International Political Economy
International political economy is about the economics of international politics and the politics of international economic choices and relationships. This was one of my first areas of research. I wrote a m aster’s t hesis at the University of Chicago on norms of i nternational debt collection enforcement in the 19 th century, and then moved into the early 20 th century when I used a Fulbright Scholarship in London to research the founding of the International Bank for Settlements The BIS was founded as a managing institution for privatizing World War I war debts and reparations. That research revealed how active a role private financiers played in moving debts from states to private markets. My PhD dissertation of the same name became my first book, Who Adjusts? Domestic Sources of Foreign Economic Policy During the Interwar Years ( described under the book section of my website )
My research into international political economy has been very heavily influenced by
the path-breaking research
and
writing of my mentor, Robert Keohane. As a scholar of international cooperation, he
influenced me to ask
questions about
the possibilities for and impediments to international economic cooperation among
states. Who Adjusts? located
at least
part of the answer in domestic politics: the interwar gold standard would not be
credible as long as markets
believed
that the representation of labor interests would inject inflationary pressures into
financial markets. New
domestic
coalitions and configurations made international cooperation by the old rules newly
impossible. Highly
independent central banks
were so concerned with fighting inflation, that they did not contribute to the
international adjustment process.
The politics of monetary policy and capital markets formed the core of my research
for several years. The Post-World War
II years were quite a contrast to the interwar years: international economic
relationships became much more
institutionalized, with the United States at the core of the system, at least for a
few decades. While working for a
year in the Capital Markets Department of the International Monetary Fund, I began
to research monetary (in)stability in
this new setting. One of my articles looked at the importance of multilateral
commitment, contained in Article VIII of
the IMF statutes, for states to keep their current accounts free from restrictions,
and I found that making an explicit
declaration to do so
had an important
effect on currency openness and stability. This research began to spark my interest
in the possible constraining
power of international law.
Another project in this phase included a theory of financial market regulatory harmonization
.
This research compared different kinds of regulations – for prudential capital in
banks, for international accounting
practices, for securities disclosures, and anti-money laundering – and argue that in
some cases markets encouraged
convergence, but in other cases (especially anti-money laundering) they did not.
International institutions such as the General Agreement on Tariffs and Trade and
the World Trade Organization have
played a significant role in structuring international economic relationships over
the past 75 years. These institutions
have rules and procedures for trade dispute settlement, which raises issues about
who uses them, and to what ends?
Research with Andrew Guzman focused on trade dispute settlement shows that
escalation to a full-blown legal panel in the
WTO depends on the divisibility of the issue at stake.
Moreover, we found good evidence in dispute patterns
that poor states appear to lack the financial, human, and institutional capital to
participate fully in the dispute
resolution system.
Finally, I have researched the liberalization and especially the protection of the
interests of foreign direct
investors. As discussed under my diffusion research, one of my major research findings, with Elkins and Guzman,
is that competitive pressures have given rise to the spread of bilateral treaties
among states that commit to standards
of investment protection and dispute settlement. I have also explored the
consequences of the spread of bilateral
investment treaties globally and in East Asia. World-wide, capital importing states
tend to sign investor protections in
this form when they face recession,
which affects their negotiating position and the substance of the commitments they
make (to the advantage of investors
rather than states). The pattern is not quite the same in East Asia,
where states have adopted
BITs when their economies were growing robustly. These articles demonstrate the
political context for BITs negotiations,
and suggest some possible criticisms of the nature and spread of investment dispute
settlement.