The Vreelander

Odette

2011-12-19T09:04:00.000-08:00

The Vreelander Holiday Edition: Looking for an original gift? Here's one that is perfect for someone interested in global affairs from an intimate perspective...

Writing beautifully. Youssef Cohen tells his story as a man searching for memories of his mother, Odette, who passed away when he was just a little boy.

The adventure will take you around the world, from New York, to Venice, Sao Paulo, and Cairo. You won't travel as a tourist, but will be welcomed nostalgically by old friends and family, with all the bitter sweet joy and melancholy these relationships bring.

You will also travel through history: Amsterdam, Syria, Paris, Portugal, Buenos Aires... Wars and crises impose migration as neighborhoods, societies, even countries are crushed then reconstituted, and your friends and family make their lives, finding their way through life around the globe.

Click here for the link on Amazon!

Who's on first?

2011-08-19T07:35:00.000-07:00

Listening to NPR morning news today - they're referring to Xi Jinping as Joe Biden's "counterpart." Ok, technically, they're both "vice" guys. But Xi has been pre-selected as the next President of China, meaning that if all goes well, he will become, arguably, the 2nd most powerful man in the world. As for our Vice President, if all goes well, he will never become President.

This inspires me to write up a fun little script that you can play with your kids to help them get a sense of three prominent figures in Chinese politics.

ABBOTT: The newspaper says that Xi will be the next President of China.

COSTELLO: The next President of China will be a woman?

ABBOTT: No, Xi is a man.

COSTELLO: Weird. What is his name?

ABBOTT: Xi.

COSTELLO: I thought you said he is a man.

ABBOTT: He is.

COSTELLO: So what is his name?

ABBOTT: Xi.

COSTELLO: Wait a minute! Just tell me - who is the next President of China?

ABBOTT: No. Hu is the current President of China.

COSTELLO: I don't know who is the current President of China.

ABBOTT: Well, he is.

COSTELLO: Who?

ABBOTT: Yes.

COSTELLO: Yes?

ABBOTT: Yes.

COSTELLO: Yes is the President of China?

ABBOTT: No! Hu is the President of China!

COSTELLO: I don't know! You said "Yes" is the President of China.

ABBOTT: No, I said Hu is the President of China.

COSTELLO: I don't know! Just tell me, who is the President of China?

ABBOTT: Yes.

COSTELLO: Yes?

ABBOTT: Yes. Hu.

COSTELLO: I don't know. Who?

ABBOTT: Yes. Now that we cleared that up. Tell me, what do you think of Xi?

COSTELLO: Who?

ABBOTT: No, Xi!

COSTELLO: The woman?

ABBOTT: Xi is a man!

COSTELLO: Who is a man?

ABBOTT: Back to him? Yes.

COSTELLO: Yes is a man?

ABBOTT: Now you're just talking nonsense... Let's just get this straight. Xi is a man, and Hu is a man.

COSTELLO: She is a man?

ABBOTT: Yes. And the next President of China.

COSTELLO: Who?

ABBOTT: No!!! Hu is the current President of China!

COSTELLO: Yes?

ABBOTT: Yes.

COSTELLO: And the next President of China?

ABBOTT: Xi.

COSTELLO: The woman with no name, who is a man.

ABBOTT: More nonsense! There is no woman. Xi will be the next President of China. Hu is the current President.

COSTELLO: Yes?

ABBOTT: Yes. You've got it?

COSTELLO: I don't have any idea what you're talking about!!! When will the new President take over?

ABBOTT: Wen?

COSTELLO: Yes, when?

ABBOTT: No, Wen is the Premier.

COSTELLO: Is that what it's called, the "premiere" of the next President?

ABBOTT: No, just the Premier.

COSTELLO: Sheesh. Ok. When is the premiere?

ABBOTT: Yes.

COSTELLO: Him again? I don't want to know who, I want to know when!

ABBOTT: The Premier.

COSTELLO: Yes. When is it?

ABBOTT: That's right.

COSTELLO: What's right? When will be the next President of China?

ABBOTT: Wen will not be the next President of China. Wen is the Premier!

COSTELLO: I have no idea when will be or not be the transition!

ABBOTT: Hu will step down as Communist Party leader in 2012 and as president the following year.

COSTELLO: I don't know. Who?

ABBOTT: Yes.

COSTELLO: Who?

ABBOTT: Yes, Hu.

COSTELLO: Yes?

ABBOTT: Yes.

COSTELLO: When?

ABBOTT: The Premier.

COSTELLO: In 2013?

ABBOTT: Xi will be President.

COSTELLO: Who?

ABBOTT: No, Xi!

COSTELLO: The woman?

ABBOTT: No, the man, Xi. Hu is also a man and the current President of China!!!

COSTELLO: Yes?

ABBOTT: Yes!!! Got it?

COSTELLO: I have no idea... I know nothing. When is the premiere? Who is the President?

ABBOTT: That's it!

COSTELLO: That's it?

ABBOTT: Yes, Wen is the Premier. Hu is the President. What do you think of Xi?

COSTELLO: I don't know when! I don't know who!! And I have know idea about she!!!

ABBOTT: Well, then, that puts you about even with most people.

Anyway, you get the idea. Have fun with the kiddies. And if you're too young to know about the inspiration for this, check out this classic clip. (Even if you know it, it's always worth another look!)

It's the election, stupid

2011-08-16T09:33:00.000-07:00

Many are suggesting that now is not the time to cut spending. Now is not the time to raise taxes. With interest rates so low, we have a golden opportunity to rebuild our public infrastructure – increasing the debt makes sense under current circumstances. And since the economy is so fragile, any hint at fiscal austerity would have an immediate contractionary effect.

Well, of course this is true. But it misses the point. We have an election on the horizon!

Right now may not be the appropriate moment to pay for the stimulus. But we are going to have to pay for it *eventually*. The question is, who is "we"? How are "we" going to pay for it?

This is about distribution. We can cut public spending. Or we can raise taxes. (Or both.)

If we cut spending, let’s be clear about who "we" means: That person who stops by your house every day delivering mail – might take a hit. Those folks who educate your kids – might take a hit. The guys fixing up the roads – might take a hit. Disabled people who rely on government assistance – might take a hit. Old folks on medicare - might take a hit. The people you call during an emergency – police, firefighters, the military – might take a hit. And if you’re in the private sector but have customers who work for the government, you’ll take a hit too – because those customers will stop shopping.

If, alternatively, we raise taxes, people are talking about targeting the rich. So, in this case, "we" means the very top of the income distribution. If you make less than $250,000 per year, you’re out of that group.

Now, if we try to understand the manufactured debt-ceiling crisis in terms of promoting economic growth, it makes no sense. It was bad for growth – period. But if we consider it in terms of income distribution and realize that there is a major election on the horizon in 2012, things come into focus.

Consider some data. The following figure comes from the website of Douglas Hibbs, who has proposed an intuitive "bread and peace" model of winning presidential elections. In this figure, we just have "bread" – i.e., economic growth - across the x-axis. It’s the average rate of growth during a 4-year presidential term – weighted so that the last few months before the election count far more than the previous time period. Along the y-axis, we have the incumbent party’s share of the vote (that is, the share out of the votes cast for the 2 major parties).

The relationship is clear: more growth, more votes for the incumbent party.

The "peace" part of the model is captured by the data-points marked in red, where military fatalities were high, so that incumbent parties lost despite solid economic growth. One thing is clear – if economic growth is low when an election approaches, the incumbent party loses.

So, how do things look for President Obama? Not so good. Here is a picture according to the latest prediction from Hibbs’s model. Note that in this figure, the x-axis combines weighted economic growth with military fatalities. The red point is the prediction for Obama:

If this looks bad for the President, you can be sure that the debt ceiling crisis made things worse. Not only did it contribute to volatile losses in the stock market, it also signaled to the world that the US stimulus is over. If you put through such contractionary policies... voilà, you’ll get a contraction. According to the "bread and peace" model, this will contribute to the Democrats losing the White House.

If you are rich, you face a trade-off. Either your income contracts because your tax rate goes up or due to the manufactured negative shock to growth. If the economy picks up towards the end of Obama’s term, he has a good chance of getting reelected. This means that when it’s time to pay for the stimulus, the Democrats will be in a strong position to raise taxes on the rich. If we can manage to keep growth low for the next year, however, then the Republicans will take over the White House, and taxes on the rich will remain low.

When you think of it this way, the manufactured crisis not only makes sense, it was brilliant. We trade low growth, for low taxes. This is a great trade for us. We may not know where the global economy is going, but we know that raising taxes cuts our incomes. Of course, by "us," I mean the rich.

For the other "us" – the 98% percent of us earning less than $250,000 a year – it was a bad trade.

