Development economics has long been split between macro-development economists—who focus on economic growth, international trade, and fiscal/macro policies—and microdevelopment economists—who study microfinance, education, health, and other social programs. Even though the central question that animates both sets of economists ostensibly is
how to achieve sustainable improvements in living standards in poor countries, the concerns and
methods of these two camps have at times diverged so much that they seem at opposite extremes
of the economics discipline.
I shall argue in this paper that there are some good reasons to be optimistic about the reunification
of the field, as these sharp distinctions are eroding in some key respects. But there
are also some reasons for pessimism, related to divergence in empirical methods. This paper
covers both the good and the bad news.
The Weatherhead Center for International Affairs has selected eleven Harvard doctoral candidates to receive pre- and mid-dissertation grants to conduct research on a project related to the core research interests of the Center. In addition and for the first time in 2008, the Center is awarding foreign language grants to doctoral students to assist them in their field research studies. The Weatherhead Center dissertation grant recipients, along with their research projects, are listed below: Christopher Bail, Ph.D. candidate in sociology, is researching the distortion of collective memory among Muslims and non-Muslims in the United States and the UK.Amy Catalinac, Ph.D. candidate in government, is conducting research on the electoral politics of national security to explain the contemporary rise of Japan.Suzanna Chapman, Ph.D. candidate in government, will conduct interviews with immigration policy-makers to examine how states select their population.Paul Cruikshank, Ph.D. candidate in the history of science, is investigating the late twentieth century historical transformation of the politics in the field of international health.Michael James Esdaile, Ph.D. candidate in history and Middle Eastern studies, is studying Arabic for his dissertation on the anti-imperial movements termed the “Aden Emergency” that opposed British control in Yemen.
Alex Fattal, Ph.D. candidate in anthropology, is conducting an analysis of the demobilization of insurgents in Colombia to better understand the cultural politics of humanitarianism.Meghan Healy, Ph.D. candidate in history, is conducting research on South African women’s schooling and power since 1869.
Max Hirsch, Ph.D. candidate in architecture and urban planning, is researching architectural and urban planning strategies that are designed to attract and retain highly skilled international migrants in Frankfurt and Hong Kong.Jane Hong, Ph.D. candidate in history, is examining political deportation cases of foreign-born Asian communists living in Los Angeles as a lens to explore the relationship between U.S. foreign policy in East Asia and domestic security measures passed between 1945 and 1965.Catherine Kelly, Ph.D. candidate in government, is studying Wolof in Senegal for her dissertation on Franco-West African relations.Katherine Mason, Ph.D. candidate in anthropology, is conducting an ethnographic investigation of the rebuilding of China’s disease control system in the wake of the 2003 SARS epidemic.
Sreemati Mitter, Ph.D. candidate in history and Middle Eastern studies, is studying Arabic and Hebrew for her dissertation on relations between Jordan and Israel between 1950 and 1967.Vipin Narang, Ph.D. candidate in government, is exploring the sources and consequences of regional power nuclear postures by examining the India-Pakistan crises that occurred both before and after nuclearization.Rebecca Nelson, Ph.D. candidate in government, seeks to explain why some governments get more debt restructurings with private creditors than others.Aleksandar Sopov, Ph.D. candidate in history and Middle Eastern studies, will study Arabic and Albanian for his dissertation on how the competing histories of the peoples in the Balkans and the Middle East influence their social and political realities.
Brazil, Mexico and a few other Latin American republics enjoyed faster industrialization after 1870
than did the rest of Latin America and even faster than the rest of the poor periphery (except East Asia).
How much of this economic performance was due to more accommodating institutions and greater
political stability, changes that would have facilitated greater technology transfer and accumulation?
That is, how much to changing fundamentals? How much instead to a cessation in the secular rise
in the net barter terms of trade which reversed de-industrialization forces, thus favoring manufacturing?
How much instead to cheaper foodstuffs coming from more open commercial policies ('grain invasions'),
and from railroad-induced integration of domestic grain markets, serving to keep urban grain prices
and thus nominal wages in industry low, helping to maintain competitiveness? How much instead
to more pro-industrial real exchange rate and tariff policy? Which of these forces contributed most
to industrialization among the Latin American leaders, long before their mid 20th century adoption
of ISI policies? Changing fundamentals, changing market conditions, or changing policies?
