Thursday, December 23, 2010

The Best of Young Spanish-Language Novelists... and Political Economy?

Last week, NPR did a story on the awards of Granta, the prestigious literary magazine, for "The Best of Young Spanish-Language Novelists." The host (Don Gonyea) noticed that Argentina is the home country of 8 out of the 22 total awards. Spain comes in 2nd place with 6 award recipients. That's a lot of the awards, considering that there are over 20 Spanish-speaking countries – most countries had zero award-winners.

When asked about Argentina, Valerie Miles, one of the founding co-editors of Granta en español, suggested the following:

"...Argentina is a country with a very long and strong literary tradition... it also has to do with the fact that it has wonderful bookstores. Some of the really great and really important publishing companies that ran away from Franco's Spain ended up in Argentina..."

I like her answer and would like to take it a step further. Why might Argentina (and Spain) have the best publishing companies, the best bookstores, and the best novelists in the Spanish-speaking world?

I would suggest a general explanation, which draws on the broader literature on who wins international competitions.

When it comes international sports – whether we’re talking World Cup or Olympics – three basic factors matter: population, income, and interest. Let me explain.

Population: more people, more chances that your country will have someone who is great.

Income: mo’ money, mo’ opportunities (with apologies to Biggie). Money translates into better athletics and education.

Interest: here’s where culture comes in. When it comes to soccer, for example, you have to actually care about it to be internationally competitive (sorry China and the United States). When it comes to literature, well, I guess you’ve simply got to have some interesting experiences on which to draw for your writing.

So, I applied these basic ideas to the Granta awards. First, let's consider overall economic size. The recipients were all born between 1971 and 1981. For this time period, Spain and Argentina had the largest economies in the Spanish-speaking world. The GDP of Spain averaged $8.4 billion and that of Argentina $7.1 billion (in constant 2000 $). The next 3 largest economies were Venezuela, Uruguay, and Mexico – Uruguay and Mexico are both home to Granta award winners. The 5 smallest economies were: Honduras, Bolivia, Paraguay, Ecuador, and Nicaragua. And there's only 1 winner amongst them (Bolivia).

Now let's take a broader look at the data by country-income:

And here's a picture of the data by the overall economic size of countries:

To put a little rigor into this, I applied regression analysis to the number of award recipients for each country. (Warning to techies: don't get your hopes up, I'm not going to spend any serious effort on this...)

I took the average population and income (in constant 2000 $) for 1971-1981. (Interestingly, constant 2000 $ fits a little better than purchasing power parity measures.)

To proxy culture, I recalled something a French lit prof in college taught me: il faut la crise pour la création – artists need crisis in order to create. Now, there are plenty of ways to measure crises in the Spanish-speaking world. In the 1970s and 1980s, it had more than its fair share by several measures. I tried number of IMF arrangements and years of dictatorship, but the measure that works best is the number of times that democracy was subverted by a coup. It makes sense – these often combine economic and political problems.

Results? These three variables explain about 50% of the variance. Bigger and richer countries that have seen democracy breakdown are more likely to produce Granta award-winners. For the curious, click here for a set of regression results. There is a lot more I could do with this to make it more accessible for the non-technical readers... but I’ve got Xmas shopping to do. Sorry.

Now, true fans of the Vreelander are, of course, much more concerned with my personal correlation with the Granta award recipients. After all, I was able to use a spurious correlation between my career statistics and soccer performance to predict many World Cup matches this summer. The countries that have done the most for my career also did the best during the first round of the World Cup (but in the second round, my good friend, Martin Gassebner, would remind us that I got beat by an 8-legged monster... twice). The reason for the spurious correlation? Big economies mean better soccer and better universities... and countries with more money in their university system are more likely to be able to fly me over for a visit :-)

So, how does the spurious correlation work out for the Granta awards? Pretty well. I've spent more time working in Argentina than any other Spanish-speaking country. Second place? Spain. After that, Mexico,... and then a lot of zeroes – just like the Granta awards for most poor Spanish-speaking countries. All by itself, the variable measuring the number of days I have spent working in Spanish-speaking countries explains more than 80% of the variance in the Granta awards.

(And I can't help noticing one thing. The economic model does not predict the award for Bolivian author Rodrigo Hasbún. But the Vreelander model kind of does, because my connection to Spain is through the excellent ESADE Professor Pedro Parada of the Georgetown-ESADE GEMBA program... Parada hails from... you guessed it: Bolivia.)

A silly sidenote for the technical readers: When I put the Vreelander variable in the OLS model, it actually blows away the other variables in terms of statistical significance. This does not hold in the more appropriate Poisson model.

Bottom line: Why do more award recipients come from Argentina and Spain than any other Spanish-speaking country? They are the richest and the biggest, and they’ve had enough crises to motivate their craft.

Sunday, December 5, 2010

Enter the Dragon... or Rabbit?

Back in 2009 when I was teaching at Korea University, I asked my Korean friends if they knew that China is shaped like a rooster. They did not. But they proceeded to tell me that Korea is also shaped like an animal... well actually like two animals.

From one perspective, Korea is shaped like a dragon:

From another perspective, Korea is shaped like a bunny rabbit:

For people interested in international relations and national identities, there are two take-aways:

(1) Korea-Japan relations:
My Korean friends explained that if you see Korea as a dragon, it is ready to handle an imperial Japan. If you see Korea as a rabbit, however, then the Japanese islands represent the animal's refuse. (I mean no offense to Japan - I'm just reporting what I was told.) My friends couldn't decide which image they prefer. They like the powerful Dragon-Korea. But they delight in the idea of Japanese islands representing rabbit-refuse.

Either way, the scars of the early 20th century Japanese occupation of the Korean peninsula are still alive in the imaginations of young Koreans. (For a history of the years leading up to the occupation, when Korea was treated as a "protectorate" of Japan, see the work of Georgetown Professor Christine Kim.)

This helps to explain why - even when Japan and Korea have common interests - they rely on the presence of the United States, which acts as a buffer to placate domestic constituencies who may still have hard feelings (see the work of T. J. Pempel). Regional organizations also play a role. Japanese and Korean governments have been able to obfuscate some of the economic assistance that Japan has given to Korea by going through the Asian Development Bank. Japan exercises a great deal of control over this organization, though many other countries, including Korea, are also voting members. (For more on this topic, see this paper, co-authored by my brilliant student, Daniel Yew Mao Lim, as well as the excellent research of my friend and colleague, Christopher Kilby).

(2) North-South relations:
Despite more than half a century of tense and, at times, bloody relations between the North and South, my friends from South Korea can still imagine their country as one. Whether dragon or bunny, the animal has no border dividing it in half. Their imagination pertains to the entire Korean peninsula. Well, at least it did in 2009 when I was last in Korea... I'd love to hear the thoughts of my friends after the most recent round of North Korea's shenanigans. And what I would really like to know is how the youth of North Korea imagine their country...


Hye Jee Cho tells me she was taught that Korea is shaped like a tiger. Hye Jee was my colleague at UCLA, where I was a Global Fellow at the International Institute, and she was doing her Ph.D. Originally from Korea, she is now an assistant professor at the Hong Kong University of Science and Technology. She'll be presenting a paper on the International Monetary Fund at the Fourth Annual Conference on the Political Economy of International Organizations in Zurich this January. She shared this awesome picture from "Strangemaps":

So, Hye Jee recalls what she was taught growing up in Korea:
Koreans believed, from the old days of the Joseon dynasty (1392–1897), that the peninsula was tiger-shaped. But after the invasion by Japan in the early 20th century, the Japanese tried to "downgrade" Korea by conceiving of it as a weaker animal - a rabbit. (Note that Hye Jee does not personally believe that rabbits are inferior to tigers - it's just the story that she was taught.)