For more on how governments can take advantage of manufactured economic crises to push through policies that are bad for growth and exacerbate income inequality, see my book: Vreeland, James Raymond. 2003. The IMF and Economic Development. New York: Cambridge University Press. (This book has also been endorsed by the American Medical Association as a non-narcotic alternative sleep-aid. Just read 2 pages. Zzzzz...)

Imagined Lines Are Not Imaginary

2011-08-11T13:00:00.000-07:00

I was traveling last week, so I didn't get a chance to re-post the following. It's something I've been talking a lot about on FB, and I put something together quickly when asked by Joshua Tucker (NYU) and John Sides (George Washington). It's always a privilege to be featured on their blog, The Monkey Cage, which they co-author along with Erik Voeten (Georgetown), Andrew Gelman (Columbia), and Henry Farrell (George Washington). So here is the original Monkey Cage post from 6 Aug 2011, and here is the text:

IMAGINED LINES ARE NOT IMAGINARY

If we had raised the debt limit with no fanfare, like usual, it would have had no effect – it’s just an arbitrary line.

But if you treat it like a line in the sand, drawing the attention of the world to our unsustainable fiscal situation, and then you fail to cut much spending or raise taxes, you send a powerful coordinating signal to the global herd: It’s time to run.

See, our twin deficits – fiscal and current account – are sustainable only as long as people believe they are. But if people stop believing, then they will start to run from the dollar and from US bonds. If that happens, you don’t want to be the last one left at the party.

Now, we all know that US imbalances are unsustainable. The only question is just how far they can be pushed, and what exactly triggers them to come back towards balance. I have been hoping that they might someday be addressed by China addressing their exchange rate as their economy develops. For a long time, China has benefited from a weak exchange rate against the dollar, as the United States is the main destination of their powerful export sector. But there is another pressure on the rise: competition for scarce resources. At some point, the Chinese government will see that the marginal benefit for the export sector from a weak exchange rate has met the marginal benefit from a strong exchange rate for cheaper oil.

If this day had come before the current mess, then we might have had nice market forces addressing US imbalances – and it would have been a slow and steady soft landing. With the revaluation of the renminbi, US consumers would be able to afford fewer exports from China, and the Chinese would buy more from the United States. A market solution would be nice because domestic politics on both sides of the border were not going to address this. Certainly not the “non-tax and spend” Congress. Our government simply lacked the political will to do what was necessary.

But, dammit, the last thing you want to do is to call attention to the lack of political will! Changing the debt ceiling issue into a global focal point forced Congress to finally put up or shut up. They failed to put up. The way you address a fiscal deficit is to cut spending and raise taxes. Every country that has been subject to IMF austerity knows this all too well. In their arrogance, (some members of) Congress believed the United States is above this logic. Now we’re heading for no man’s land. We have announced to the global herd in a focused manner that the United States lacks the political will to address its deficit. Sadly, this is going to hurt global economic transactions, which many people believe contribute to a more peaceful world. The foolishness of making the debt ceiling a focal point – especially with what is going on in Europe – cannot be underestimated. Hard times are ahead.

Culture vs. Institutions: The Soccer Edition

2011-07-10T12:39:00.000-07:00

Brazil and the United States battled today in soccer. Brazil: a nation of 200 million dedicated exclusively to soccer – perhaps the #1 soccer-nation in the world. VERSUS The United States: a nation that devotes most of its vast resources – its time, money, and best athletes – to... baseball, football, and basketball. Let's face it, we don't even call soccer by its proper name.

But this was also a battle of culture versus institutions. Of markets versus states. And when it comes to supporting sports, markets have a bias towards testosterone. Without government intervention, men have many more incentives than women to devote their lives to sports. And Brazil doesn't intervene on behalf of women. The United States does.

Yes, I'm talking about the 2011 Women's World Cup Tournament.

To understand today’s match, we need a little history of US institutions. In 1972, the United States passed a law called "Title IX," which requires educational institutions to devote equal resources to male and female athletics (or any education program/activity receiving Federal financial assistance).

American universities were spending a lot of money on their men's American football teams, and they wanted to continue to do so. But how can you maintain football expenditures and also find money to spend on women's sports teams? Well, first, you cut expenditures on other men's sports... like men's soccer. (This helps to explain why we lag behind the rest of the world in men's soccer. Title IX implicitly encourages our best male-athletes to play something else.) You also, obviously, increase the money that you spend on women's sports – on any women’s sport you can find.

Title IX thus produces incentives for millions of little girls to play various sports. Think about the incentives for parents to support their daughters. Take my cousin, for example. He was coaching his amazing son to be a bowler. (They’re both really good, having both bowled perfect 300 games on pro-shot lanes.) His younger daughter was tagging along at the lanes, bowling for fun. Somebody in the bowling alley noticed that she was pretty good, so he mentioned something to my cousin. "Ever heard of Title IX?"

This question set in motion a bowling career for Jennifer Vreeland. She wasn't so keen on joining the school bowling team at first. Frankly speaking, it wouldn't have happened without the motivation of her father, who, in turn, was motivated to get her a scholarship because of Title IX. Yet, Jenn grew to love the bowling team. By her senior year in high school, she was team captain and enjoyed self-esteem, camaraderie, and good health thanks to Title IX. Today she is an NCAA bowler on scholarship at St. Francis College. In her first season, she set a new team record, scoring 288 in an important match.

This is a personal anecdote, and there are literally millions more like it across America. Mothers and fathers recognize that by encouraging their daughters to play sports, they give them a better chance of getting into college – and getting scholarship money.

And that brings us back to today's AMAZING victory of the United States over Brazil. Yes, you guessed it. Today, institutions triumphed over culture. And it's not the first time. US women's soccer is a dominant force in international sports. If you haven't heard what happened in today's game... well, find out. This game is one for the movies. I can't do it justice here. Seriously, if you had pitched today's story to Hollywood, they wouldn't have taken it because they would have thought it unbelievable. And the victory is due, in part, to Title IX.

The case I'm making here is not meant to diminish the powerful influence that culture can have. Brazil has a smaller population and a smaller economy than the United States. Still, they have an incredible team, including, arguably, the best player in the world. But Brazil doesn't invest in women's sports the way that the United States does. (Interestingly, the American broadcasters on ESPN questioned just how great Brazilian women's soccer might be if only their country actually invested in it.)

The bottom line is that there are a number of factors that determine how well a country's national team does. The obvious are population size, income, and culture. But one factor that should not be overlooked is government action, especially when it comes to women's sports.

With this in mind, I believe that the United States has one of the greatest soccer programs in the world. Our nation may not yet have won a men's world cup trophy, but we don't really need national teams to inspire boys to play sports. Millions of fans tune in to watch high-testosterone professional league games. Ultimately, sports should promote self-esteem, camaraderie, and good health for the whole population. If you rely exclusively on markets, you only provide incentives for half of your population to play. You should thus judge a nation by the policies it puts in place to incentivize the other half of its population.

Congratulations to the US women's soccer team. Score another victory for Title IX. And God bless the United States of America.

Leading a Multi-Polar World

2011-06-02T14:48:00.000-07:00

Crazy recent events have opened an opportunity for new leadership at the International Monetary Fund (IMF). The Managing Director position has always gone to a European. The United States - which provides the most IMF resources and gets the most votes in return- has been fine with this arrangement. We get the IMF headquarters (just down the block from the White House and US Treasury) and the head of the other major financial institution, the World Bank. The front-runner to lead the IMF is yet another European - Christine Lagarde. But appointing another Western European would be a mistake for the United States.

No matter what happens, the IMF will remain mainly under the influence of the United States. But if we fail to open up the leadership of this institution, then the emerging market world will take the institution less seriously. Then the United States will be in charge of an institution that risks irrelevance, or one that is no longer an International but rather a European Monetary Fund.

Consider how power is distributed at the IMF Executive Board - the body charged with selecting the Managing Director. The United States controls nearly 17%. The European Union, if it votes as a bloc, controls about 30%. The Directorships of Japan, China, Singapore, and India collectively control nearly 17% of the votes. Latin America is weaker - with less than 10% of the votes, and Africa much weaker, with less than 5% of the votes (see here). But the point is that this is not a decision that the United States or the European Union can make alone. At least part of the rest of the world also has to go along. And the de facto approach has to make the decision by consensus.

So, suppose that the rest of the world does go along. Suppose that once again the IMF appoints a European. It won't be because emerging market and developing countries failed to propose alternatives. There are potential candidates from all over the world (e.g., Asia, Africa, and Latin America). Note that the emerging market and developing world can force the issue if they choose. Right now, Europe is over a barrel. Europe needs the IMF. The rest of the world does not.