The focus of reforms in the developing world has moved from getting prices right to getting institutions right. This reflects the recognition that markets are unlikely to work well in the absence of a predictable and legitimate set of rules that support economic activity and dispense its fruits. "Governance reforms" have become the buzzword for bilateral donors and multilateral institutions, in much the same way that liberalization, privatization and stabilization were the mantras of the 1980s. But what kind of institutions should reformers strive to build? It is easier to list the functions that good institutions perform than it is to describe the shape they should take. Desirable institutions provide security of property rights, enforce contracts, stimulate entrepreneurship, foster integration in the world economy, maintain macroeconomic stability, manage risk-taking by financial intermediaries, supply social insurance and safety nets, and enhance voice and accountability. But as the variety of institutional forms that prevail in the advanced countries themselves suggests (Richard Freeman 2000, Peter Hall and David Soskice 2001), each one of these ends can be achieved in a large number of different ways (Dani Rodrik 2007).
Between 1850 and 1930, demographic upheaval in the United States was connected to reorganization of the racial order. Socially and politically recognized boundaries between groups shifted, new groups emerged, others disappeared, and notions of who belonged in which category changed. All recognized racial groups—blacks, whites, Indians, Asians, Mexicans and others—were affected. This article investigates how and why census racial classification policies changed during this period, only to stabilize abruptly before World War II. In the context of demographic transformations and their political consequences, we find that census policy in any given year was driven by a combination of scientific, political, and ideological motivations.
Based on this analysis, we rethink existing theoretical approaches to censuses and racial classification, arguing that a nation's census is deeply implicated in and helps to construct its social and political order. Censuses provide the concepts, taxonomy, and substantive information by which a nation understands its component parts as well as the contours of the whole; censuses both create the image and provide the mirror of that image for a nation's self-reflection. We conclude by outlining the meaning of this period in American history for current and future debates over race and classification.
This paper was originally: Hochschild, Jennifer L., and Brenna M. Powell. "Racial Reorganization and the United States Census 1850-1930: Mulattoes, Half-Breeds, Mixed Parentage, Hindoos, and the Mexican." Working Paper 2007-28, Weatherhead Center for International Affairs, Harvard University, 2007.
HAIM RAMON, a vice prime minister of Israel, recently stated that Israel hoped to reach agreement with its Palestinian negotiating partners by the end of 2008 on a "declaration of principles" for peace, but not on a detailed peace treaty. At this time of escalating violence and diminishing hope, the call for such a declaration offers an opportunity for revitalizing the Israeli-Palestinian peace process.To represent a dramatic breakthrough, a declaration would have to go beyond a vague, general commitment to a two-state solution, and lay out the fundamental principles on which such a solution must be based if it is to be perceived as fair and just by the two populations and offer them a positive vision of their future relationship. The statement must address the key final-status issues - notably borders, Jerusalem, settlements, and refugees - that a viable two-state agreement would have to resolve. In essence, the statement would frame the envisaged final agreement as a principled peace, based on a historic compromise that meets the fundamental needs of both peoples, validates their national identities, and declares an end to the conflict and to the occupation consistent with the requirements of fairness and attainable justice.To concretize the components of a statement of basic principles for framing a negotiated agreement, I offer the following hypothetical draft of what such a statement, issued by the two leaderships, might contain, in the hope that it might stimulate thought.Israeli-Palestinian joint statement of principlesThe parties agree that the land that has been in dispute between the Jewish and the Palestinian peoples - the land that includes the State of Israel and the occupied territories (the West Bank and Gaza) - belongs to both peoples: both have historic roots in it, both are deeply attached to it, and both claim it as their national homeland. We are convinced that there is no military solution to the conflict resulting from these competing claims.The attempt to impose a solution by violence has caused pain and suffering to both peoples for generations, which we deeply regret. The conflict threatens to destroy the future of both peoples and of the land itself. We are therefore committed to ending the conflict by negotiating a principled peace, based on a historic compromise in the form of a two-state solution. We agree to share the land in a way that allows each people to exercise its right to national self-determination, express its national identity, and fulfill its national aspirations in its own independent, viable state within the shared land.The details of a peace agreement that concretizes this historic compromise have to be negotiated, but we are committed to certain basic principles, dictated by the logic of the historic compromise, that must be followed in resolving the key issues in the negotiations. Specifically:The borders between the two states will follow the 1967 armistice lines, with minor, mutually agreed-upon adjustments, based on an exchange of West Bank territories that contain most of the Israeli settlements for Israeli territories of equal size and value, and with a secure link between the West Bank and Gaza. These borders are necessary in order to enable the Palestinian state to meet the criteria of true independence, viability, governability, and contiguity within the West Bank. Palestinians can accept the fairness of these borders because they conform with international legitimacy, as expressed in appropriate United Nations resolutions.Jerusalem will be shared by the two states and contain the national capital of each state, in recognition of the central importance of the city to the national identities of both peoples. Jerusalem's Jewish neighborhoods will be under