Saturday, December 4, 2010

Rise of the Rooster

We all need to know more about China. In today's blog, however, I don't want to get into the litany of facts that others have been covering. Instead, I want to bring up something rather simple: What does China look like?

I mean on the map. The shape of China - what does it resemble?

Everyone in China learns what animal the map of China resembles. But practically no one outside of China knows.

The question came up for me when I was visiting Beijing for the first time a couple of years ago. I found myself in a cafe with some newfound Chinese friends. They could speak English well enough for us to communicate; I was grateful because I don't speak Chinese. Well, somehow, the conversation fell upon my international travels. But my friends did not know the words in English for the various countries of the world. (Funny how the word for "Belgium," for example, doesn't come up when you're learning basic English.)

So, I started sketching a map of the world on a napkin to point out countries. I did a pretty good job with the Americas and an ok job of drawing Europe, but when it came to Asia... well, I just drew a circle where China was supposed to be.

"That's not what China looks like!" said one of my friends, incredulously.

"Um," I said, "I don't know the intricacies of the borders, but I've got the location right: south of Russia and Mongolia, east of the Central Asian countries, northeast of India, Nepal, and Bangladesh, and north of the Southeast Asian countries, west of the Koreas--"

My friend interrupted me. "But China has a very specific shape. It's easy to draw. And it looks nothing like what you drew.

"China is shaped like a rooster!" she concluded.

She drew the rooster on the map, and, sure enough, that was definitely China. I asked her if this is something she came up with herself. She just laughed. It turns out that everyone in China learns this as a child. It is deep-seated in their minds – this is how they imagine their nation to be shaped.

I think that it's taught to children so early in China that they take it for granted. When I ask people from China if they know what the map of China resembles, they simply shrug "of course." But, perhaps because they take it for granted, it doesn't seem to be something that comes up for outsiders. No one I've chatted with from outside of China knows about it. Most people are really surprised by it. Some people mistakenly think I'm making a joke. And almost everyone is struck by how obvious it is, once you point it out.

I should note that ignorance of the rooster connection is something I've found world-wide, whether I ask people from the United States, Europe, Latin America, Africa, Asia... Even people I've met from Taiwan don't know about it. Now, of course, there are some folks who do know. If you Google - China rooster - you'll find plenty of pages. Here's one that came up for me today.

But, ok, so you've learned a bit of trivia. So what? What can knowing the shape of China teach me about international political economy?

One thing that comes to mind is the territorial integrity of China. Chinese people know how their country is shaped, right down to little details.

The capital, Beijing, is at the throat of the rooster.

Harbin is the eye.

Shanghai is on the chest.

The Xizang Autonomous Region (a.k.a. Tibet) is part of the tailfeathers - and it is very much part of the rooster. Try plucking the tailfeathers off of a real rooster and see how fast he gouges you with beak and claws.

And speaking of those claws - some say that the island of Taiwan represents one of the feet - they ask, how long can a rooster stand on one leg? (I ask, can a more moderate conception of the rooster leave Taiwan out?... Or can we someday have 1 rooster with 2 or 3 systems? This may become a central question for the future of international security.)

The territorial integrity of China is important to Chinese governments in part because of the history of empires collapsing following the loss of territory. Let's set aside questions of endogeneity. If this is what Chinese governments believe, then separatist movements will not be tolerated. I learned this from my friend and colleage, Pierre Landry, author of Decentralized Authoritarianism in China: The Communist Party's Control of Local Elites in the Post-Mao Era. On the extent and importance of Chinese nationalism, he recommends China: Fragile Superpower, by Susan Shirk. On the value of Tibet to the PRC, I recommend recent research by my friends/colleagues Andreas Fuchs and Nils-Hendrik Klann (the paper is here). They show that when the Dalai Lama is received by a country's government at the highest level, the country suffers reduced access to Chinese markets - exports to China drop. Check out the story here. (And for my view, click here.)

Finally, the #1 reason to remember the rooster shape is that it is a great way to get young children interested in learning the geography of a country that is going to become even more important over the course of their lives. Also, teach them to ask/state, "who"/"Hu" is the president of China. (They may also have fun with this: "Who is the next President of China? No, Hu is the current President. Xi ("she") is the next President.")

Roosters, wordplays, and China - great fun for the kiddies...

Friday, November 12, 2010

G20 Revisited: ASK IT SAM!

As the G20 Summit closes, I wanted to return to something I posted about over the summer. Once again, we see that the G20 doesn't actually accomplish anything. It is perhaps a useful forum to focus the world's attention on global economic issues, but what is really important about the G20 is not what it does. What is important about the G20 is what it represents: The arrival of the emerging market countries!

If this observation is correct, however, then it's a shame that most people cannot name the members of the G20 (even most scholars of International Relations fail the test). Learning their names will give you a sense of the major players in international relations... and learning who's *not* in is also interesting (see what I said about Iran here).

So, I came up with a mnemonic device to help people remember:


The details are in the previous post. Briefly, the G7 comprises the major players of the last 3 decades of the 20th Century - you should definitely know them. BRIC stands for the 4 biggest emerging markets, you should know them too. EU? That's the seat on the G20 going to the European Union countries not already represented by the G7 (yeah, the EU gets separate seats for Germany, France, Italy, the United Kingdom, and then one more for good measure... also note that there are not actually 20 countries in the G20, only 19, with the 20th seat going to the EU).

That leaves 8 countries. They're the tough ones to remember, so I came up with this word, "MAKTISAS," where each letter stands for one of the remaining countries. The nice thing about it is that it also roughly orders the countries in terms of gross national product (GDP). Buuuut, as many of my friends have pointed out, MAKTISAS only works as a mnemonic device if you can actually remember the made up word, something that has proven to be difficult. Sooo, my good friend and co-author, Raj Desai, came up with an easier acronym to remember:


S=Saudi Arabia
K=Korea (South, duh!)


S=South Africa

So, there you have it:


The full list, in order of GDP (2010 US$ estimates from the International Monetary Fund), is thus:

United States ($14.6 trillion)
Rest of the EU* ($6.0 trillion)
China ($5.7 trillion)
Japan ($5.4 trillion)
Germany ($3.3 trillion)
France ($2.6 trillion)
United Kingdom ($2.3)
Italy ($2.0 trillion)
Brazil ($2.0 trillion)
Canada ($1.6 trillion)
Russia ($1.5 trillion)
India ($1.4 trillion)
Australia ($1.2 trillion)
Mexico ($1.0 trillion)
Korea ($986 billion)
Turkey ($729 billion)
Indonesia ($695 billion)
Saudi Arabia ($434 billion)
South Africa ($354 billion)
Argentina ($351 billion)

*Rest of the EU excludes Germany, France, United Kingdom, & Italy. If they are double-counted, then the total EU GDP is $16.1 trillion

Wednesday, October 6, 2010

The Committees that Rule the World
(Who should lead a multipolar world? Part III)

Last time at The Vreelander, we learned that votes for 187 member-countries countries at the International Monetary Fund (IMF) and the World Bank are out of whack with reality. Advanced industrialized countries have more than their fair share, while emerging market countries are under-represented. But that’s only part of the global governance problem. I think a bigger issue is how the votes of the 187 member-countries are put together to elect the 24-member Executive Boards of the IMF and the World Bank. Who are these guys (yeah, they’re pretty much all guys) helping to rule the global economy?

So, the Executive Boards of the IMF and the World Bank are basically mirror images of each other. Some of the Directors represent single countries – the "great powers" – while the "rest of the world" elects the remaining Directors (elections are held every two years).

At present, there are eight governments with country-specific Directors: the United States, Japan, Germany, France, the United Kingdom, China, Saudi Arabia, and Russia (in order of vote-share).