Ultimately, if we see another European running the IMF, it's because emerging market and developing countries don't really care. If we see another European Managing Director, it will be because the rest of the world doesn't want to bother to mobilize the necessary political capital to overcome the Europeans (which would be substantial). And herein lies the problem. The emerging market world is done with the IMF.

So, we can appoint another European, but we will further alienate the rest of the world from this institution.

The opportunity for the United States is to draw the rest of the world back into supporting this institution - an institution where the United States will still have the lion's share of voting power.

Of course, irrelevance may be the IMF's destiny.

Global financial power is shifting. In the days of bi-polarity and uni-polarity, it made sense for the global hegemon (the United States) to provide the lion’s share of resources to global financial institutions and receive commensurate political control in return. In the new multi-polar world, however, emerging markets will demand more and more political power as they are able to provide more resources. Meanwhile, Western powers will be less and less willing to support an institution where they have declining control. Power at the IMF is on a tightrope.

The logic of collective action suggests that problems can be overcome when there are power-asymmetries, with the most powerful actor providing the public good. As power-asymmetries diminish at the global level so will the political support for a powerful global financial institution.

Yet, the multi-polar world does not spell the end of international cooperation. Power asymmetries persist at the regional level. There may not be a global economic hegemon, but there are regional economic hegemons. And there is increasing political will for Regional Financial Institutions (for a longer discussion, see this piece by Raj Desai and me).

As the relative financial power of the United States continues to decline, so will the power of the global institutions set up at the end of World War II. In a multi-polar world, political and financial power will be more decentralized. This process will speed up if the next head of the IMF is a European. It will return the IMF to its roots: an institution designed for Europeans, led by a European. But the rest of the world will turn away. If the United States wants to maintain the power of an institution where it exercises the most influence, it should not hasten the decline of the IMF. It should, instead, try to draw in the rest of the world by supporting a leader who comes from outside of Europe.

(Considering their lack of voting power, how about someone from Africa? I vote for Trevor Manuel.)

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

2010-12-23T14:32:00.000-08:00

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.

Enter the Dragon... or Rabbit?

2010-12-05T20:21:00.000-08:00

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...

UPDATE!

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.)

Rise of the Rooster

2010-12-04T13:33:00.000-08:00

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...

G20 Revisited: ASK IT SAM!

2010-11-12T05:00:00.000-08:00

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:

G7 + BRIC + EU + MAKTISAS

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:

ASK IT SAM!

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

I=Indonesia
T=Turkey

S=South Africa
A=Argentina
M=Mexico

So, there you have it:

G7 + BRIC + EU + ASK IT SAM!

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

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

2010-10-06T15:47:00.001-07:00

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)

2010-10-06T14:42:00.000-07:00

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

Who should lead a multipolar world?World Bank visits Georgetown

2010-09-30T07:58:00.001-07:00

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.

Regional Games

2010-09-24T08:07:00.000-07:00

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.

Hungary and the IMF

2010-07-21T04:04:00.000-07:00

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.)

Vreelander: The Reckoning

2010-07-09T04:09:00.000-07:00

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!

The Vreelander versus the Psychic Squid!

2010-07-07T01:52:00.000-07:00

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.

Winning at the World Cup Correlated with The Vreelander?

2010-06-24T07:26:00.000-07:00

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.
RESULT: TIE
1-1

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.
Uruguay.
RESULT: TIE
0-0

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!
RESULT: KOREA
2-0

Argentina v. Nigeria
Another easy choice - Just got back from teaching 2 weeks in Argentina - plus I did a conference there in 2002.
ARGENTINA!...
RESULT: ARGENTINA
1-0

England v. USA:
Obvious. With regrets to my beloved co-author, Alastair Smith...
USA-USA-USA!!!
RESULT: TIE
1-1

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!
RESULT: SLOVENIA
0-1

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!
RESULT: GHANA
0-1

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...
Deutschland!
RESULT: GERMANY
4-0

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!!!
RESULT: NETHERLANDS
2-0

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!
RESULT: JAPAN
1-0

Italy v. Paraguay
Another easy call. I have worked with two Italian co-authors: Silvia Marchesi & Paolo Spada.
Italia!
RESULT: TIE
1-1

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!
RESULT: TIE
1-1

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!
RESULT: TIE
0-0

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!
RESULT: BRAZIL
2-1

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
RESULT: URUGUAY
0-3

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!
RESULT: CHILE
0-1
FIRST LOSS***

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!
RESULT: SWITZERLAND
0-1

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!!
RESULT: MEXICO
0-2

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:
Korea!
RESULT: ARGENTINA (2ND LOSS***)
4-1

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!
RESULT: GREECE
2-1

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

England v. Algeria
Co-authored with Alastair Smith in 2006.
Go England!
RESULT: TIE
0-0

Germany v. Serbia
Go Germany!
RESULT: SERBIA
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!
RESULT: TIE
1-1

Netherlands v. Japan
Dutch co-author trumps. And did I mention my wonderful colleague, Erik Voeten?
Go Netherlands!
RESULT: NETHERLANDS
1-0

Cameroon v. Denmark
Neither. But Denmark appears 4 times in my book index, Cameroon only twice.
Go Denmark.
RESULT: DENMARK
1-2

20 June
Slovakia v. Paraguay
Neither. Book index indicates more support for:
Paraguay.
RESULT: PARAGUAY
0-2

Italy v. New Zealand
2 co-authors=
Italy!
RESULT: TIE
1-1

Brazil v. Cote d'Ivoire
Co-author + visit to USP =
Brazil!
RESULT: BRAZIL
3-1

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.
RESULT: PORTUGAL
7-0

Chile v Switzerland
Easy choice for me. Go KOF, Go ETH, Go Zurich...
Go Switzerland!
RESULT: CHILE ***4TH LOSS
1-0

Spain v Honduras
Another easy choice - Go ESADE...
Go Spain!
RESULT: SPAIN
2-0

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!
RESULT: SOUTH AFRICA
1-2

Mexico v Uruguay
Yikes - tough call. Gave a talk in Mexico. Published in Uruguay.
Go Uruguay!
RESULT: URUGUAY
0-1

Greece v Argentina
ARGENTINA!
RESULT: ARGENTINA
0-1

Nigeria v South Korea
Global KU Frontier Spirit!
KOREA!
RESULT: TIE
2-2

23 June
Slovenia v England
England!
RESULT: ENGLAND
0-1

United States v Algeria
USA!
RESULT: USA
1-0

Australia v Serbia
Australia!
RESULT: AUSTRALIA
2-1

Ghana v Germany
Germany!
RESULT: GERMANY
0-1

24 June
Cameroon v Netherlands
Go Dutch!
RESULT: NETHERLANDS
1-2

Denmark v Japan
Japan!
RESULT: JAPAN
1-3

Paraguay v New Zealand
Index rule says...
Paraguay
RESULT: TIE
0-0

Slovakia v Italy
Italy!
RESULT: SLOVAKIA (?)
3-2
***FIFTH LOSS

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.
RESULT: COTE D'IVOIRE
0-3

Portugal v Brazil
Go USP! Go BRAZIL!
RESULT: TIE
0-0

Chile v Spain
Go ESADE! Go Spain!
RESULT: SPAIN
1-2

Switzerland v Honduras
GO ETH! Go Switzerland!
RESULT: TIE
0-0

The G20 and MAKTISAS

2010-06-20T10:59:00.000-07:00

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:

G7 + BRIC + EU + MAKTISAS

(1)
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
Japan
Germany
The United Kingdom
France
Italy
Canada

(2) Add BRIC:
Brazil
Russia
India
China

(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!
M-exico
A-ustralia
K-orea
T-urkey
I-ndonesia
S-audi Arabia
A-rgentina
S-outh Africa

So there you have the G20 in 4 easy steps:

G7 + BRIC + EU + MAKTISAS

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?
Spain
Poland
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:
Norway
Switzerland

(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...
Iran

(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
Eurozone
(Still would be a powerful voice.)

The >4 Trillion PPP Dollar Club
China
Japan

The >2 Trillion PPP Dollar Club
India
Germany
United Kingdom
Russia
France
Brazil

The >1 Trillion PPP Dollar Club
Italy
Mexico
Korea
Spain
Canada

The >500 Billion PPP Dollar Club
Indonesia
Turkey
Australia
Iran
Taiwan
Poland
Netherlands
Saudi Arabia
Argentina
Thailand

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)

Happy Birthday, Argentina!

2010-05-25T23:44:00.000-07:00

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

Primero que nada: ¡FELIZ CUMPLEAÑOS ARGENTINA!
¡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.

The Turkish Bridge: East meets West & Security meets Economics

2010-05-06T06:46:00.000-07:00

Turkey is in a pivotal position on the United Nations Security Council – the United States, the United Kingdom, and France are looking to impose sanction on Iran, and they may need Turkey’s vote. But Turkey is looking to avoid the sanction option – and they’re opposed to military action against Iran.