Israeli sovereignty and its Arab neighborhoods under Palestinian sovereignty, with jointly administrated arrangements for security, freedom of movement, and municipal services for the entire city and for governance of the Old City. A plan of shared or joint sovereignty will be negotiated for the holy sites, allowing each side control over its own sites and assuring free access to them from both parts of the city.Israeli settlements with extraterritorial rights and status (including separate roads and protection by Israeli troops) will be removed from the Palestinian state in order to ensure the state's independence, viability, governability, and contiguity. The right of individual settlers to stay in place as Palestinian citizens or as resident aliens, subject to Palestinian law, will be negotiated.In negotiating solutions to the problem of Palestinian refugees, Israel recognizes that the refugee problem and the right of return are central to the Palestinian national identity and national narrative, and acknowledges its share of responsibility for the plight of the refugees. Concretely, the refugee problem will be addressed in all its dimensions, with comprehensive plans for financial compensation, regularization of the status of refugees in host countries, and resettlement when needed or desired. Refugees will be granted citizenship in and the right of return to the Palestinian state. Only a limited number, however, will return to Israel proper, in order to allow Israel to maintain its character as a Jewish-majority state.The final negotiated agreement, based on a historic compromise as reflected in the above principles, is designed to yield a principled peace, characterized by the following conditions:Mutual recognition of the national identity of the other people and of each people's right to express this identity in an independent state within the shared land.A sense that the agreement is not merely a product of the balance of power, but is consistent with the principle of attainable justice and with international law and the international consensus.Integration of both states in the region and the international community.As we commit ourselves to negotiating a final agreement based on the concept of a historic compromise and meeting the conditions of a principled peace, we are enabled to develop and to communicate to our publics a positive vision of a common future for the two peoples in the land they are agreeing to share. Our vision contemplates:A secure and prosperous existence for each society.Mutually beneficial cooperation between the two states and societies in various fields, including economic relations, public health, environmental protection, telecommunications, cultural and educational programs, and tourism.Regional development.Stable peace with ultimate reconciliation.Our positive vision extends not only to the future of the two peoples in their independent states within the land they are agreeing to share, but to the future of the shared land itself: a land to which both peoples are attached, even though each agrees to claim only part of it for its independent state.In this spirit, our vision of a common future includes freedom of movement across state borders, as well as a range of cooperative activities that treat the shared land as a unit and are designed to benefit it in its entirety.A joint statement of principles along the lines proposed above would reassure the two publics about the intentions of the other side and help to reestablish trust in the availability of a negotiating partner. By advocating a principled peace that acknowledges each side's national identity and national narrative, that conforms to the dictates of attainable justice, that provides a rationale for the concessions each side is expected to make, and that offers a positive vision of the future, it has the potential for energizing the two publics and eliciting their full support for the negotiated agreement on a two-state solution.Given the apparent readiness of the two leaderships to formulate a declaration of principles, the challenge now is to utilize this moment as an opportunity to create a visionary document that will reassure and energize the two publics and elicit their enthusiastic support for negotiating a historic compromise.Civil society efforts, in the form of unofficial Israeli-Palestinian dialogue, can be instrumental in generating ideas for such a document and conveying them to the political leadership. The US government and other third parties can contribute significantly by encouraging the parties to formulate a statement of basic principles and identifying the issues that it must address, keeping in mind that, in the end, the document must be crafted by the parties themselves in order to reflect their concerns and engender their commitment.Finally, to be maximally effective, movement toward and beyond the proposed joint statement of basic principles must be accompanied by significant changes in the conditions on the ground, designed to improve the security, economic well-being, quality of life, and personal dignity of the two populations.
Herbert C. Kelman is a professor social ethics emeritus and cochairman of the Middle East Seminar at Harvard.
Data suggest buyers willing to pay more to humane producers.
A majority of consumers want to do the right thing. That is, in numerous studies, consumers say that they are willing to pay more for products produced under good working conditions, rather than those that come from sweatshops.
But what consumers say and what they actually do when they pull out their wallets at the cash register is not as clear.
Michael J. Hiscox, professor of government, has been developing models to test actual consumer behavior when shoppers are confronted with a choice to buy a higher-priced item certified as produced under good conditions and cheaper items that are not so designated.
Preliminary results suggest that, indeed, consumers are willing to pay a premium if they believe that a product is made under good working conditions, Hiscox said during a Feb. 28 seminar sponsored by the Mossavar-Rahmani Center for Business and Government at the John F. Kennedy School of Government.
More research is needed, but “if this holds up, it’s pretty compelling evidence,” Hiscox told his audience during his talk on “Consumer Demand for Labor Standards: Experiments with Ethical Labeling of Imported Products.”
Hiscox, author of the Riker Prize-winning book “International Trade and Political Conflict” (2002), draws his conclusions from innovative study methods he and graduate students have devised over the past three years.