The "rest of the world" pools their votes into blocs to elect the remaining 16 Directors – and there are no rules. Here’s how things shape up (click the figures for a larger view):

Some things should strike you as strange. Like – why does the guy from li’l Belgium have more votes at the IMF than the guy from France? How on earth could tiny Denmark possibly have more votes than mighty China? And, um, over at the World Bank, the guy from Austria has the largest share second only to the United States??? Are ya kiddin’ me?

What’s going on is that some countries team up as a big voting bloc and elect a very powerful Director to represent their interests. So, out of a bloc of countries, which one gets to have a guy from their country be the leader?

Some groups allow the Directorship to rotate across all members – this is true for the two African Directorships. Other regional blocs are more "hegemonic," with only the most powerful countries in the bloc controlling the Directorships.

Why would a country give its political support to a hegemon?

The case of Spain involves colonial legacies. Spain currently controls an IMF Executive Directorship representing a group of Latin American countries. Spain shares control of this Directorship, alternating with Mexico (the Alternate Director) and Venezuela (the Director at the World Bank).

The Canadian bloc is more geographically diverse, but also follows colonial legacies. Canada partnered early on with Ireland, a fellow former colony of the United Kingdom. The Canadian bloc then took on other former British colonies of the Americas as they became independent and joined the IMF and World Bank.

Then there are blocs that do not exclusively follow regional lines. Iran, for example, leads a bloc at the IMF including Middle Eastern and North African countries, along with Ghana, which was recruited into the bloc in 1973.

Italy is a remarkable case. With more votes than either Saudi Arabia or Russia, Italy has enough votes to elect its own Directorship. Rather than go it alone, however, the government has formed a bloc including mostly Southern European neighbors – Greece, Malta, Portugal, San Marino, and Albania. The bloc also includes Timor-Leste, which is far outside of the regional pattern. By bringing together this coalition, the Director from Italy actually has a greater vote-share than does the Director from China.

The Directorships of the Netherlands and Austria-Belgium are even more outstanding. At the World Bank, they control, respectively, the third and second most powerful Directorships. The Netherlands bloc includes a group of non-obvious partners: Armenia, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, Macedonia, Moldova, Montenegro, Romania and Ukraine. Austria and Belgium represent Belarus, Czech Republic, Hungary, Kazakhstan, Luxembourg, Slovak Republic, Slovenia, and Turkey.

And then there is Switzerland. Since joining in 1992, Switzerland has held Directorships at the World Bank and the IMF. Currently, Switzerland represents a hodgepodge group including Azerbaijan, Kyrgyz Republic, Poland, Serbia, Tajikistan, Turkmenistan, and Uzbekistan.

How does Switzerland do it? My research indicates that foreign aid might be helping. This is straightforward political economy: trading money for political influence. Rich countries provide foreign aid to developing countries that offer political support at the World Bank and the International Monetary Fund.

How much Swiss foreign aid is due to Swiss-bloc membership? Consider some statistics from 2008. Total Swiss Official Development Assistance to independent countries was $758 million, and the 6 poor countries in the Swiss-bloc received about 94 million of this – or 12% of the total. Considering that the total population of these 6 poor countries (less than 60 million) accounts for less than 1% of total world population, getting a full 12% is, well, quite a large share of Swiss aid!

Back in 1992 when Switzerland first joined the World Bank and the IMF, the Swiss government worked hard to put together a coalition of other new members so that it could be elected to the prestigious Directorships. By leaving Italy to join Switzerland, Poland earned a promotion to Alternate Director for the Swiss. And the Swiss have maintained a commitment to providing foreign aid to the impoverished members of their bloc. This should come as no surprise to astute observers of Swiss involvement in international affairs. Some policy-makers are rightfully proud of the service they provide for their constituent countries. As they see it, the great power of holding Directorships at the World Bank and the IMF comes with great responsibility.

The question for emerging market countries is this: do they want to get into the game of putting together powerful blocs? I’m sure, for example, that China could put together a supporting cast of countries that would make it much more powerful than the Italian bloc.

The real question is probably this: do emerging market countries even care? See, Western European countries can play all the games they like to maintain their privileged position in global institutions. But if these institutions don’t reflect economic realities about which countries have real power, they may cease to be relevant. Emerging market countries may not yet have the power to take over the global institutions, but they are beginning to run things at a regional level. And thus they may be more interested in focusing their resources on regional institutions.

I will have a paper about this topic that will be coming out soon - co-authored with Raj Desai. For a preview of our views, click here.

As for the IMF and the World Bank, I refer to what I said in Part 1 of this series: they’re in a bind. If the power of the United States and Western Europe is reduced, these countries may be less likely to approve additional funding for the institutions. But if global governance fails to become more inclusive, emerging markets will (continue to) lose interest.

Perhaps this is the signature of a multipolar world, where no one is strong enough to dominate at the international level – and regional hegemons emerge. If this is so, I think a potential solution for the IMF and World Bank is to recognize the growing strength of regional organizations and find ways to engage and work with them.

The Committees that Rule the World
(Who should lead a multipolar world? Part II)

Every two years, representatives of countries from all over the world gather in Washington, DC to elect two committees that partly rule the world on global economic policy. This year, the meetings are coming right up this weekend: October 8-10.

Usually, these elections just rubber stamp the same old usual suspects who have been running things for decades. But the 2008 Finance Crisis has obvious changes in world order. We are now living in a multipolar world, and the emerging market countries have arrived. This time around, they are going to be looking for a bigger share of global governance.

The committees I’m talking about are the Executive Boards of the International Monetary Fund (IMF) and the World Bank, two of the world’s most powerful international organizations. Who controls these institutions? Well, every member-country has some share of the votes, and with 187 countries as members, technically, the IMF and the World Bank are accountable to nearly all of the citizens of the world. But, in reality, the real governance is run by a handful of key countries.

Basically, you’ve got 187 member-countries that elect 24-member Executive Boards (one for the IMF and one for the World Bank). Do each of the 187 countries get one vote? No, no, no – this isn’t the United Nations. Rather, the share of votes is explicitly tied to economic size. So, the mighty United States has the largest share (16.74%), and tiny Tuvalu has the smallest share (0.012%).

But economic weight isn’t the only factor – politics also matter. You see, even though China has just surpassed Japan as the second largest economy in the world, this powerful country has a smaller vote share than France (3.65% vs 4.85%). Yeah, that’s right – France (GDP=$2.7 trillion) has more votes than China (GDP=$4.9 trillion). Think that’s out of whack with reality? How about this? Belgium (GDP=$470 billion) has 2.08% of the votes, but Brazil (GDP=1.6 trillion) has only 1.38% of the votes and India (GDP=$1.2 trillion) has only 1.88% of the votes.

Personally, I think it makes sense that votes reflect economic size. After all, the contributions to the IMF and the World Bank are also tied to economic size. If you give more money, you should get more votes. What’s out of whack is that the votes just don’t reflect current economic realities. Brazil, China, India, Korea,… and the list goes on… are all willing and able to contribute more, but, because this will translate into a smaller share of votes for advanced industrialized countries, like Belgium and France, they drag their feet.

What does it take to change the votes? An 85% supermajority of the current voting structure is required. Yeah, with over 15% of the votes, the United States has veto power, and so do the European Union countries when they coordinate and vote together.

But changing the votes is only part of the problem. In fact, you can be sure that the individual vote shares of the 187 member-countries are going to be revised over the next few days. The United States and the European Union recognize that this needs to change, and it is not news. Emerging market countries have been making small gains for years. So, in 2006, China had only 2.94% of the votes, and now it has 3.65%.

