Publications

2000
Domínguez, Jorge I. 2000. “The @#$%& Missile Crisis (Or, What Was 'cuban' About U.s. Decisions During the Cuban Missile Crisis).” The Journal of the Society for Historians of Foreign Relations / Blackwell Publishing. The Journal of the Society for Historians of Foreign Relations / Blackwell Publishing. Publisher's VersionAbstract
The documents concerning the Cuban missile crisis, declassified by the Office of the Historian of the U.S. Department of State, reveal quite effectively a key theme in the conduct of U.S. foreign policy in 1962–63: Cuba's bizarre role within the context of U.S. government decision making. This role had somewhat contradictory dimensions.Cuba seemed to be both an afterthought and an obsession for U.S. decision makers. Its exclusion from the diplomatic negotiations over the missile crisis was an instance of negligence, though it came about in part from a deliberate decision. Such Cuban exclusion reduced the likelihood that the United States could accomplish all of its goals in the missile crisis settlement. Moreover, information included in these documents only to some degree (or not at all) calls attention to Cuba's much greater substantive importance before and during the missile crisis than U.S. officials thought at the time. This documentary record, therefore, reminds us that the outcome of the missile crisis was so positive for the United States, to a significant degree, thanks to Soviet statesmanship in managing and controlling its unhappy Cuban ally.
Walt, Stephen M. 2000. “Two Cheers for Clinton's Foreign Policy[Br](From Foreign Affairs: March/april 2000; V.79, No. 2)”.Abstract
As with any president, it is easy to think up ways that Clinton's record might be improved. But on the whole, he does not deserve the chorus of criticism he has received. Clinton's critics fail to appreciate how changes in the international position of the United States have complicated the making of its foreign policy. The next president will fact similar pressures.
LaPorta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W Vishny. 2000. “Government Ownership of Banks”.Abstract
In this paper, we investigate a neglected aspect of financial systems of many countries around the world: government ownership of banks. We assemble data which establish four findings. First, government ownership of banks is large and pervasive around the world. Second, such ownership is greater in countries with low levels of per capita income, backward financial systems, interventionist and inefficient governments, and poor protection of property rights. Third, higher government ownership of banks in 1970 is associated with slower subsequent financial development. Finally, higher government ownership of banks in 1970 is associated with lower subsequent growth of per capita income, and in particular with lower growth of productivity rather than slower factor accumulation. This evidence is inconsistent with the optimistic "development" theories of government ownership of banks common in the 1960s, but supports the more recent "political" theories of the effects of government ownership of firms.
Kremer, Michael. 2000. “Globalization and International Public Finance”.Abstract
This paper examines the effect of reduced transaction costs in the international trading of assets on the ability of governments to issue debt. We examine a model in which governments care about the welfare of their citizens, and thus are more inclined to default if a large proportion of their debt is held by foreigners. Reductions in transaction costs make it easier for domestic citizens to share risk by selling debt to foreigners. This may increase tendencies for governments to default, and thus raise their cost of credit and reduce welfare. We find that even in the absence of transaction costs, home bias in placement of government debt may persist, because in the presence of default risk the return on government debt is correlated with the tax burden required to pay the debt. Asset inequality may reduce this home bias, and by increasing foreign ownership, increase incentives for default. Finally, if foreign creditors are less risk averse than domestic creditors, there may be one equilibrium in which domestic creditors hold the asset and default risk is low, and another in which foreign creditors hold the asset and default risk is high.
Robinson, James A. 2000. “The Colonial Origins of Comparative Development: An Empirical Investigation”.Abstract
American Economic Review, 91, 1369–1401We exploit differences in European mortality rates to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and were more likely to set up extractive institutions. These institutions persisted to the present. Exploiting differences in European mortality rates as an instrument for current institutions, we estimate large effects of institutions on income per capital. Once the effect of institutions is controlled, for countries in Africa or those closer to the equator do not have lower incomes.
Reich, Michael R. 2000. “Public-Private Partnerships for Public Health”.Abstract
Global health problems require global solutions, and public–private partnerships are increasingly called on to provide these solutions. But although such partnerships may be able to produce the desired outcome, they also bring their own problems. A first–of–its kind workshop in April, hosted by the Harvard School of Public Health and the Global Health Council, examined the organizational and ethical challenges of partnerships, and ways to address them.