For decades, Turkey was in the hip pocket of the West, no? The country had been trying to get into the European Union since at least the late 1980s – doing just about anything to please the West. Europe took this country for granted and kept slamming the door in Turkey’s face. But times they are a-changin’ in this multi-polar world of ours, and Turkey may now see its destiny with Asia, not Europe.

How did we get this far? I’d like to share just two observations that tie this international security issue to international economic issues.

(1) After decades of loyalty to the West, Turkey got into major financial trouble at the turn of this new century. The government entered into an International Monetary Fund (IMF) arrangement in December 1999. Conditionality was harsh. In return for IMF loans, the government was required to impose austerity on the Turkish people. Turkey – at that moment in history – was not looking so important to the Western powers, and the IMF deal was not sweet. It left many in Turkey bitter towards the West.

(2) Flash forward to the fall of 2008… the annual elections for the United Nations Security Council. Western Europe was taking turns filling the seat. And who’s turn was it? Why, Iceland, of course! Well, if you think back to the fall of 2008, it was not exactly the finest moment in Icelandic history.

Usually, regions decide who gets to be their regional representative on the Security Council. Europe had picked Iceland. But, technically, any country can nominate itself and run for election. And the winner must garner two-thirds of the votes of the United Nations General Assembly.

Guess which country believed it could beat Iceland! That’s right, Turkey – spurned by Europe over and again – decided to run for the Western European seat on the Security Council. And up against Iceland at that moment in history, well, it won decisively. It was a watershed moment in history that went unnoticed my most. (I caught it.)

1999: A financial crisis leads to an IMF arrangement that leaves Turkey bitter with the West.

2008: Another financial crisis enables Turkey to catch a seat on the Security Council in a veritable coup.

Financial crises taketh away… and they giveth back.

How can we win Turkey back? Well, the first thing the West needs to realize is that it should never have taken Turkey for granted. Interestingly, the previous times Turkey had been elected to the Security Council – back in the 1950s & 1960s – the country was elected to represent Asia. I think Turkey is the only country to have represented different regions – this special country is truly at the crossroads of Europe and Asia.

Turkey is the bridge between the East and the West, and in a multi-polar world, Turkey will be a pivotal player. We ought to be consistently treating it like one.

It may, of course, be too late to win Turkey back. If you had to choose your destiny, and could hitch your wagon to either Europe or Asia, which would you choose right now? Asia has growing economic might. But the West has proven economic strength and the promise of democracy. So, the West should not give up on winning back countries it burned in the past. If, by chance, Turkey should happen to need a loan from the IMF, let’s be sweeter next time – kind treatment from the IMF has been known to buy the West votes on the Security Council before. International economics can be a bridge to international security.

Moral Hazard & Conditionality: The Gods of this Greek Tragedy

2010-04-26T07:36:00.000-07:00

So here it is: the long-awaited, much anticipated bail out of Greece. Was there really ever any doubt? I guess there was a little - that's why Greek bond yields went up. But the break-up of the Eurozone? Com'on - wasn't gonna happen.

So why has this been such a tragedy? Why the bickering back and forth about whether Greece will get a bail-out and who will do the bailing?

The answer has to do with "moral hazard" and "conditionality."

Moral hazard rears its ugly head any time actors are insured against a risk.

Imagine how people would drive if they were completely insured against any damage to their cars - answer: a little more recklessly.

The auto-insurance industry deals with potential moral hazard with lots of institutions: deductibles, higher premiums for folks with poor driving records, different rates for different types of cars and drivers.

Imagine the kinds of risks that banks might take if they were completely insured against risk by the government... hmmm... Imagine - it isn't hard to do.

Why, they'd take risky bets, lending to people who had little chance of repaying - and then when the loan repayments didn't come, well, they'd just get bailed out by the government.

So, how do we address this kind of moral hazard? This one is tougher. See, if the big banks fail, we all suffer. That's what "too big to fail" is all about - we don't have a credible commitment to let them fail... unless we are willing to allow the whole financial system to fail - that is, none of us eat. Since we don't want to go hungry, and the banks know this, they understand that they are just too big to fail.

Congress is trying to figure out away to deal with this moral hazard. Their solutions have to do with passing preemptive laws. One law could be to require banks to lend less and keep more money in their vaults (this is what "deleveraging" and "capitalizing" are about). Another law being considered is to keep banks small. The financial system can survive if small banks collapse. so we've got a credible commitment to let them fail. Knowing this, the small banks will not take undue risks.

Now, imagine how governments would act if they were completely insured against the risk of defaulting on loans. Why, they'd borrow and borrow and borrow... and they'd never worry about paying anything back... Yeah - imagine that. Well, this is what Germany has been imagining lately... it's been a nightmare thinking about the signal it sends when Greece is bailed out. Portugal, Spain, Italy - they'll all realize that they can borrow and spend without limit, and in the end someone will bail them out. How, then, can Germany deal with this kind of moral hazard?

The answer: Conditionality. Conditionality is just a quid pro quo. You want loans? You've got to change your ways. We'll give you a li'l slice of the loan upfront. But before giving you the next slice in a few months, we're going to check your policies. If you're still misbehaving - eating more than your earning - we'll hold up the next installment of the loan. And that will be ugly. You won't be able to pay government workers or deliver public services. Investors will run scared from your country, and no one else will be willing to lend to you. You won't eat.

Note that conditionality attacks a country's very sovereignty. The "conditions" of the loan have to do with government taxes and spending - the very essence of politics. It is as though the lender has suddenly entered into a country's political arena. And when taxes go up while spending goes down, there are lots of people who lose - people who won't be very happy about conditionality.

So who's going to impose conditionality?

Germany & the Eurozone have the money to lend to Greece. And they likely have the credibility to crack the conditionality whip. But this is dirty work. Germany would be seen as the bad guy in Greece - indeed throughout Europe - if it were dictating to the Greek government how to run Greece. If only there were some kind of smokescreen that Germany could use... where they call the shots, but make it appear that someone else is cracking the whip.

That's where the International Monetary Fund (IMF) comes in. See, the IMF has been doing conditionality for years and years. And while the United States is the largest single vote-holder at the IMF, the combined power of the Eurozone easily surpasses American might. So, the Eurozone will be calling the shots. Bickering amongst Eurozone members like France and Germany can take place behind the secret doors of the IMF Executive Boardroom. And whatever emerges will be IMF policy.

So, be on the look out for protest signs in Athens bashing the IMF in coming months. Some will surely see through the IMF facade, realizing that Germany is really calling the shots. Others will see that Greece really sacrificed its sovereignty the day they gave up the drachma in favor of the euro. But the real devil here is moral hazard. And the solution conditionality.

North America needs a flag!

2010-04-13T17:25:00.000-07:00

In a multi-polar world, regionalism may become the key to global governance and prosperity. For all of its current troubles, the European Union and the Euro are here to stay. The Chiang Mai Initiative is the latest in overlapping institutions in East Asia. South America already has a customs union in Mercosur, and there is talk of their own new Banco del Sur. For the United States, our best hope for a regional future is making NAFTA better and building fair cooperation with our neighbors to the north and south.

I like the idea of closer ties to Mexico and Canada. As improbable as unity may seem for us three today, our prospects are certainly brighter than one would have imagined for France and Germany in the first half of the last century. War torn and bitter for decades, look at them now - united under one flag of Europe. A united North America is our future - perhaps distant - and it's never too early to start dreaming of greater unity and prosperity together under one North American flag.

So that's where I decided to Google-image "NAFTA flag"... YIKES! The image I found - a blending of the US, Mexican, and Canadian flags - looks like somebody's nightmare. I am, of course, teasing - I appreciate the effort. And it is perhaps reflective of the fact that NAFTA has a long way to go before it brings about any unity to our region. But to forge a new North American regional identity, we need a new flag, not a blending of our current national flags.

If we are going to dream of a future together, we need a new symbol of North American unity - one that reflects our past, present, and future as a new unified region. We can all keep our old national flags, of course, but for the region, we need an original design.

So, I've decided to try my hand at a flag for all of North America. Here's my proposal:

The triangle symbolizes:

The greatness of the pyramids built by the native people of the Americas in Mexico long before the days of colonization
The three sides represent the three core members of our regional cooperation, beginning with NAFTA: Canada, Mexico, and the United States
Most importantly, a resemblance to the North American geographical territory, which is narrow in the southern tip of Mexico, and wide across north of Alaska and Canada

The color recalls the gold of the past and the prosperity of the region’s future

The blue background:

Complements the map interpretation of the triangle: recalls the Atlantic and Pacific oceans which surround and unify us
Blue signifies trust, unity, and loyalty

Some final thoughts - while I justify the blue and gold in terms of our own North American past, present, and future, any similarity to the European flag is not a coincidence. I think that Europe has led the way on regional integration and serves as a model for the world. Personally, I do think 12 stars is overdoing it a bit. I like the simplicity of design on a flag. The one I propose here reminds me of the minimalism of the Japanese flag. This simple design is still distinctively ours: the use of the triangle is original and fitting for our three countries and for our North American land mass. Using a symbol that represents our geography is inspired by the flag of the Gambia. Note that there's room for Central America and the Caribbean to join some day - but we're not adding more sides or more stars - let's keep the design simple: the triangle represents North American unity.