The real question is how these votes translate into seats at the 24-member Executive Board of Directors. Who are these guys? (Yeah, they’re pretty much all guys. See here.) For the answer to this question, and more exciting analysis of global governance, tune in next time at The Vreelander

The IMF Executive Board

Thursday, September 30, 2010

Who should lead a multipolar world?
World Bank visits Georgetown

The President of the World Bank, Robert Zoellick, visited Georgetown University yesterday. I asked him about the future of the leadership of the organization. World Bank lending decisions are partly influenced by US strategic interests (see my research on this here), and this is partly due to US dominance of the governance of the institution. The President of the Bank has always been (de facto) an American, and the Bank is careful to cater to US interests.

I jokingly pointed out, following the observation of The Daily Show, from Wolfenson, to Wolfowitz, to Zoellick, the Presidents of the World Bank appear to be chosen alphabetically. Does this mean that for the next President, we'll return to the beginning of the alphabet, choosing someone like "Another American"? Or is it time for the leadership of the World Bank to go to someone from the emerging market world?

Zoellick gave a good answer. He explained that later in the day, he would visit Congress to report on the World Bank. If the leader of the Bank were not an American, and the United States had less control over the institution, perhaps Congress would be less willing to support it financially. This is a fair point, with backing from related research by Lawrence Broz (here, here, and here). Yet, emerging markets are becoming powerful enough these days that if they don't see change in the leadership of global institutions, they too can abandon them in favor of regional organizations, where they have a stronger voice and more political control.

So, I think that the Bank is in a bind. If it does not make governance more inclusive, it will (continue to) lose the interest of emerging market countries. But if it does away with US power, Congress may indeed be less likely to approve future increases to contributions.

Either way, the global institution risks irrelevance - the threat of which does not actually bother the emerging market world.

Perhaps this is the signature of a multipolar world, where no one is strong enough to dominate at the international level - and regional hegemons emerge. If this is so, I think a potential solution for the Bank is to recognize the growing strength of regional organizations and find ways to engage and work with them.

Friday, September 24, 2010

Regional Games

Saw Invictus. It inspired me.

It's the story of how President Nelson Mandela risked political capital by supporting South Africa's rugby team, the Springboks, which had been a symbol of the apartheid era. Mandela believed that by embracing the team, he could change what the team represented - making it a symbol of a new, united South Africa. He believed that he could help forge a new South African identity - one united behind its sports team as it competed for the World Cup.

In the movie, Mandela receives political advice not to gamble the future of his administration over something as trivial as rugby. Instead, he should be worried about "housing, food, jobs, crime, [the national] currency." But Mandela argues that none of these problems can be addressed without first establishing a new national identity, one that unites people of all backgrounds. This is a tall task.

While dramatizing and exaggerating, the film reflects a political reality. South Africa still has racial problems to deal with, but Mandela left his nation more united than when his administration began. Surely, a lot of his success came from specific policies that impacted housing, jobs, crime, and the value of the national currency. But I can't help think that forging a new national identity was also an important ingredient. And perhaps uniting behind a sports team is an effective way to foment an identity.

A personal anecdote: I grew up hating the Lakers. So, when Kobe Bryant joined the team in 1996, I hated him too... for 12 years. And then came The Redeem Team. Spain was nipping at *our* heals in the 2008 Beijing Olympic Basketball Final. Then Kobe drilled a 3-pointer with about 3 minutes to go, and he silenced the pro-Spain (and anti-American) crowd, shushing them with a finger to his lips (to see it, go to 7:12 in this clip). In that moment, I felt unadulterated enthusiasm for this guy and happily cheered for him. There was no hesitation. Afterwards, it hit me that I had cheered for a Laker - I could only chuckle, thinking, it's a hell of a lot better when Kobe's with you than against you! I'll never forget that victory, and, you know, I don't hate Kobe any more, or the Laker team that he represents. Don't get me wrong - I still don't like the Lakers - I'll always route against them. But hate them? It's hard to really hate a team led by a guy that brought me that moment of victory. Kobe might be Laker, but he's also Team USA.

So this brings me to thinking about a multi-polar world.

Regions around the world are slowly uniting. Europe is the most advanced: goods flow freely, most countries have the euro, and immigration is unchecked across borders. Europeans started down this path seeking peace. They also achieved economies of scale: the European Union is the largest market in the world.

When the economy isn't doing well, many want to retreat from regional integration. This is true across the globe. Yet, these retreats do not appear to derail the forces of regionalization. When the economy picks up again, trade ensues, and regional ties deepen anew.

The political problems are, however, severe, and the forces of regionalization are often impeded by them. Take North America, for example. If the United States is going to compete in a regionalized multi-polar world, we need Mexico. With a nearly trillion dollar economy and over 100 million people, cooperation with Mexico could be a real boon. But problems of poverty must be addressed, and with our 3,000-plus kilometer border, issues over there will inevitably become issues over here.

Yet, while our neighbor is engulfed in out-of-control narco-violence (which is linked to US consumption of illegal drugs), we foolishly talk of building walls and shipping millions of immigrants back across the border. We see Mexicans as "the other." There is a failure to recognize that the destiny of the United States of America is intrinsically linked to that of the Estados Unidos Mexicanos.

In my research, I consider political and economic issues that have impacts across borders on things like housing, food, jobs, crime, the national currency... But when I saw Invictus, it made me wonder. Maybe - to address these problems - we first need a new identity. Economic integration appears to be an irresistible force, but the political problems might be easier to address if people perceive themselves to be part of a region and not just part of a country. Maybe we need to imagine regional identities. And maybe sports competition can help.

So I propose Regional Games. And I'm not talking about intra-regional games, where countries of the same region play each other. No, we've had plenty of that. I'm talking inter-regional games, where North America plays South America, plays Asia, plays Europe, Africa, the Middle East.

Imagine people in El Paso and Juarez cheering for Ortiz as he hits a home-run in the bottom of the 9th to bring Team North America to victory. Or folks in São Paulo cheering for Ginóbili when he hits a buzzer-beating 3-pointer to win the game for Team South America. Or how about this? As an attacking midfielder for Team Middle East scores an overtime goal, people from Cairo to Riyadh to Tehran cheer for their beloved Benayoun.

Crazy? Yep, that's just what they thought of Mandela's idea that blacks and whites could unite behind the Springboks.

Wednesday, July 21, 2010

Hungary and the IMF

I made a guest appearance on The Monkey Cage, along with Grigore Pop-Elches of Princeton University, discussing Hungary and the IMF - thanks to Joshua Tucker, of my beloved alma mater, NYU.

Here's the post, as it is introduced by Joshua:

Yesterday I was somewhat surprised to read that the IMF and the EU had decided to suspend a credit line to Hungary because of concerns over the newly-elected Hungarian government’s budget plans. After all, the recent Hungarian government had come to power in dramatic fashion this spring in part to clean up Hungary’s economic mess. Did this signify a new direction in Hungarian politics, or, perhaps more importantly, a new direction for the IMF and/or the EU in dealing with issues of sovereign debt in Europe?

With these questions in mind, I emailed Grigore Pop-Elches of Princeton University (the author of From Economic Crisis to Reform: IMF Programs in Latin America and Eastern Europe and James Vreeland of Georgetown University (the author of The International Monetary Fund: Politics of Conditional Lending) for their thoughts.

Grigore offered the following observations:

1. A number of analysts claim that it’s “very rare” for the Fund to freeze funding for program countries, which suggests a pretty serious situation. While this may be true for the recent wave of IMF programs following the 2008 crisis (in which both the IMF and most debtor countries have been on their “best behavior”) it is not really a rarity in historical terms: thus, less than half of IMF programs in Eastern Europe in the 1990s were fully implemented, so these kinds of disagreements and punishments are hardly unusual. Moreover, the Fund has signaled its willingness to return to negotiations in September, which means that the program has not completely gone off track. The problem is that Fidesz in unlikely to be willing to make a lot of compromises prior to the October local elections, for fear of further strengthening Jobbik.