One such study was conducted in a major home goods retail store in New York City in 2005 with two products: candles and towels. Hiscox created special labels that indicated that an item was “made under fair labor conditions, in a safe and healthy working environment which is free of discrimination, and where management has committed to respecting the rights and dignity of workers.” These labels were posted on one set of candles and one set of towels—when, in reality, all the candles and towels in the displays were produced under good conditions. The labeled towels and candles were priced higher than unlabeled items, and the prices changed over time. Hiscox’s crew also switched labels at key points to the previously unlabeled products.
The result: “Sales rose for items labeled as being made under good labor standards, and demand for the labeled product actually rose with the price increases of 10 to 20 percent above pretest (unlabeled) levels,” according to Hiscox’s paper on his work.
Moreover, a higher price on a labeled towel seemed to actually stimulate demand. The higher price might be telling shoppers it’s a better product,” Hiscox said. They think, “Aha! The label is credible because I have to pay more for the goods.”
Still, the study was done in a high-end shop in a company with a known commitment to fair practice. The items may have had “snob appeal” to wealthy consumers already predisposed to buy ethical items. What about consumers really looking for a bargain?
So Hiscox turned to one of the biggest bargain-hunting markets in the world: eBay.
Hiscox’s team devised auctions around two items, gourmet coffee and polo shirts. All were produced under good conditions and all were extremely similar in presentation. (“It’s very good coffee,” Hiscox added.) But one set of coffee beans was labeled as “fair trade” and the other as “premium.” One set of shirts was described as “ethically made” while the other had no designation.
And again, “eBay shoppers were willing to pay a substantial premium for goods certified by label” as produced under fair standards,” Hiscox said. The results were, however, more dramatic for coffee than for the shirts.
Perhaps, suggested moderator F.M. Scherer, professor of public policy and corporate management emeritus, eBay shoppers are more “world-oriented,” a possibility that Hiscox conceded.
What, asked Jack Waxman, a master’s student in public policy, would happen to fair-trade markets in an economic downturn? “Yes, that’s a fear,” Hiscox said.
Jennifer Kurz, also a master’s student in public policy, wondered if products produced under good conditions would really—in the long run—cost more. “Maybe certification doesn’t increase prices,” she said.
It’s a possibility, Hiscox said. Perhaps healthy workers operating under safe conditions are actually more efficient, thus increasing productivity and lowering prices, he said. “It’s a really inherently open question.”
Hiscox cautioned against basing any business decisions on these initial results. More studies are needed, he said.
“At the moment there’s a prior question: Is there even a market for this that would support the expansion of these [socially accountable] systems? We don’t know that,” he said. “Before you start championing, “‘This is the answer,’ you have to know whether or not it’s feasible.”
Heading upcountry in Africa to visit small farms is absolutely exhilarating given the dramatic beauty of big skies, red soil, and arid vistas, but eventually the two-lane tarmac narrows to rutted dirt, and the journey must continue on foot. The farmers you eventually meet are mostly women, hardworking but visibly poor. They have no improved seeds, no chemical fertilizers, no irrigation, and with their meager crops they earn less than a dollar a day. Many are malnourished.Nearly two-thirds of Africans are employed in agriculture, yet on a per-capita basis they produce roughly 20 percent less than they did in 1970. Although modern agricultural science was the key to reducing rural poverty in Asia, modern farm science—including biotechnology—has recently been kept out of Africa.In Starved for Science Robert Paarlberg explains why poor African farmers are denied access to productive technologies, particularly genetically engineered seeds with improved resistance to insects and drought. He traces this obstacle to the current opposition to farm science in prosperous countries. Having embraced agricultural science to become well-fed themselves, those in wealthy countries are now instructing Africans—on the most dubious grounds—not to do the same.In a book sure to generate intense debate, Paarlberg details how this cultural turn against agricultural science among affluent societies is now being exported, inappropriately, to Africa. Those who are opposed to the use of agricultural technologies are telling African farmers that, in effect, it would be just as well for them to remain poor.