So there it is. Let me know what you think. And if you like it, please forward this to others who might be interested...

Foreign Aid, Fractionalizers, and V-Graphs on The Vreelander

2010-04-10T17:44:00.000-07:00

Last month I was privileged to participate in a conference on foreign aid at Oxford University.

Why do governments provide foreign aid? To which countries? And with what effects on economic development?

These are questions we considered. The participants included academics, like me, as well as practitioners - and people who straddle both worlds. Now, sometimes we academics have trouble expressing our nuanced ideas in a readily accessible format for a broad audience. This is why I was happy to see an innovative way to present the results of sophisticated data analyses with a picture - and the name is just perfect for The Vreelander: V-Graphs.

Two graduate students from Columbia University, Jordan Kyle and Elizabeth Sperber, presented research they've done with Jonathan Blake on "foreign aid fractionalization." What is "fractionalization" about? Well, sometimes donor countries give a lump some of aid to a developing country to be used for a broad range of purposes, but other times, donor countries "fractionalize" their aid into small packages for a number of very specific projects.

Just about everybody who studies foreign aid condemns "fractionalization." It increases transaction costs, places additional costly burdens on the bureaucracy, and limits the use local knowledge to respond to changing circumstances.

So why would a donor country "fractionalize" aid?

Blake, Kyle and Sperber suggest that it may be a question of how much the donor trusts the developing country's desire and ability to use the aid effectively. The more the donor trusts the recipient, the more of a "lump sum" that may be provided. If the donor doesn't trust the recipient, the aid may be "fractionalized" so that the disbursements can be micromanaged from afar. If a developing country has a highly-reputed effective bureaucracy, a donor may trust it to do a good job, but if the country's bureaucracy is known to be inept, the donor may "fractionalize."

The scholars test this hypothesis on a wealth of data from many different donors. They find that the effect of the developing country's bureaucratic quality influences different donors in different ways. Lately, the United States, for example, fractionalizes aid less for developing countries with high-quality bureaucracies, and fractionalizes more for the developing countries with low-quality bureaucracies, just as one would expect. But not every donor country follows this pattern. Many countries don't seem to care about the bureaucratic quality of recipient countries. And still other countries - like France - actually fractionalize more for the high-quality bureaucracies and less for the low-quality bureaucracies. (Why would the French do this? A mystery.)

I could go on listing the effects country by country, but Blake, Kyle and Sperber have a better way to present the results with a picture - the V-Graph!

Just a li'l bit of background: when we perform statistical analyses, we look for two things: (1) the direction & magnitude of a correlation (positive, negative, or neutral) and (2) how strong the relationship is - that is, whether it's "statistically significant." These two concepts are presented as the "coefficient" and the "standard error." Roughly speaking, the "coefficient" is a summary of the best fit of a relationship - sort of like a mean or average. The "standard error" is a sense of dispersion... or how many of our cases really come close to the best fitted relationship - sort of like a standard deviation. In the social sciences, we often look for relationships that are statistically significant at the 95% level... That means we're 95% certain that we would not have estimated a given coefficient if the real relationship is just zero... 95% significance is indicated when the size of the coefficient is about twice size of the standard error (more precisely, the ratio must be 1.96 or greater). Blah blah blah...

Whoah! Did I lose you in the previous paragraph? No problem. All you need to know is that the relationship between foreign aid fractionalization and bureaucratic quality might be either positive, neutral, or negative. The V-Graph summarizes all this in three partitions:

(Click the pic to make it bigger.)

If a country lands in the red part, the relationship is negative and statistically significant. (Higher bureaucratic quality => less fractionalization, like we might expect.) In the yellow part, the relationship is neutral or null - it's not considered statistically significant. (Bureaucratic quality doesn't influence these donors.) And in the green part, the relationship is positive and statistically significant. (Higher bureaucratic quality => more fractionalization - this is strange.) So, the graph conveniently summarizes the different ways donors consider the bureaucratic quality of recipient countries. You can easily see that for the USA the effect is negative - the United States "fractionalizes" its aid less for countries with high quality bureaucracies that it trusts to do a good job. The effect for IRE is neutral - Ireland doesn't seem to care about the bureaucratic effectiveness of recipient countries. And the effect for FRA is positive... strangely, France fractionalizes their aid packages more for the countries with high-quality bureaucracies. (If you're unfamiliar with the abbreviations for some countries, this page might help.)

From a substantive point of view, the question of fractionalization is important. Breaking up aid into small projects can overburden a developing country's bureaucracy and can be an inefficient way to provide aid. (See, for example, Nancy Birdsall's work on this.) So, we want to understand why donors choose to fractionalize. There is a lot more to it than I've touched on here - I recommend checking out the full paper.

And for statistically-minded folks who'd like to use V-Graphs to present their findings, the code is available here, on Jordan Kyle's webpage. So nice when a scholar provides a public good like this :-)

Say Goodnight to the Bad Guy! Germany, Greece, and the IMF

2010-03-19T08:22:00.000-07:00

The Financial Times reports today, "Berlin shifts stance on IMF role in Greece."

So, one day Germany says it won't bail out Greece.
Next day, Greece says it’ll go to the International Monetary Fund (IMF).
So then, Germany says it doesn't want the IMF messing in the eurozone.
Next thing you know, Germany says the IMF-option is back on the table.

What's going on here?

Somebody's got to be the bad guy.

Somebody's got to provide liquidity to Greece, but also make sure that all this money doesn't simply go towards subsidizing the bad policies that got Greece into this mess in the first place.

Changing policies means imposing painful austerity on Greece. Eventually, this might entail raising interest rates, placing ceilings on public credit, cutting public expenditures, and raising taxes. The value of the euro might also slip... which is why the onus of having an outside actor - the IMF - is distasteful to Germany. Oh - and the bad guy's got to slap around Greece bad enough to scare Spain, Portugal, maybe even Italy, or it might have to play bad guy in those countries later...

So then who will be the bad guy? Who will crack the whip?
>>Peitsche!<<

The Greek government will get plenty of blame ... they'd like to spread some of it around.

The German government has been getting blame from throughout Europe for austere monetary policy for generations.

How about bringing in the IMF so they can share some of the blame as things go from bad to worse, as they surely will?

Note that by bringing in an international organization with as obscure governance as the IMF - whose membership includes all the countries in the world, and few understand who's really in control... many just figure it must be the United States - governments can obfuscate the responsibility for painful policy choices.

The IMF may yet have to play Dark Knight in this Greek tragedy - making the tough choices.

Why should my US audience care?

Well, we've been running a structural deficit for so long, our national debt is rapidly approaching 100% of our over 14 trillion dollar gross domestic product. A really big chunk of this debt is owed to China.

Some day - perhaps some day soon - we will have to pay the piper. We'll be the country that is raising interest rates, cutting public expenditures, raising taxes. Our government will look to scapegoat someone. We'll look for a bad guy. Of course, the IMF is too small to bail us out. They don't even have one trillion dollars, much less ten. So, we'll have to be more creative in painting the picture of a bad guy. We'll have to come up with new obscure ideas, like "currency manipulator" or "protectionist" ... maybe we'll just resort to ol'fashioned US xenophobia. Yeah, we'll probably just blame the folks who lent us the money in the first place. China'll be our bad guy.

You need the bad guy,
so you can point your *** fingers...and say, "That's the bad guy."
So...what does that make you? Good? You're not good.
You just know how to hide...how to lie.
Me, I don't have that problem.
Me, I always tell the truth.
Even when I lie.
So say good night to the bad guy!
Come on.
The last time you gonna see a bad guy like this again, let me tell you.

With apologies to Oliver Stone, Brian De Palma, and Al Pacino.

For more on these themes, see:

(1) Scarface (1983)
(2) The Dark Knight (2008)
(3) The IMF and Economic Development (2003)

One stone, four birds... Greece, Germany and the European Union

2010-03-17T08:02:00.000-07:00

Thomas Meaney (Columbia University) and Harris Mylonas (George Washington University) have an interesting take on the Greek tragedy in the European Community:

"What hasn't yet shattered the EU just might make it stronger."