2. What’s interesting - and rather ironic from a Hungarian perspective - is that the patterns of conflict between the Orban government and the IMF are actually quite similar to the IMF relations the Meciar government in Slovakia in the mid-1990s. In both cases, the conflicts were driven less about the broad parameters of fiscal adjustment, on which both governments were fairly close to the targets but about relatively minor populist measures - the bank tax in Hungary and the import surcharge in Slovakia - on which the two populist leaders were unwilling to compromise.

3. The other thing driving the current standoff is that ultimately Hungary’s crisis is not that critical in the short term - they still have enough reserves and decent financial market access - which gives both the government and the IMF (and the EU) room to stick to their positions without fearing an immediate meltdown. But as reserves diminish and the cost of lending goes up in the fall, the Hungarian government will have less maneuvering space and will probably be more willing to compromise. On the other hand, if things get bad enough, the EU may decide that one of the lessons from Greece is that earlier intervention is cheaper in the long run, which could soften their own demands for additional fiscal austerity.

James wrote:

The International Monetary Fund has returned to its roots: lending to Europe. Some have suggested that the European Union needs its own European Monetary Fund, so that its governments do not have to turn to the IMF. But what would such an “EMF” bring? They already have the European Central Bank, with ample lending resources. The answer is “conditionality”- the quid-pro-quo of loans in return for policy reform. Right now, the IMF is playing hard ball with Hungary, whose government is not willing to implement the level of austerity recommended by the Fund. This is a warm-up for what may be coming with Greece down the road, if its government decides it can’t live up to the budget cuts required in its IMF arrangement (see here). And you can bet that politicians in Italy, Spain, and Portugal are paying attention to see just how strict (or not) the IMF will be. Ultimately, most of the loans and prospective loans for these countries come from other European governments - mainly France and Germany. It is in their interests to keep these countries afloat — major exporters to the European countries in trouble are surely pressuring their governments to lend. But they also have concerns about inflation and moral hazard. For a generation, the German Bundesbank towed the hardline, and the German government - urged by inflation-averse voters - continues to crack the whip. But as Europe has moved into a new phase with the Eurozone, it may be more politically palatable for the rest of the EU to launder these ugly politics through another international institution. That’s what the IMF is doing - the IMF can be the bad guy - forcing governments to make tough choices. The IMF provides an institutionalize mechanism by which liquidity is provided in return for policy reform. Compliance is not always forthcoming, especially with strategically important or politically powerful countries, but for countries like Hungary and Greece, conditionality can have a real impact.

Some further Vreelander thoughts:

It will be interesting to see how far the Managing Director of the IMF, Dominique Strauss-Kahn, will want to push austerity. He is from the Socialist Party in France and may have aspirations to run for president (for a discussion of this and of his performance at the IMF, in French, see here). He's not a big austerity guy. So, Germany may have a reluctant whip-cracker. Still, I think the IMF Executive Board preferences will prevail. And when it comes to Europe, I suspect that Germany will hold sway in those behind-closed-door meetings.

As for the "bad guy" link above, it amuses me because it casts the IMF as the "Batman," Germany as "Alfred" (or "Gotham City," if you will), and Hungary/Greece/Italy/Spain/Portugal as the "Joker." A disclaimer: while a lifelong fan of Batman fiction, I neither condemn nor condone the IMF - I am a neutral observer in real-life.

IMF: People are dying. What would you have me do?

Germany: Endure. You can be the outcast. You can make the choice that no one else will face: the right choice. [Europe] needs you.

Greece (to Germany): A little fight in you. I like that.

IMF: Then you're gonna love me.

Germany: Now that's more like it, Mr. [Strauss-Kahn].

Hungary: It's all part of the plan.

IMF: Com'on!

Hungary: Hit me!

Spain & Greece: Let's put a smile on that face...

(To see it all 1960's style, click here.)

Friday, July 9, 2010

Vreelander: The Reckoning

After humiliating defeat at the (eight) hands of Paul the Octopus, The Vreelander has a final chance at redemption in the World Cup 2010.

The Psychic Squid has predicted Germany over Uruguay for 3rd place, and Spain over The Netherlands for 1st place.

Paul and I agree on Germany. But we disagree on the final. The Vreelander is with The Netherlands!

Paul's decision is based on ... nothing ... He takes food out of one of two boxes marked by the flags of the competing countries. And Paul has called every game correctly when it comes to Germany this WC. He lacks experience, however, when Germany is not involved...

The Vreelander decision-rule is based on a spurious correlation which links size and economic strength to university-strength and soccer-strength. Out of loyalty to my colleagues and students, I root for the country that has contributed the most to my career. Amazingly, the decision-rule has a current game-by-game record of 40 correct predictions, 8 incorrect, and 14 ties.

Analysis of Uruguay-Germany

I am indebted to Uruguay:
A piece I wrote was translated and published in Uruguay by Diego Aboal and Juan Andrés Moraes.

But look what Germany has done for me:
Not one, not two, but three publications with a German co-author (Axel Dreher). Plus, not one but two working papers with three other German co-authors (Martin Gassebner, Stephan Klasen, and Michael Lamla).

Plus I've given nine presentations in Germany.

Analysis of Netherlands-Spain

Spain has done more for me than most countries:
I have been teaching in a joint Georgetown-ESADE program. ESADE is a top-ranked business school with campuses in Barcelona, Madrid, and Buenos Aires. I've also given a talk at Institut Barcelona d'Estudis Internacionals (IBEI). Plus, my friend and colleague, Covadonga Meseguer cites me in her book (which I endorsed).

But the Netherlands has done a lot to earn my loyalty:
I have not one but two publications with a Dutch co-author, Jan-Egbert Sturm. One of these publications just won an award. Plus we have an additional working paper that we recently posted. Finally, the Dutch Finance Ministry sponsored a trip for me to Amsterdam to take part in a conference on reforming the Bretton Woods Institutions.

And I have my Dutch colleague, Erik Voeten, who not only promotes my career, but also my blog over at The Monkey Cage. Erik has also pointed out that The Vreelander owes its identity to Holland. As I am a descendant of the original Vreeland, my name comes from a village in the Netherlands. Conclusion: GO ORANGE!

The bottom line is that I have been fortunate in my career, receiving a great deal of international support. At the end of the day, Paul the Octopus and I both base our choices on what we "eat," and I have benefitted from the generosity of many countries. It's been so much fun rooting for all of my adopted homes. I love you all!

Wednesday, July 7, 2010

The Vreelander versus the Psychic Squid!

Tune in later today for an unfathomable battle of good versus evil:

The Vreelander versus the Psychic Squid!

Yes, the World Cup has come to this.

I have boldly predicted a victory for Germany based on 3 publications with a German co-author - plus working papers with 3 other German co-authors - and none with Spanish scholars.

But the Psychic Squid has chosen Spain for victory.

I have science plus a spurious correlation on my side. But Paul the Octopus has destiny on his.

Will fate triumph over freedom of choice? Or can The Vreelander defeat the Octopus? It is now just a matter of time till we find out.

Thursday, June 24, 2010

Winning at the World Cup Correlated with The Vreelander?

Relationships between soccer and politics have been well established at the international as well as the domestic level. As a scholar of international relations, I decided to root for teams in this year's World Cup out of loyalty to the scholars, students, and universities who have invested in my career.

A fun, but absurd rule, of course.

Yet, it's record speak for itself:

Correctly predicted: 29
Incorrectly predicted: 5
Ties: 14

(A note to purists: I didn't attempt to predict ties or final scores - I was just having fun by choosing a side to root for.)

So, does contributing to my career help countries do better in soccer? Or perhaps good soccer makes countries want to help my career?

The connection is, of course, spurious. But it's not accidental that my win-loss ratio was nearly 6:1.