In the mushrooming procedural debate about Democratic superdelegates and the uncontested Florida and Michigan primaries, more is at stake than the identity of the presidential nominee or even the Democrats' chances of victory in November. Primaries and caucuses coast to coast in the last two months have evinced the sharpest increase in civic engagement among American youth in at least a half-century, portending a remarkable revitalization of American democracy. But that rebirth of American civic life would be aborted if the decision rendered by millions of ordinary Americans could be overturned by a backroom deal among political insiders. The issue is not public jurisprudence or obscure party regulations or the alleged "wisdom" of party elders, but simple playground notions of fairness.Throughout the last four decades of the 20th century, young people's engagement in American civic life declined year after year with depressing regularity. In fall 1966, well before the full flowering of Vietnam War protests, a UCLA poll of college freshmen nationwide found that "keeping up with politics" was a "very important" goal in their lives for fully 60 percent.Thirty-four years later that figure had plummeted to 28 percent. In 1972, when the vote was first extended to 18-year-olds, turnout in the presidential election among 18- to 24-year-olds was a disappointing 52 percent. But even beginning at that modest level, rates of voting in presidential elections by young people steadily fell throughout the '70s, '80s, and '90s, reaching barely 36 percent in 2000. National commissions bemoaned the seemingly inexorable increase in youthful apathy and incivism. The National Commission on Civic Renewal said, "When we assess our country's civic and moral condition, we are deeply troubled... We are in danger of becoming a nation of spectators."Then came the attacks of Sept. 11, 2001, a national tragedy, but also a vivid reminder that we are all in this together. Civic seismometers across the land showed a sharp spike in virtually every measure of community-mindedness. It was, I wrote at the time, not only a tragedy, but also the sort of opportunity for civic revival that comes along once or twice a century. Just as Pearl Harbor had spawned the civic-minded "Greatest Generation," so too Sept. 11 might turn out to produce a more civically engaged generation of young people.For most Americans the half-life of the civic boomlet after the attacks was barely six months. Within a year measures of civic engagement had returned to the previous levels, from which they have barely budged since. Except among young people.Among the cohort of Americans caught by 9/11 in their formative years, the effects of the attacks on their civic consciousness were more enduring. The annual UCLA chart of interest in politics jumped upward in 2001 for the first time in decades and has kept rising every year since.Last month the UCLA researchers reported that "For today's freshmen, discussing politics is more prevalent now than at any point in the past 41 years." This and other evidence led us and other observers to speak hopefully of a 9/11 generation, perhaps even a "new Greatest Generation." In the 2004 and 2006 elections, turnout among young people began at last to climb after decades of decline, reaching the highest point in 20 years in 2006. As we approached the presidential season of 2008, young Americans were, in effect, coiled for civic action, not because of their stage of life, but because of the lingering effects of the unifying national crisis they had experienced in their formative years.The exceptionally lively presidential nominating contests of this year—and, it must be said, the extraordinary candidacy of Barack Obama—have sparked into white hot flame a pile of youthful kindling that had been stacked and ready to flare for more than six years. The 18-year-olds first eligible to vote in 2008 were in sixth grade when the twin towers fell, and their older sisters and brothers who were college seniors in September 2001 are now 28 or 29. It is precisely this group, above all others in America, that has pushed participation rates in this spring's caucuses and primaries to record levels. Turnout in this spring's electoral contests so far has generally been higher than in previous presidential nominating contests, but for twenty-somethings the rise has been truly phenomenal—turnout often three or four times greater than ever before measured.The 2008 elections are thus the coming-out party of this new Greatest Generation. Their grandparents of the original Greatest Generation were the civic pillars of American democracy for more than a half-century, and at long last, just as that generation is leaving the scene, reinforcements are arriving. Americans of every political persuasion should rejoice at this epochal swing of the generational pendulum, for it portends precisely the sort of civic renaissance for which Jeremiahs have been calling for many years.This, then, is what is at stake in the otherwise inside-baseball controversies about superdelegates and pledged delegates and the uncontested Florida and Michigan primaries—controversies now roiling Democratic party leaders. If the results of the caucuses and primaries are, despite record-breaking rates of popular participation, overturned by unelected (though officially legitimate) superdelegates or by delegates from states that all candidates had previously agreed not to contest, the lesson for the young civic stalwarts would be unmistakable—democratic politics is a sham. Politics is actually controlled by party bosses behind the scenes. Civic engagement is for suckers.From Little League to student council races, we all learn to accept defeats we have lost fair and square. But losing in a contest in which the rules can be rigged teaches that the game is not worth the candle. Who can honestly doubt that if the Democratic presidential candidate preferred by a majority of the delegates elected in this spring's competitive contests (and by the overwhelming majority of young voters) were to be rejected solely by the power of unelected delegates (or those "elected" without any serious competition), the unmistakable civics lesson would be catastrophic for this incipient cadre of super citizens?So as the superdelegates, the two campaigns, and Democratic Party leaders contemplate how to resolve the procedural issues before them - what to do about Michigan and Florida, and how superdelegates should vote—let's hope that they weigh the consequences not merely for their own candidates this year, and not merely for the Democratic prospects in the fall, but for the future vitality of American democracy.Robert D. Putnam, a professor of public policy at Harvard University's John F. Kennedy School of Government, is author of Bowling Alone: The Collapse and Revival of American Community and Better Together: Restoring the American Community.