This is particularly true for Germany. They argue that the German dithering over what to do about the financial crisis of Greece - and by extension, the Eurozone - was actually strategic. Allowing the crisis to come to a head - threatening to tear the European Union apart - actually benefits Germany in four ways:

(1) The crisis has caused the Euro to depreciate which will help German exports:
"Germany has been hamstrung by a weak dollar and even weaker Chinese yuan. The devaluation of the euro relative to the dollar in the last three months by more than 10% has helped German exports recover from a devastating 19% drop in 2009."

(2) The crisis may help Germany see one of their own nationals elected to head the European Central Bank:
"The candidacy of the longtime favorite, Italy's Mario Draghi, has been severely compromised by his close ties with Goldman Sachs and its role in helping the Greek government's attempt to conceal the full extent of its debt. Now Axel Weber, the current Bundesbank president, leads in the running, putting the Germans in a much better position to have one of their own head Europe's leading financial institution."

(3) The crisis - especially the fact that Europe allowed Greece to languish before agreeing to come to the rescue - has sharpened the German whip it's been cracking at other debtor countries like Spain and Portugal:
"Germany now stands on much firmer ground when it comes to haranguing debtor nations in the Eurozone to get their books in order."

(4) The crisis had increased support for the German stand against expanding the Eurozone:
"EU nations such as Estonia, Latvia, Lithuania and Denmark, which have not made it into the inner sanctum of the Eurozone, will now face a much longer wait."

So while Germany seemed to struggle on the world stage as the financial meltdown in Greece threatened to wreak havoc on the rest of the German-led Eurozone, Germany may actually stand to improve its position in Europe. And if what's good for Germany is good for the European Union, then this story may yet have a happy ending.

The piece by Meaney & Mylonas appeared March 15, 2010 in the Los Angeles Times.

Gotta catch 'em all!

2010-03-12T06:58:00.000-08:00

Prime Minister Hatoyama announced today that the yen is too strong and said that the exchange rate should be left to the markets...

But, of course the value of the yen should be left to markets! That's the whole point of a floating exchange rate. So why the announcement and why is it a headline in the Financial Times?

Well, this is sort of like when a passive aggressive friend tells you, "I can't decide for you if you should come to my party, you must make the right decision for yourself." Oh, and now imagine that your friend adds, "I wouldn't hold it against you except in extreme circumstances..."

For, the FT article goes on to say that PM Hatoyama added that markets should determine the exchange rate, "except in cases where there were sudden moves in the market that did not reflect the fundamental value of the currency" [quoting FT, not PM Hatoyama].

Basically, the Prime Minister is throwing a little uncertainty out to markets about what the government might do. And considering that his party's sweeping electoral victory last year represented an historic shift in power in Japanese politics, there isn't much track record to judge.

Now, the announcement is unlikely to shatter markets - the FT reports that the yen only weakened slightly following the Prime Minister's comments. And the government will likely not take any real action to lower the value of the yen.

Still, the announcement itself is a li'l bit of an action. The government does not want to see the value of the yen appreciate. A weak yen would be good for the strong export-oriented sector in Japan. A dropping yen would do much more to help Toyota sales, for example, than any further appearances from Mr. Toyota himself. The weak yen would make Japanese automobiles, electronics, etc. cheaper for people abroad (e.g., Americans), and it would make imports more expensive for Japanese consumers.

Let's take a broader perspective: The financial crisis in 2008 weakens the dollar. The Chinese renmimbi is pegged mostly to the dollar, so its value drops. In relative terms, this makes the euro and the yen stronger... Now, with the Greek tragedy playing out, the value of the euro drops. So, investors (and speculators) are looking to see what currency will keep its value... And, by the way, if we all coordinate on buying the same currency, we'll have a self-fulfilling prophecy. The value of whichever currency we all coordinate on will rise accordingly.

So, Prime Minister Hatoyama's headline is really just a message: the buck does not stop here either!

Now, under the old days that led up to the Great Depression, governments had fixed exchange rates and played dirtier. They engaged in outright competitive devaluations, and this beggar-thy-neighbor approach caused things to spiral out of control. A weakened currency can boost an economy, a valueless currency not so much. With major currencies on floating exchange rates, movements are gradual, and the games that governments play are subtle. That's good for all of us.

Yet, if we don't trust the dollar to rise, and we don't trust the euro to rise, and we don't trust the yen to rise, and the currencies of the emerging markets are still a bit risky, where will we go? The Chinese and the IMF have been floating the idea of a new international reserve currency... but I'm not optimistic. Does anyone know the number of a gold-broker?

For more on the coordination around international reserve currencies see:
McNamara, Kathleen R. 2008. A rivalry in the making? The Euro and international monetary power. International Political Economy 15 (3):439-459.

And for a great intro to these topics, see:
Oatley, Thomas. 2010. International Political Economy (4th Edition) (Paperback). New York: Longman.

A More Multi-Polar Mundo

2010-03-08T06:07:00.000-08:00

Two headlines today in the London Financial Times are indicative of a multi-polar world:

Beijing studies severing peg to US dollar

Eurozone eyes IMF-style fund

The first is about China moving away from fixing their currency to the dollar, and allowing it to appreciate. The article also discusses China's growing economic and political ties to Africa and an oil pipeline between China and Russia.

The second is about Europe developing a European Monetary Fund, in contrast to the International Monetary Fund (IMF), whose largest shareholder is the United States. This news comes as the Chiang Mai Initiative moves forward to form a similar monetary fund for Asia.

What does this news mean for the United States?

The bottom line is that moving forward in the 21st century will require a different leadership style than we've had in the past. We will still be the largest economy of any single country - by far - and we'll have the most powerful military for the foreseeable future. But we now share power with real rivals.

Europe as a whole represents more economic might than the United States. Our debt to China means our economy is intimately linked with theirs. And our military might is stretched thin over two conflicts - we wouldn't want to take on any more.

To be more specific about today's headlines:

A strengthening Chinese currency will produce winners and losers in the United States.

The winners:
(1) Exporters. The Chinese will be able to buy more American goods and services.
(2) Import-competitors. Americans will buy more American goods & services, fewer Chinese.

(Aside: the biggest winners are other developing countries who compete for US market share, like Mexico!)

The losers:
American consumers. We'll have to pay more for Chinese goods. That could put a real damper on most Americans' spending patterns.

In the long-run, this is good news for the United States... and for global monetary stability. It will help address our debt to China. But in the short to medium run, we'll be tightening our belts as we adjust.

(Aside: For me personally, it is exciting - a stronger Chinese currency means that more students from China can afford to study abroad here in the United States... And maybe more Chinese Universities will invite me to lecture over there. No, this is not an advertisement - sadly, Blogger is blocked in China.)

The European Monetary Fund is less of a big deal. In the 1950s, 60s, and 70s, European countries borrowed from the IMF and had to accept the conditions attached. With the United States as the largest shareholder of the IMF, this gave our country some influence over policy in Europe. But Europe turned away from the IMF a long time ago. With Greece flirting with the idea of turning to the IMF for a loan, Germany and France are moving to make the divorce more final; Europe will deal with European monetary affairs.

But this European monetary move adds impetus to other regional organizations, like the Chiang Mai Initiative for Asia, and the Banco del Sur for South America. Global governance going forward will be increasingly based along regional lines. The United States will no longer have as much influence - neither directly, nor through its influence at the IMF.

So, the United States needs a new leadership style. We should continue to invest regionally, promoting our relations with neighbors, Canada and Mexico. And we should look to lead the world by engaging multilaterally. The days of effective US unilateralism are over. Cooperation with friends is the key moving forward.

Buy America... Bye America :-(

2010-03-05T05:36:00.000-08:00

Congress is flirting with “Buy America” again, “complaining that money is going to projects that are creating jobs in foreign countries.” They’re pointing to the “Buy America” provisions in the 2009 stimulus package, which call for American firms to be favored over foreign firms when making government purchases.

Back in ’09, President Obama correctly observed that favoring US companies over foreign ones could “trigger a trade war” and send a message to the world that “we’re just looking after ourselves.” Indeed, the Buy America provisions have provoked outrage from important trading partners across the globe.

Yet, President Obama’s gentle leadership on this issue is not enough. We need his bold and courageous style to explain in no uncertain terms why protectionism is wrong for the United States.

On March 18, 2008, then-candidate Barack Obama gave the most important speech on race in the United States since Martin Luther King, Jr. spoke in the 1960s. He addressed fears that people have of others who are different from them. He explained that he was running for president because “we cannot solve the challenges of our time unless we solve them together.” The speech showed courage of leadership on a divisive issue, and it inspired many to vote for him.

These days, people are worried about the economy, and it is easy to let fears about people who are different – people of foreign countries – be our scapegoat.

