7 countries to establish a low-inflation rule-based international monetary regime. The paper concludes that the regime of very low inflation targeting was consolidated as a politically viable solution to a political problem rather than as an economic best practice. Furthermore, it concludes that the norm of very low inflation targeting was a “corer solution” that neglected the problem of exchange rate stability.
Topic:
Economics, Markets, Political Economy, Monetary Policy, and Financial Crisis
Political Geography:
United States and Europe

260. Transformations on Whose Terms? Understanding the New EU-ACP Trade Relations from the Outside In

Author:
Ulrike Lorenz
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
In the past ten years, the long-standing trade relations between the European Union (EU) and the African, Caribbean, and Pacific (ACP) countries have experienced radical transformations. The negotiations of the Economic Partnership Agreements (EPAs) between the EU and seven regional groupings formed by the ACP countries have led to the EU being maneuvered into an unexpectedly weak position. For the first time, European negotiators had to substantially leave their pre-agreed negotiation path and positions due to the immense pressure from ACP countries, regional organizations, and non-state actors – and still have not been able to finalize negotiations that had initially been expected to only take five years until the end of 2007.
Topic:
Economics, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
Africa, Europe, Asia, Australia/Pacific, and Caribbean