Until recently, the term "reconciliation" was used primarily (although with some notable exceptions) in religious discourse. It was not often subjected to systematic analysis by political scientists or social psychologists. The dramatic political change in South Africa in 1994, soon followed by the establishment of the Truth and Reconciliation Commission, as well as a number of related efforts in other, postconflict zones, can probably serve as a marker for the shift in attention to the concept of reconciliation among social scientists.
The G8 summit in Toyako offers Japan, as the host government, a special opportunity to influence collective action on global health. At the last G8 summit held in Japan, the Japanese government launched an effort to address critical infectious diseases, from which a series of disease-specific programmes emerged. This year’s summit provides another chance to catalyse global action on health, this time with a focus on health systems.
Global efforts to improve health conditions in poor countries have embraced two different strategies in recent decades, one focusing on health systems, the other on specific diseases. The interactions of these two strategies have shaped where we stand today.
Does a legal tradition adopted in the distant past constrain a country’s ability to provide the protection that investors
need for financial markets to develop? This paper contributes to the literature that studies the connection between
law and finance by looking at the relationship between legal origin and the development of bond markets. The paper
shows that there is too much variation over time in terms of bond market size, creditor protections, and court
enforcement of bond contracts to assume that the adoption of a legal system can constrain future financial
development. The paper examines in detail the evolution of bond markets in Brazil, a French civil law country, and
provides preliminary results of similar variation for a small cross-section of countries.
The diffusion of markets and democracy around the world was a defining feature of the late twentieth century. Many social scientists view this economic and political liberalization as the product of independent choices by national governments. This book argues that policy and political changes were influenced heavily by prior actions of external actors: not just other governments, but international organizations and communities of experts. Drawing together insights from economics, sociology, political science and international relations, the contributors focus on four mechanisms by which markets and democracy have diffused through interdependent decision-making: coercion and the impact of powerful countries and international actors; economic competition for markets and investment; learning from experiences of other countries; and emulation among countries. These mechanisms are tested empirically using sophisticated quantitative techniques in areas as diverse as capital account and investment policy, human rights and democratization, and government downsizing, privatization and taxation.
This is a book about the politics of the global economy—about how firms prosper by understanding those politics, or fail by misunderstanding them. Understanding the politics of globalization may once have been a luxury; it is now, for most high-level managers, simply a necessity. The book contains cases which can be used by instructors and students to build a framework of analysis that enables them to understand the challenges of international trade and investment and master the opportunities they represent. This framework is based on a systematic evaluation of the informal and formal rules that define markets for goods, services, and capital. These insightful cases allow for evaluation of: the political and economic origins of our current era of globalization and how the rules that constrain and enable firms are changing; the impact of governments’ policies and which tools are available for predicting, avoiding, or even employing the long arm of the government; and the influence of informal and formal institutions on opportunities for success in international finance and trade.
W. Arthur Lewis argued that a new international economic order emerged between 1870 and 1913,
and that global terms of trade forces produced rising primary product specialization and de-industrialization
in the poor periphery. More recently, modern economists argue that volatility reduces growth in the
poor periphery. This paper assess these de-industrialization and volatility forces between 1782 and
1913 during the Great Divergence. First, it argues that the new economic order had been firmly established
by 1870, and that the transition took place in the century before, not after. Second, based on econometric
evidence from 1870-1939, we know that while a terms of trade improvement raised long run growth
in the rich core, it did not do so in the poor periphery. Given that the secular terms of trade boom in
the poor periphery was much bigger over the century before 1870 than after, it seems plausible to infer
that it might help explain the great 19th century divergence between core and periphery. Third, the
boom and its de-industrialization impact was only part of the story; growth-reducing terms of trade
volatility was the other. Between 1820 and 1870, terms of trade volatility was much greater in the
poor periphery than the core. It was still very big after 1870, certainly far bigger than in the core. Based
on econometric evidence from 1870-2000, we know that terms of trade volatility lowers long run growth
in the poor periphery, and that the negative impact is big. Given that terms of trade volatility in the
poor periphery was even bigger during the century before 1870, it seems plausible to infer that it also
helps explain the great 19th century divergence between core and periphery.