Yet, let’s look back at other periods of stormy economy history. It is widely agreed that the world plunged deeper into the Great Depression of the 1930s because of insular “beggar-thy-neighbor” policies. Governments sought to bail out their own countries at the expense of their neighbors.

Now, as we live through times of economic woe, with crisis in country after country, isolationism is certainly tempting. We are seduced by ugly nationalism to deal with international problems, just as we have so many times faltered and turned to racism domestically. These poisonous fruits, however, can only spell further disaster.

So, while President Obama sometimes nudges in the right direction on this issue, his gentle prodding to tone down nationalist demands are simply insufficient.

We need bold global leadership from someone who understands the ways in which all people – from Kansas to Kenya, from Illinois to Indonesia, from Pennsylvania Avenue to Pakistan – are intimately connected. This is why we elected President Obama.

We need our President to forthrightly explain to the American people exactly why a Buy America approach is wrong:
We live in a globalized, multi-polar world. Simply put, we cannot solve the financial challenges of our time unless we solve them together.

Hit over the head with a baseball bat

2010-02-23T11:29:00.000-08:00

Drezner - da blogosphere MAN - has welcomed me by hitting me over the head with a baseball bat... I LOVE IT!

Here's the link: I'm officially welcoming Jim Vreeland to the blogosphere by hitting him over the head with a baseball bat.

Dan disagrees with me about President Obama meeting with the Dali Lama. He makes good points:

"foreign policies are never crafted with a clean slate, even with a change in presidential administrations. If no president had ever met with the Dalai Lama before and then Obama bumped into him in the Map Room, that sends one signal. If every president for two decades met with the Dalai Lama and then Obama abstains from meeting him -- let's call this the Vreeland Gambit -- that sends another signal.

"I understand Vreeland's concerns that Tibet will gum up the foreign economic policy works, but I also know that the signal Obama would have sent by canceling this meeting would not have been a good one.

"I would interpret this is a massive exercise in (oh, the irony) kabuki politics. Obama has a meeting that leads to no real policy differences, and China gets visibly upset and the inconsequential meeting. A week from now, neither side's rhetoric on this issue will matter all that much."

I agree that in the long-run, this particular meeting will not have much of an effect. But it's part of a trend:
(1) US protectionism against Chinese tires
(2) Arms sales to Taiwan
(3) Repeated references from the State Dept to Tibet
(4) Meeting the Dali Lama...

If I were advising the Obama Administration on China policy, my agenda would look more like this:
(1) Press for the revaluation of the renminbi
(2) Press for the revaluation of the renminbi
(3) Press for the revaluation of the renminbi
(4) Press for the revaluation of the renminbi ...

To be more specific:
(1) I would make the revaluation of the renminbi an integral part of daily US public discourse domestically
(2) I would make the revaluation of the renminbi an integral part of daily international public discourse
(3) I would address the domestic audience in China about this issue - yes, revaluation would hurt the export sector, but it would help the growing consumer class in China - esp. people who want to send their children to study abroad in the United States

With this last point in mind, please note that we in the United States have so many friends in the citizens of China - people who would love to embrace our most important policy objectives. But don't underestimate how much meeting the Dali Lama offends Chinese people - and here I mean the people, not Beijing, whose reaction is actually moderate compared to that of many Chinese.

By showing some sensitivity on this issue - even just a little - Obama could go a long way towards opening a dialogue with most Chinese people. Obama has been so deft at addressing the public in Iran. Winning points with the domestic audience in China would be so easy if he'd snub the Dali Lama.

Would this send a signal? Yes it would - to the country with whom we have an interesting economic arrangement of mutually assured destruction... It would send a signal that we are taking China seriously and are interested in a serious dialogue about the most immediate threat to world stability.

We need to work on the G2… and fast. For, the root cause of the financial collapse is still looming large… to the tune of $800 billion in debt. This is the next crisis waiting to happen. And every time I hear our governments talking about Tibet they’re not talking about solving this serious problem. And if we don’t, then we’ll really be hit over the head with a baseball bat…

Dali Folly

2010-02-17T10:52:00.000-08:00

President Obama is planning to meet with the Dalai Lama at the White House. This is terrible. He is the spiritual leader of Tibet, an advocate for autonomy from China, and the head of the Tibetan government-in-exile. And the visit with Obama implies a tacit US endorsement that will deeply offend the Chinese government, not to mention many of the Chinese people.

Right now we need close cooperation with China to address serious global issues ranging from the economic crisis, to the environment, and even global security.

Meeting with the Dalai Lama is a major affront to Beijing and to many Chinese. They consider this an issue of national sovereignty. (BTW, for an excellent book on the logic of separatist movements, see Michael Hechter's work.)

Now, there are US interest groups who care about human rights issues in Tibet to be sure. But why not engage China on human rights for all of China? The Chinese government may not agree on all points, but a conversation about human rights is one that the Chinese government is willing to have. The people of China will also appreciate that conversation. And any advances on human rights in China will help the people of Tibet along with all Chinese people. (I am grateful to my friend and colleague - and one of the world's foremost experts on China - Pierre Landry for these ideas.)

If, on the other hand, we try a conversation about independence movements - well, that's not a conversation in which China will engage. It will, quite frankly, tick them off. And for what? We lose the opportunity to truly engage in a conversation about human rights, and, let's face it, we get nothing for Tibet. The world's fastest growing superpower is not about to start giving up territory.

China is a multi-cultural, multi-ethnic, and multi-lingual country. It has to deal with some problems similar to those of the United States. The path is long, circuitous and difficult. And having the leader of a rival power meet with a head of government-in-exile doesn't help.

More importantly, we've got bigger issues to deal with regarding China. Rather than meet with the Dalai Lama, Obama should be talking about Chinese currency revaluation. And he should be doing so on a daily basis. Leave China's sovereignty alone.

When the shoe is on the other foot: Changes in Global Governance

2010-02-16T05:57:00.001-08:00

The Chief Economist of the International Monetary Fund (IMF) is calling for countries to raise their inflation targets and pursue counter cyclical fiscal policies. Why? The current economic crisis has "exposed flaws in the precrisis policy framework." As the Financial Times reports, this runs against what has come to be called economic "orthodoxy," and represents a dramatic shift away from the standard policy advice of the IMF - stretching back decades.

During the East Asian Financial Crisis of the late 1990s, for example, the Fund imposed economic austerity on countries that received IMF loans - raised interest rates and contractionary fiscal policy. During the Latin American Debt Crisis of the 1980s, austerity was also the answer. Not surprisingly, these policies resulted in lower economic growth, but the IMF preached financial stability first, economic growth to follow.

Of course, during these years, the only borrowers from the IMF were developing countries. Indeed, until the recent crisis, the last time an advanced industrial country borrowed from the IMF was the mid-1970s. And as Joseph Stiglitz has observed, the contractionary IMF advice seemed somewhat hypocritical, considering the way advanced industrial countries responded to economic crises - far from following economic austerity, these countries always put together stimulus packages.

The hypocrisy did not go unnoticed by people of the developing world, who grew to hate the IMF, some seeing it as a tentacle of Western imperialism. The debacle that resulted from IMF policy advice during the East Asian Financial Crisis was the last straw. Nearly all emerging market countries and even some poorer countries vowed they would never again borrow from the IMF. During the first decade of the 2000s, the IMF had to go on an austerity program of its own. With few countries borrowing or - importantly - repaying their loans with interest, the Fund did not have the funds to run its operations.

Well, now the shoe is on the other foot. The current economic crisis has driven many countries to borrow from the IMF, and the international organization is back in business. For the first time in a long time, however, its customers include advanced industrial economies. And suddenly, economic austerity isn't looking like the answer.

If one takes a broad historical view of the IMF, this softer IMF does not seem so heretical. The IMF was the brainchild of Lord Meynard Keynes of "Keynsian" economics. As the world emerged from the Great Depression, he advocated the international pooling of resources to be used in times of economic downturns in a counter-cyclical manner. The problem as seen by the United States - the world's largest creditor at that time - was that the promise of liquidity during economic crises would lower the incentives of governments to avoid those crises in the first place, a problem we call "moral hazard." The solution that developed over time was "conditionality": in return for liquidity, the IMF would require governments to adjust their policies.

But how much liquidity in return for how much adjustment? This debate has fueled the historical evolution of the IMF. In the early years - up to the 1970s, the United States was on the harsher side of conditionality, with opposition coming from the borrowing Western European countries. When the United States became a deficit country, the advanced industrial world decided to turn away from IMF solutions, pursuing a radically different way to structure their international economic transactions. (Notably, they moved from fixed to floating exchange rates - see Eichengreen's work.)