See, countries with large, rich populations are more likely (1) to have better athletic teams and (2) to have more developed universities.

When it comes to soccer, it works something like this:

First, how many people does your country have? More people, more chances at having talented athletes.

Second, how rich is your country? More money, better investment in the health and performance of your athletes.

Third, how much does your country care? More interest in soccer, the more of the population and the income you'll put into the sport.

An interesting study presents evidence of the above, and also argues that having democracy helps. The latter is interesting because it goes against the literature on Olympic Games, which argues that Communist Dictatorships have the edge.

Cultural preference for soccer is measured by the strength of club teams, but one might also consider other measures, like the percentage of children playing soccer, soccer fields/balls per capita, government support of the sport, and which sports pay their professional athletes the most.

Another factor that has been shown to help in the Olympics, soccer, and basketball is home-team advantage.

Finally, getting into how specific athletes play, Miguel, Saiegh, and Satyanath show that players who have lived through civil wars are more likely to commit violence on the soccer field.

All of that said, my absurd rule predicted a few upsets that the econometric studies did not.

For example, thanks to the investments that ETH Zurich has made in my career, my rule correctly predicted Switzerland's victory over Spain (where I also have a wonderful affiliation at ESADE, but the ETH connection has a deeper history).

I also predicted that France would lose to both South Africa and Mexico (I've never been invited to France to give a talk, but South Africa and Mexico have both hosted me).

And thanks to my Uruguayan colleagues, Diego Aboal and Juan Andrés Moraes, who translated and published a piece I wrote about their country, I correctly predicted Uruguay over South Africa and Mexico.

Most importantly, I correctly predicted USA moving to the next round! (Who's invested more in my career than my home country?! Go NYU! Go Yale! Go UCLA! Go Georgetown!)

For those of you looking to find ways of getting invited to all these great countries, might I suggest a career in international relations? Georgetown University is a great place to start!

For those of you just looking to waste time, I present all of my picks below, complete with the rationales off of my Curriculum Vitae. The bottom line is this: If France would like to make it to the second round in 2014, I suggest they start inviting me to visit their universities! (Please forward to scholars in France ;-)

11 June:
South Africa v. Mexico
This is a tossup for me. I've given talks in both countries. Mexico has figured much more in my research (10 references to 5 for S Africa in the 2007 book). Plus, I used to work with the former President of Mexico, Ernesto Zedillo, when I was at Yale. Yet, I have a South African co-author, Peter Rosendorff...
I have to break slightly in favor of South Africa.

Uruguay v. France
Another tossup. I studied abroad in France and worked there for a summer. But I have actually been published in an edited volume in Uruguay (in Spanish)... and I wrote the chapter about Uruguay and the IMF. Easy call for me.

12 June:
June 12: Korea v. Greece
This is an easy choice for me. Though I recently was interviewed in a Greek newspaper, last summer I taught at Korea University for 6 weeks.
Go Korea!

Argentina v. Nigeria
Another easy choice - Just got back from teaching 2 weeks in Argentina - plus I did a conference there in 2002.

England v. USA:
Obvious. With regrets to my beloved co-author, Alastair Smith...

Algeria v. Slovenia
This one is a tossup. I haven't had any real contact with these countries in my career... so I'm going by how many times they appear in the index of my 2007 book. Slovenia gets the edge 2 times to 1.
Go Slovenia!

Serbia v. Ghana
Another match with countries I haven't had direct contact with. But I talk about Ghana in 3 places in my 2007 book; only mention Serbia twice.
Go Ghana!

13 June:
Germany V. Australia
So, here are two countries that have both been good to me. I have a research affiliation with Bond University in Gold Coast, Australia. But I am currently a visiting researcher at Georg-August-Universität Göttingen, and I just finished a conference at Tubingen - and I have written about 5 papers with 4 German co-authors (Dreher, Klasen, Gassebner, and Lamla), so...

14 June:
Netherlands v. Denmark
Easy call for me to make. I have 2 publications with my beloved co-author, Jan-Egbert Sturm. (And we're working on a third paper right now...)
Plus, well, my name is *Vreeland* after all:
Go Orange!!!

Japan v. Cameroon
No question that Japan has figured larger in my research than Cameroon. I'm actually working on two papers right now that deal directly with Japan's foreign policy interests. Still, I am still waiting for an invitation to visit a Japanese university... but in the meantime:
Go Nippon!

Italy v. Paraguay
Another easy call. I have worked with two Italian co-authors: Silvia Marchesi & Paolo Spada.

15 June:
New Zealand v. Slovakia
Oh jeez - neither of these countries have figured much in my research. I only mention Slovakia once in my book. Amazingly, New Zealand appears nowhere (which surprised me - I thought I mentioned every country at least once...)
Go Slovakia!

Cote d'Ivoire v. Portugal
Another pair of countries where I haven't been invited... although there may be something in the works for Portugal. Meantime, both countries appear 3 times in my book. To break the tie, I go to the index of my 2003 book, where Portugal appears twice and Cote d'Ivoire not at all.
Go Portugal!

Brazil v. North Korea
Easy choice. Between co-author Ze Cheibub and a visit to the University of São Paulo arranged by my friend & colleague Fernando Limongi, I'm with Brazil on this one!
Penta campeão!

16 June:
South Africa v. Uruguay
Published on Uruguay in an edited volume in Uruguay. Visited South Africa on a trip paid for by the South African Finance Ministry.
Breaking slightly in favor of Uruguay

Honduras v. Chile
Neither country has done much for my career. But both appear in my 2007 book. 6 times to 3 times.
Go Honduras!

Spain v. Switzerland
I'm affiliated with ESADE in Spain, and have given talks there and at IBEI. But ETH has done so much for my career! I've been a visiting research there many times, and I've given about 9 talks throughout Switzerland and have even appeared in the press there. Plus, I just wrote a paper on Swiss foreign aid.
Schweiz! Suisse! Svizzera!

17 June:
France v. Mexico
Studied abroad in France in 1992 and worked there for a summer. But what have you done for me lately? I gave a talk in Mexico at CIDE in el Distrito Federal in November 2005. It was an amazing trip!
Viva Mexico!!

Argentina v. Korea
Yikes. I attended my first international conference at Di Tella in Buenos Aires in 2002. And I just finished teaching a class as the Universidad Nacional de San Martín. I love Buenos Aires!
But I also taught last summer in Seoul for 6 weeks at Korea University. I love Seoul!
I just don't know who to pick...
Korea U. pays better, but also demands more teaching time.
Argentina appears 7 times in my 2007 index. Korea only 3 times.
Korea appears 3 times in my 2003 index. Argentina not at all.
I have wonderful colleagues and students from both countries.
Looks like I need to go to the "citation rule"
Who has cited me more according to ISI Web of Knowledge?
One from Minzee Kim - that's a point for Korea.
One from Seonjou Kang - that's 2 points for Korea.
One from Jong-Wha Lee - that's 3 points for Korea.
Books are not linked to references on ISI, so for the book, I go to Google Scholar:
One from Sebastian Saiegh - 1 point for Argentina!
One from Vicky Murillo - 2 points for Argentina...
One from Maria Soledad Martinez Peria - 3 points for Argentina... (this is more exciting to me than actual soccer...)
Another cite from Seonjou Kang - 4 points for Korea!
Another cite from Saiegh - 4 points for Argentina - these countries are really battling!
Chi Wook Kim: 5 points for Korea...
Yong Kyun Ki: 6 points for Korea!
My friend Hye Jee Cho from UCLA - 7 points for Korea... they're running away with it!
Byungwon Woo - 8 for Korea!
Another from Murillo: 5 points for Argentina - they're not giving up!
Another from Woo - 9 for Korea. Relentless.
So that's it - I'm with Korea.
And since Argentina is the favorite, I'll most likely have chances to root for them in future rounds. For now, so I'm going with:

Greece v. Nigeria
Nigeria was a case in my 2003 book, and appeared 4 times in my 2007 book. Greece only 3 times. Yet, a Greek newspaper recently did a really nice interview with me about the IMF where they flattered me by saying I was a foremost expert on the subject. Flattery will get you everywhere... Plus, I co-authored a magazine article with Harris Mylonas.
Go Greece!