As Fischer had prophesied, there has been an explosion in empirical studies on the
consequences of financial globalization. But far from clinching the case for capitalaccount
liberalization, these studies paint quite a mixed and paradoxical picture.3 Kose, Prasad, Rogoff, and Wei (2006, hereafter KPRW), who provide perhaps the most detailed
and careful review of the literature, conclude that the cross-country evidence on the
growth benefits of capital-account openness is inconclusive and lacks robustness. They
argue that one should look for the gains not in enhanced access to finance for domestic
investment, but in indirect benefits that are hard to detect with macroeconomic data and
techniques (an argument which we will evaluate below). In another paper, Kose, Prasad
and Terrones (2003) find that consumption volatility actually rose (relative to output
volatility) in emerging market economies during the current era of financial
globalization—a finding that flatly contradicts theoretical expectations. Perhaps most
paradoxical of all are the findings of Prasad, Rajan, and Subramanian (2007, hereafter
PRS) and Gourinchas and Jeanne (2007), which throw cold water on the presumed
complementarity between foreign capital and economic growth: it appears that countries
that grow more rapidly are those that rely less and not more on foreign capital; and in
turn foreign capital tends to go to countries that experience not high, but low productivity
IN A SPEECH this week, Iran's supreme leader found himself in rare agreement with President Bush. Echoing Bush's judgment that nuclear terrorism is "the single most serious threat to American national security," Ayatollah Ali Khamenei warned that, "sooner or later, international terrorists will get their hands on nuclear weapons and bring the security of the world…to an end."Bush has insisted that "for the sake of peace, the world must not allow Iran to have a nuclear weapon." Unfortunately, however, as a result of the failure of the Bush administration's strategy toward Iran, today Tehran stands seven years further down its path to nuclear weapons than it did on Jan. 20, 2001. Specifically, when Bush entered office, Iran had no operational uranium enrichment facilities. Today, as last month's International Atomic Energy Agency report documents, Iran is operating 3,492 centrifuges in a cascade that has produced 500 pounds of low-enriched uranium. This is one-third of what is required for Iran's first nuclear bomb.The Bush administration's strategy to prevent Iran's mastering technology for enriching uranium and producing nuclear weapons has been characterized as a "diplomatic slow squeeze." The administration has hoped that UN Security Council resolutions isolating Iran, enforced by sanctions, would persuade Tehran to suspend enrichment activity. Ironically, the IAEA chose Memorial Day to inform its member governments that for the third time, Iran has stiffed the demands of the Security Council resolution.In baseball, it's three strikes and you're out. After the undeniable failure of the third Security Council resolution imposing sanctions to slow Iran's nuclear program, Bush's Iran strategists should recognize that they have struck out.Hoping to divert attention from this record, the Bush administration has further confused the issue with exaggerated rhetorical attacks on those who advocate an alternative strategy of direct diplomacy including negotiations. Speaking to the Israeli Knesset on the 60th anniversary of Israel's creation, Bush accused proponents of negotiations with unfriendly regimes of "appeasement." More diplomatically, but equally pointedly, in addressing the American Israel Public Affairs Committee this week, Secretary of State Condoleezza Rice called for another dose of the same medicine the administration has been prescribing, and sought to shift the blame to Iran, asserting that "The real question is: Why won't Tehran talk to us?"Facts are only obliquely relevant to political debate. But for the record, the charge of appeasement leveled against British Prime Minister Neville Chamberlain focused not on his willingness to talk, but on his unwillingness to act. In the run-up to World War II, negotiation was not the issue. The question was whether Britain and France would act when Adolf Hitler violated Germany's Versailles Treaty commitments.Winston Churchill criticized the governments for capitulating when Hitler remilitarized the Rhineland, arguing that if they had responded, "There is no doubt that Hitler would have been compelled by his own General Staff to withdraw.…They had only to act to win." Instead, a confident Hitler went on to absorb Austria, and after Munich, Czechoslovakia.If Bush recognized the fact that his diplomatic squeeze has failed, and asked what he could do in his final eight months to advance US interests in relations with Iran, he would not have to look beyond his own Cabinet.In a 2004 report titled "Iran: Now is the Time for a New Approach," Defense Secretary Robert Gates urged that "the United States deal with the current regime rather than wait for it to fall." When asked about this recommendation during recent testimony on the Hill, Gates noted that he had been "in a happier place" then.But it is clear that Gates remains convinced that direct negotiations are imperative for solving the nuclear standoff. As he told the Academy of American Diplomacy last month, "We need to figure out a way to develop some leverage…and then sit down and talk with them."Negotiations are never certain to yield results. The alternative, a world of nuclear anarchy, is of great concern to both nations. Having seen the results of seven years of nonengagement, Bush could do his successor—whether Democrat or Republican—a great favor by proposing to negotiate with Iran now.Graham Allison is a Weatherhead Center Faculty Associate; Douglas Dillon Professor of Government and Director, Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University.
The outsourcing of military functions is always accompanied by a loss of control over the use of force. Whereas the variances in handling consequences by weak versus strong states have already been addressed in other studies, we know little about the causes of differences among strong states. I will argue that strong states are very well aware of the risk of losing control by outsourcing. In order to mitigate the risk, they develop outsourcing strategies. The strategies of the two states considered here—the United States and Germany—are similar. Despite the resemblance, the U.S. Army faces much greater losses of control than does the German Bundeswehr. This is the result of differences in the compliance with their respective strategies. Whereas the Bundeswehr almost always sticks to its strategy, the U.S. Army instead violates it in numerous cases. This difference can be explained by the different scopes of the two forces’ demand-capability gap, a factor that directly affects compliance-behavior with the strategy. The larger the gap, the less compliance is shown and the greater the loss of control. Since the U.S. Army experiences a larger gap than the Bundeswehr, the former suffers a greater loss of control.