The IMF had been lending all along to developing countries, however, and thus it simply shifted its focus to them. During these times, the advanced industrial countries usually favored harsh conditionality, while the developing world often complained that IMF policies were hurting economic development. Of course, the IMF decides most things according to majority rule, and votes are supposed to be pegged to economic weight. So, the developing world was out-voted, and austerity carried the day throughout the 1980s and 1990s. Finally, by the early 2000s, practically no one wanted to deal with the IMF conditionality.

Now with the current crisis, the Washington "Consensus" of tight monetary policy and fiscal austerity is no longer. Those favoring weak conditionality and expansionary policies are now carrying the day at the IMF. Yet, there will be a price to be paid for expansion, and when the dust settles, we will have a very different looking IMF.

The emerging markets have arrived. In the coming decade, we will see increasing vote shares at the IMF for countries like China, Brazil, India, Korea, Mexico, Indonesia, Turkey, Iran (yes, a member in good standing) and South Africa - many of whom were historically spurned by IMF conditionality. Still, the debate over conditionality will persist. Those not hit by a crisis will still worry most about moral hazard and advocate stringent conditionality. Those closely tied to the crisis will advocate the massive provision liquidity, eschewing conditionality (see Lipscy's piece on this). Some will preach stability first, growth thereafter. Others will suggest that by priming the pump, we can grow our way out of crisis and debt.

So where's the real change?

Global economic power has shifted. In their Godfather parable, Hulsman & Mitchell suggest the United States is "slipping." We've moved from a uni-polar world to a multi-polar globe. The United States will remain the "chairman of the board," continuing to hold more IMF votes than any other single country - as the world's largest economy and biggest contributor to the IMF. But it will have to share power, most notably with China. And this will be the real, long-lasting change at the IMF. See, during the bi-polar days of the Cold War, the Soviet countries refused membership in the Fund. So the West dominated the votes. But soon, and for the first time in its history, the IMF will have multiple voices with power. Importantly, they will have different ties to different economies - so preferences over liquidity provision and moral hazard may shift depending on where the next crisis hits. Looking decades ahead, we've got to ask ourselves: How will conditionality feel when the shoe is on the other foot?

Dictatorships, torture, and human rights treaties: The Bad Ass Theory

2010-02-12T16:35:00.000-08:00

Why do dictatorships enter into human rights treaties?

I addressed this question a while back, picking up on a puzzle first identified by my friend and colleague Oona Hathaway.

Dictatorships that practice the most torture are more likely accede to the UN Convention Against Torture (CAT) than dictatorships that practice less torture. I argued the reason has to do with the logic of torture:
Torture is more likely where power is shared. In one-party or no-party dictatorships, few individuals defect against the regime. Consequently, less torture occurs. But dictatorships are pro-torture regimes; they have little interest in making gestures against torture, such as signing the CAT. There is more torture where power is shared, such as where dictatorships allow multiple political parties. Alternative political points of view are endorsed, but some individuals go too far. More acts of defection against the regime occur, and torture rates are higher. Because political parties exert some power, however, they pressure the regime to make concessions. One small concession is acceding to the CAT.

Peter Rosendorff and James Hollyer, who are from my alma mater - NYU, have a different argument, which I find fascinating. Here's their story:

Dictators who enter into the CAT send a signal of extraordinarily strong resolve to hold on to power. How does the signal work? Well, the CAT has an important legal feature called "Universal Jurisdiction." This means that if a dictator commits torture in his (they's almost universally men) own country, he may be prosecuted for the crime by courts in another country - this is what happend to Pinochet of Chile. Now, as long as the dictator holds on to power, he is safe from prosecution. But if he ever falls from power, he may very well find himself in the same place Pinochet did, when he was extradited from the United Kingdom to Spain.

Skeptics might suggest that none of this really matters since states are unlikely to utilize universal jurisdiction. Yet, as Darren Hawkins and Jay Goodliffe write in an unpublished paper with me, one recent study found that 109 states had incorporated universal jurisdiction into their domestic legislation. Of those, 14 have actually tried court cases based on the principle, and courts have upheld the law in 12 of them.

So, if a dictator enters into the CAT, he better be darn sure that he will never fall from power. And this is precisely the point. He is sending a signal to his domestic audience that he intends on doing whatever is necessary to hold on to power, and he's quite confident in his ability to survive in office. Only the strongest resolve dictators will take such a step. Soft dictators can't rist faking it - if they sign the CAT and lose their grip on power, they're libel to end up in the slammer. So the signal the tough dictators send is unambiguous, and might even serve to quite opposition, who realize that resistance is futile.

The phrase “bad ass” developed when Rosendorff first told me about the paper. I believe I was the first to use the term publicly - first, when I taught the paper to some students, and then more recently at the 3rd Annual Conference on the Political Economy of International Organizations.

I agree with Erik Voeten, regarding “the sheer ingenuity of the theory.” And I’d like to also note that this is part of a broad approach that Rosendorff has developed over the course of his career.

The central thesis in much of Peter’s work is that international arrangements are ways to signal information to an uninformed domestic audience. Basically, rulers and citizens play a principal-agent game of asymmetric information. Whether and what kind of information the ruler will transmit to citizens depends on domestic political institutions (e.g., democracy vs. dictatorship), with rulers always trying to maximize their chances of survival in office. International arrangements can serve as credible 3rd parties that rulers use to transmit information about what type of ruler s/he is.

Peter has used this framework to explain trade agreements in his work with Milner and Mansfield. And he has used the framework to explain transparency (where the World Bank serves a credible 3rd party) in a paper he co-authored with yours truly.

In the trade and transparency work, democracies use international arrangements to credibly signal the fact that they are following policy that is good for voters. In the human rights story, the dictator uses the treaty to signal that they are willing to do anything, including torture, to stay in office - and they’re so sure of themselves, they commit to going to jail (through the enforcement of universal jurisdiction) if they do ever fall from power.

The “bad ass” story of why dictators enter into human rights treaties contrasts nicely with Moravcsik’s story of why democracies enter into them. You see, Rosendorff and Hollyer’s dictators enter because they’re sure they’ll never fall from power, and they want to send a signal of how tough they are. Moravcsik’s democracies enter because they’re not sure at all that they’re going to maintain power… they fear that a tough dictator may want to overthrow and torture them… so they want to tie the hands of the state to a powerful international organization. I don’t think the stories are mutually exclusive, and they pertain to different types of international institutions - the Convention Against Torture has “universal jurisdiction” and the European Convention for the Protection of Human Rights andFundamental Freedoms delegates sovereignty to a powerful international organization…

I’ve been trying to convince Peter to write a book on this stuff… consider this a really rough start :-)

(Credit to Erik Voeten's blog, where I originally posted this comment.)

Darf ich mich vorstellen?

2010-02-11T17:09:00.000-08:00

My name is James Raymond Vreeland, Associate Professor of International Relations at Georgetown University in the Edmund A. Walsh School of Foreign Service and the Government Department.

I love my job! It has taken me all over the world. My research has been presented in over fifteen countries located in six different continents, and I have held positions on five continents at universities including Bond University, ETH Zürich (Swiss Federal Institute of Technology Zürich), Korea University, University of California, Los Angeles, University of São Paulo and Yale University. I also teach for the Global Executive Master of Business program through the McDonough School of Business and ESADE Business School (Barcelona, Spain). My module is taught in Moscow. This summer, I will also teach a course in Buenos Aires for the Master in Development Management and Policy program, a joint degree created by the Universidad Nacional de San Martín (UNSAM) and Georgetown University.

I do research in the field of international political economy. My research explores a wide range of policy outcomes, including economic growth and the distribution of income under programs of economic reform, the foreign policy positions of developing countries, the transparency of policy making under various political systems, and even the commitment of governments to defend basic human rights or, alternatively, to engage in such pernicious activities as the practice of torture. I have also done some work on democracy and its relationship to civil war.

My work addresses the ways in which international and domestic politics interact, in particular the ways in which international organizations can be used to do the dirty work of governments - how they can "launder" dirty politics - how they are used as scapegoats - in short, how international actors can be the "dark knight" in domestic politics (sometimes for better, sometimes for worse).

I have written two books: The IMF and Economic Development (Cambridge University Press, March 2003) and The International Monetary Fund: Politics of Conditional Lending (Routledge, January 2007), and I co-edited Globalization and the Nation State: The Impact of the IMF and the World Bank (Routledge, 2006). I am currently working on a new book entitled The Political Economy of the United Nations Security Council, which is under contract with Cambridge University Press. My research has also appeared in numerous scholarly journals, including International Organization, Journal of Conflict Resolution, European Economic Review, Journal of Development Economics, Public Choice, World Development, International Political Science Review, Political Analysis, The Review of International Organizations, World Economics, and Foreign Policy Magazine.

Thank you for visiting my blog! I will be posting about my ongoing research as well as current events that relate to international political economy. I look forward to your comments...