18 June:
Slovenia v. USA
2-2 (horrible referee call - this should have been a win!)

England v. Algeria
Co-authored with Alastair Smith in 2006.
Go England!

Germany v. Serbia
Go Germany!
0-1 (3RD LOSS***)

19 June:
Ghana v. Australia
Australia hosted me for 2 weeks at Bond University, where I am a research affiliate.
Go Auzzi!

Netherlands v. Japan
Dutch co-author trumps. And did I mention my wonderful colleague, Erik Voeten?
Go Netherlands!

Cameroon v. Denmark
Neither. But Denmark appears 4 times in my book index, Cameroon only twice.
Go Denmark.

20 June
Slovakia v. Paraguay
Neither. Book index indicates more support for:

Italy v. New Zealand
2 co-authors=

Brazil v. Cote d'Ivoire
Co-author + visit to USP =

21 June
Portugal v North Korea
Again - 2 countries who have done nothing for my career. But let's face it - Portugal is more of a possibility.
Go Portugal.

Chile v Switzerland
Easy choice for me. Go KOF, Go ETH, Go Zurich...
Go Switzerland!

Spain v Honduras
Another easy choice - Go ESADE...
Go Spain!

22 June
France v South Africa
France, what have you done for me lately?
Qui veut-dire recemment
Je veux que tu arretes de men-
tir! (MC James)
Go South Africa!

Mexico v Uruguay
Yikes - tough call. Gave a talk in Mexico. Published in Uruguay.
Go Uruguay!

Greece v Argentina

Nigeria v South Korea
Global KU Frontier Spirit!

23 June
Slovenia v England

United States v Algeria

Australia v Serbia

Ghana v Germany

24 June
Cameroon v Netherlands
Go Dutch!

Denmark v Japan

Paraguay v New Zealand
Index rule says...

Slovakia v Italy

25 June
North Korea v Ivory Coast
Neither country has done me any favors. Both appear the same # of times in the 2007 book. Neither appears in the 2003 book. I like the North Korea flag better, but I study the IMF and North Korea is not even a member.
Go Cote d'Ivoire.

Portugal v Brazil

Chile v Spain
Go ESADE! Go Spain!

Switzerland v Honduras
GO ETH! Go Switzerland!

Sunday, June 20, 2010

The G20 and MAKTISAS

Why should you care about the G20?

The G20 represents the arrival of the emerging markets!

The 2008 financial meltdown made clear the reality of a multipolar world. The United States, while still the strongest country in the world, ain't what it used to be. And there are a number of new important players in international affairs.

So, even if the meetings produce nothing more than photo-ops and media frenzy, the G20 makes a splash when it meets.

Funny thing is, I have never found anyone who can name the G20. And I'm not just talking about people I meet on the street or even my wonderful students. I'm talking about fellow professionals who teach international affairs for a living.

This is a reflection a few things, I think: (1) The G20 doesn't really do anything. (2) The selection process was arbitrary and membership is already out of date. (3) The group is just too big to be effective (which, by the way, may be by design).

Still, learning who is in the G20 - and who is not - is a good way to get a sense of the mightiest countries on the horizon. Note, however, that the G20 does not actually reflect the largest countries in terms of Gross Domestic Product, so it's important to pay attention to a few countries who are out.

First, who's in?

Let me give you a manageable way to remember them in 4 easy steps:


Start with the G7.
You should already know these countries if you have been paying attention to the world of international affairs for the past 30 years or so. But, just in case, they are:
The United States of America
The United Kingdom

(2) Add BRIC:

(3) 11 down... so 9 countries to go, right? Wrong!
Only 8 more to go because the G20 only has 19 countries.
The 20th member is:
The European Union.

(4) So who are the remaining 8? They are... MAKTISAS!
S-audi Arabia
S-outh Africa

So there you have the G20 in 4 easy steps:


No more excuses - this is easy to remember. And don't worry, the G20 has stated it will keep the same membership.

That's good news for remembering these countries... but bad news for global governance. Just like the current international institutions, the G20 is destined to become out of sync with economic reality. Indeed, it's already out of sync.

Who's out? Again - 4 groups:
(1) EU Countries, (2) Other European Countries, (3) The Bad Guy, (4) Good/Bad Guesses

(1) EU countries
There are EU countries that are big enough to be in the top 20, but they're not G20 because there'd just be too many Europeans around the table. Personally, I would like all the EU countries - or at least the Eurozone countries - to unite as one voice. An EU voice would be the largest, most powerful at the table - surpassing even the United States... but that's not going to happen. Germany, France, the UK, and Italy are in, and they don't want to give up their individual seats. Who's out?
The Netherlands

(The remaining EU countries are too small - they wouldn't get an individual voice anyway.)

(2) Other European countries
There are two remaining countries of Europe that could have top 20 status (depending on how you measure), but they are not in the G20. The reason is the same as above - there'd be too many Europeans. But unlike the previous group, this group really loses out, because they don't even have nominal representation through the EU seat because they're not members of the EU:

(3) The bad guy
So here's a game I like to play. Name a country whose GDP (measured in either nominal or PPP terms) is larger than that of G20 members South Africa and Argentina, but who is not in the G20 and is not a country in Europe... At this point, people start throwing out names of countries. I've never had anyone guess right at first, and I often offer the following hint: When I tell you the name of the country, it will be obvious why the country is not in the G20. At this point, clever people get it. The answer is...

(4) Good/Bad Guesses
Finally, I'd like to list some countries that people often guess and address the merits of those guesses.

Bangladesh & Pakistan: These countries are very poor, so they don't meet the GDP criterion. But their populations are, well, huge. They each constitute at least 2% of global population. These are wrong, but good guesses.

Nigeria: The most populous country in Africa. At nearly 155 million people, it's much larger than South Africa (about 50 million). But South Africa is far richer, and its GDP is thus way bigger. That said, neither of these countries is really a top 20 economy. South Africa is in the G20 to have balanced representation - we want at least one country from Africa.

Egypt: It's got the 2nd largest economy on the African continent after South Africa. So, a good guess for Africa, but no cigar.

Thailand: Excellent guess. It's economy is bigger than that of South Africa in PPP terms (though not in nominal terms). And it's smaller than Argentina... and we needed a country from Africa.

Taiwan: Economically, a good guess. Politically, a terrible guess. Its PPP economy is bigger than that of Saudi Arabia, Argentina, or South Africa. But this country will never play a big role in global governance. The answer in three letters: P.R.C.

Venezuela: Depends on how you measure its GDP. In nominal terms, it's bigger than Argentina. But in terms of what you actually get for your money - Purchasing Power Parity (PPP) - it is not. Venezuela doesn't make the cut. And with Chavez at the helm, well, I wouldn't hold my breath for an invitation - remember, the United States is still the biggest kid on the block.

Israel: I hear this one a lot, but it's a terrible guess. Israel is, of course, strategically important, and because it is a nuclear state, it is militarily powerful. But it's citizens are not that rich (Israel makes the top 30 for GDP/capita, but not the top 20), and its population is tiny (around 100th in the world, making it median-sized). As for its GDP, it is significantly smaller than South Africa or Argentina. Israel is just not even close to being a top 20 economy. The fact that I have heard so many people guess this country shows just how out of sync people are when it comes to Israel's economic weight.