It matters what we call things. It took too long for the Bush administration to admit that its intended liberation of Iraq had become an occupation, that US forces faced a home-grown insurgency there, and that a transition to Iraqi democracy might not result in a nation that supports US interests. Finally, not until 2007 did the Pentagon acknowledge that Iraqi sectarian violence had crossed a threshold to become a civil war. But policymakers still haven't come to terms with the implications of that fact. If they did, they'd see that a wisely executed withdrawal of US-led forces could well be the surest path to peace. That's because withdrawal is likely to transform the fighting in Iraq into a defensive struggle for power in a nation-state, as opposed to an offensive battle rooted in religion. The evidence overwhelmingly suggests that the war in Iraq is a religious civil war and that—even putting aside Al Qaeda in Iraq—Islam is at the heart of it for three reasons. First, Iraq's Sunnis and Shiites themselves see the war in these terms. They identify first and foremost as Shiites and Sunnis. Second, they use religious identity both to target opponents and define threats. Finally, they have appealed beyond the borders of Iraq for aid—fighters, arms, cash—in religious terms. Islam is not based in a specific territory; it is a transnational faith that unites its community, or umma, in the minds of men. Further, Islam does not have one leader who can dictate what is right or who is wrong. The absence of an ultimate authority figure means that Shiites—who, unlike Sunnis, believe that religious scholars are needed to help interpret the will of God—often latch on to charismatic imams. This helps explain why the cleric Moqtada al-Sadr has recently committed himself to further religious study in Iran. It also helps to explain why Iraqi Prime Minister Nouri al-Maliki will fail to gain acceptance as a leader among the vast majority of Iraq's Shiite population. Not only does Mr. Maliki not have support in the street—his government's failure to deliver even basic security and life's needs is apparent to most Iraqis—but he has no religious credentials of his own to fall back on. By contrast, Mr. Sadr's ability to deliver security and services through his Mahdi Army, and his authority as cleric and the son of the martyred Grand Ayatollah Mohammed al-Sadr, has assured him a devoted following. Sectarian conflict in Iraq was previously limited to fighting between Sunnis and Shiites. But today, the conflict has grown to include Shiites against fellow Shiites. Despite signs that security has improved, the religious civil wars in Iraq may have only just begun. My research on civil wars from 1940 to 2000 highlights three important facts about such wars, all of which apply to Iraq. First, nearly half of all ongoing civil wars (46 percent) involve religion in some form. Second, Islam has been involved in more than 80 percent of all religious civil wars. Third, religious civil wars are less likely to end in negotiated settlement. Instead, combatants tend to duke it out until one side achieves victory. In Iraq, a negotiated settlement is going to be very difficult for two reasons. First, the Shiites will want to remain in almost complete control due to two entirely legitimate concerns: (1) fears of Sunni repression as experienced in the past, and (2) a sense of majority-rule justice. Second, the Shiites themselves are divided on how Iraq should be ruled, so it's difficult to know whom to bargain with on the Shiite side, and therefore who can credibly commit to abide by the terms of any settlement. What then can the United States and its allies do to bring about a negotiated settlement? Ironically, the best way to support a negotiated settlement would be to leave Iraq. The withdrawal of US forces would allow Iraq's predominantly Arab Shiites and Sunnis to find common interest in opposing their two more classical historical adversaries: Kurds and Persians. The longer the US and Britain stay, the more they facilitate a shift away from the identity that long unified Iraq to the religious identity that is tearing it apart and facilitating its manipulation by Iran. There are three obvious downsides to this approach. First, the end of violence in Iraq following a US withdrawal would lead to the emergence of a nonsecular, nondemocratic government in Iraq. It would be more friendly toward Iran (though not Iran's puppet, as currently feared), but less friendly toward Israel, although a democratic Iraq would be no improvement in this regard. Second, since US withdrawal has been conditioned on a de-escalation of violence in Iraq, the Bush and Brown governments would be left the unenviable task of explaining to their countries that "withdrawal is the best way to create the conditions for, withdrawal." Third, withdrawal before violence has fully ceased will look like failure to most Americans and Britons. The idea of victory versus failure is really a false dichotomy, however. The real choice for US and British policymakers is between the more costly failure that will obtain from current policy and the less costly failure that might obtain from a well-thought-out and well-executed withdrawal.