North Korea: Another terrible guess that I hear a lot. Again we have a strategically important country with nuclear ambitions. But this country is small. Just 20 million people... and it is poor! So GDP turns out to be ranked around 100th in the world - this is a median-sized economy.

Now, to conclude, it's useful to go through the countries above one more time, giving a rough sense of their economic size and their population. Together, these two factors can give you a sense of how rich their citizens are: GDP/capita. This variable has been shown to be a powerful predictor of many phenomena, from civil war to the survival of democracy and respect for human rights. I won't give you the exact figures - the point isn't to memorize numbers. Rather, I'll give you a sense of the "order of magnitude" - you should be able to remember the ball park range for the most important countries in the world:

GDP (in PPP terms):

The >14 Trillion PPP Dollar Club
The European Union
The United States
(In that order. See how powerful Europe would be if it could speak with one voice?)

The >10 Trillion PPP Dollar Club
(Still would be a powerful voice.)

The >4 Trillion PPP Dollar Club

The >2 Trillion PPP Dollar Club
United Kingdom

The >1 Trillion PPP Dollar Club

The >500 Billion PPP Dollar Club
Saudi Arabia

Note: South Africa is the only G20 country not to make the >500 Billion PPP Dollar Club.

Population (here I list only countries that were discussed above - in most cases, rounded to the nearest 5 million):

The >1 Billion People Club
China (1.3 billion)
India (1.2 billion)

The >500 Million People Club
No one. See, China and India really dwarf the rest of the world when it comes to population.

The >300 Million People Club
United States (310 million)

The >200 Million People Club
Indonesia (230 million)

The >150 Million People Club
Brazil (190 million)
Pakistan (170 million)
Bangladesh (160 million)
Nigeria (155 million)

The >100 Million People Club
Russia (140 million)
Japan (130 million)
Mexico (110 million)

The >70 Million People Club
Germany (80 million)
Egypt (80 million)
Iran (75 million)
Turkey (75 million)

The >60 Million People Club
France (65 million)
Thailand (65 million)
United Kingdom (60 million)
Italy (60 million)

The >40 Million People Club
Korea (50 million)
South Africa (50 million)
Spain (45 million)
Argentina (40 million)

The >30 Million People Club
Poland (40 million)
Canada (35 million)

The >20 Million People Club
Venezuela (30 million)
Saudi Arabia (25 million)
North Korea (25 million)
Taiwan (25 million)
Australia (25 million)

Tuesday, May 25, 2010

Happy Birthday, Argentina!

Spent tonight at the Bicentennial celebration in Buenos Aires - 200 years!

¡La noche fue espectacular!

Argentines have much to be celebrating tonight!
Now, some observations as a New Yorker and an American.

Tonight capped off celebrations that have been going on since the weekend - every day parades, every night free concerts, and people everywhere at all hours.

They estimate that there were 2.5 million people gathered on Avenida 9 de Julio. And check this out:

There was no security. There were no police barricades. I did not see a single police officer the entire night, and I was able to get to the center of all the happenings.

I remember I did Times Square for New Year's to bring in 1989. Even back then, we needed a strong police presence - although crowd control was pretty loose. Nowadays, if you want to do New Year's in Times Square, you need to be searched by a metal detector and get patted down by police (yes, they do this to every one - I did it to bring in 2008).

Observation #1: It's nice to be in a great big city that is not a target of terrorism. It's really nice. Buenos Aires is lucky.

Before the concert tonight, they did a parade with floats representing major events in Argentine history.

They began with Native Americans, then they showed the arrival of Europeans. Then more immigration - on one of the most impressive floats I've ever seen in a parade. It was shaped as a huge ship that looked to be about three stories high, booming with music, draped in the flags of Europe and Asia, with people dancing and singing aboard.

Next came Import Substitution Industrialization. That's right. This was a pretty sophisticated parade, for Argentines are pretty sophisticated people when it comes to many things, including political economy. The float had a life-size automobile singing from an assembly line with workers hammering away on it, as well as other machines - like refrigerators.

Then there were floats for various strikes, protests, and demonstrations. Floats for the constitution, and then the coup d’états and brutal dictatorship. There was a beautiful float for Las Madres de Plaza de Mayo - they wore scarves that lit up so that they looked like halos. (This was an important group of human rights activists whose children were disappeared buy the government during the dictatorship's Dirty War, 1976-1983).

Then the parade presented very simply the word "Democracy," spread over 4 huge sheets (DE MO CRA CIA) in the colors of the Argentine flag.

Next, there was even a float representing financial crisis - specifically the hyperinflation of 1989. I told you these people are sophisticated about political economy!

After the parade there was a fantastic concert featuring Fito Páez - AMAZING!

The night ended with the national anthem and an amazing fireworks display directly overhead in the middle of it all. (We can't do that in NY - our buildings are just too big :-)

Oh - one more thing - near the end of the parade were great big balloons, each with the flag of the countries of the Americas. They had every Latino country, as well as the countries of the Caribbean.

There was, of course, no flag for the United States. Some might suggest this is because we are not part of Latin America. But Jamaica and Haiti had flags present, and they're not Latino. And this was a celebration of the revolution of May 25, 1810, where self-rule was demanded by the people of South America. Um, who do you think might have helped inspire a revolution for self-rule? After Argentina won independence on July 9, 1816, guess whose constitution they modeled theirs after. Hint: they choose a federal republic with separation of powers. So, it is certainly conceivable that the US flag be present. Its absence is not accidental.

See, the government running that Dirty War I mentioned above - not to mention other dictatorial coups - was not just tolerated by the United States. We embraced right-wing dictatorships as Cold War allies. We provided aid and even military training. And as for the financial crises I mentioned above, the United States (via the International Monetary Fund) came to the "rescue" with policy advice that we would never take ourselves in the face of an economic crisis. (Anyone think we should have cranked up our interest rate last year? Well, that's the advice we gave to Latin America every time they have had an economic crisis.)

But it wasn't just the absence of the flag - it was the "shout outs" during the concert. Fito shouted out to cities all around the world (for example, Marrakesh). But not to New York. Now, there was no spite in this. It just did not occur to people to shout out to New York. See, in this multi-polar world we live in, the United States is just not that important. Did I mention who was seated beside Argentina's president, (warmly known as “Christina”)? Hugo Chavez.

Observation #2: We no longer live in a unipolar or even bipolar world. And in this multipolar world, some regions are happy to do without the United States.

200 years ago, all of the peoples of the Americas had a special relationship, and the American Revolution inspired them all. But through the course of history, the United States lost any special relationship it could have had with South America. We should work to repair this, but, in all honesty, South America is done with the United States. With Brazil on the rise, and MERCOSUR as a powerful customs union, they just don't need us.

But the same does not go for all of Latin America. We are at a crossroads with Mexico. It is not too late to repair that relationship. We desperately need each other. We need each other to compete in a global economy increasingly organized along regional lines. And we need each other because actions in one country - be they drug use or financial crises, poverty or gang warfare - intimately impact life across the border.

Over this weekend - at a national celebration in Argentina - I have seen flags from many countries officially welcomed and unofficially present in the crowds. Performers from Colombia to Uruguay have been embraced by the crowd of millions. Argentina is a multi-ethnic country that embraces internationalism.

Observation #3: In a multipolar world, regional ties are important.

Have you ever seen a 4th of July where the flags of Mexico and Canada were present? Well, think about it. These are our neighbors. They are our future. If we follow in the footsteps of the crazy AZ, we're lost. The world will simply leave us behind. Whether we tear ourselves apart through drug violence or financial crisis, the rest of the world will go on without us. It’s time we fixed North America and strengthen our relationship with Mexico. And then maybe, just maybe, the United States flag might have a place next to Mexico’s at the next centennial down here in Buenos Aires.