Martin, Lisa L. 2000. “Social and Economic Pressures at Odds: Governance in Tourism and Foreign Direct Investment”.Abstract
This paper focuses on two issue–areas that are characterized by relatively high levels of conflict between economic and social pressures, tourism and foreign direct investment (FDI). Tourism has been little studied by political scientists, but as an international economic activity it has tremendous importance for many states, and is often highly politicized. There is also a substantial secondary literature on tourism, mostly written by sociologists, and abundant (if at times unreliable) data. It thus is a good issue to study in this context, asking about the level at which tourism policy is made, and why. FDI has been taken more seriously by political scientists, although there has been surprisingly little written on this topic in the last decade or two. The literature on FDI from the 1970s leaves little doubt that economic and social pressures are often conflictual. We have also seen numerous attempts to shift the level of governance for FDI, and dramatic policy shifts. FDI therefore also promises to provide insights into how governments resolve tension between social and economic pressures for particular patterns of governance.
Hausmann, Ricardo. 2000. “Exchange Rate Regimes and Financial-Market Imperfections”.Abstract
This paper investigates the design of an exchange rate policy for an economy where the domestic capital market is segmented from the global financial market, producers rely on credit to finance working capital needs, and the labor market is characterized by nominal contracts. We show that the choice of an exchange rate regime is intertwined with the financial structure — greater reliance on working capital to finance input needs, and greater segmentation of the domestic capital market increase the desirable exchange rate stability. This result follows from the observation that greater exchange rate stability is likely to reduce the real interest rate facing the producer, thereby increasing output. Hence, greater reliance on working capital increases the welfare gain attached to the lower interest rate associated with lower flexibility of the exchange rate, thereby increasing the desirability of a fixed exchange rate. Similarly, greater integration with the global capital market reduces the real interest rate benefits from exchange rate stability, increasing thereby the optimal flexibility of the exchange rate, and reducing the demand for international reserves.
Feng, Jianwu. 2000. “China's Relationship with the U.s. and the Eu in the Twenty-First Century”.Abstract
In history, a new rising power usually experiences great trouble in the existing world order. With the renaissance of Europe and emergence of China, will the world avoid a repetitive painful experience of the old days and register the twenty–first Century as a peaceful century in human history? The answer will very much depend on how these countries manage their foreign affairs.
Wolborsky, Stephen L. 2000. “Swords into Stilettos: The Battle Between Hedgers and Transformers for the Soul of Dod”.Abstract
In a now–familiar scene, General H. Norman Schwarzkopf, imposing in his desert "battle dress uniform," stood before the press and pointed to the TV on his left. On the screen, a set of bombing crosshairs overlaid a roadbed. Transfixed by the cockpit imagery, the reporters chuckled nervously when someone the general called "the luckiest man in Iraq" drove through the crosshairs. With perfect comic timing, he quipped, "And now, in his rear–view mirror?" as a U.S. precision–guided munition (PGM) detonated, obliterating the road where the driver had just been. According to the Gulf War Air Power Survey, "Few scenes were as vivid on television as the picture of a guided bomb going through a ventilation shaft in an Iraqi office building." A central post–war question was whether such images in fact presaged a new style of combat based on advanced technology: Were we watching the birth of a U.S.–led revolution in military affairs (RMA), or simply slicker packaging of business as usual?
Simmons, Beth A. 2000. “The Legalization of International Monetary Affairs”.Abstract
Sovereign control over money is one of the most closely guarded national prerogatives. Creating, valuating, and controlling the distribution of national legal tender is viewed as an inherent right of a nation–state in the modern period.Yet over the course of the twentieth century, international rules of good monetary conduct have become "legalized" in the sense developed in this volume. This historic shift took place after World War II in an effort to bolster the confidence that had been shattered by the interwar monetary experience. If the interwar years taught monetary policymakers anything, it was that economic prosperity required credible exchange–rate commitments, open markets, and nondiscriminatory economic arrangements. International legalization of monetary affairs was a way to inspire private actors to once again trade and invest across national borders.
Lopez-de-Silanes, Florencio, Rafael LaPorta, Andrei Shleifer, and Simon Johnson. 2000. “Tunnelling”.Abstract
Tunnelling is defined as the transfer of assets and profits out of firms for the benefit of their controlling shareholders. We describe the various forms that tunnelling can take, and examine under what circumstances it is legal. We discuss two important legal principles — the duty of care and the duty of loyalty — which courts use to analyze cases involving tunnelling. Several important legal cases from France, Belgium, and Italy illustrate how and why the law accommodates tunnelling in civil law countries, and why certain kinds of tunnelling are less likely to pass legal scrutiny in common law countries.
Robinson, James A. 2000. “Political Losers as Barriers to Economic Development”.Abstract
American Economic Review, 90, 126-130Per capita income in many sub–Saharan African countries, such as Chad and Niger, is less than 1/30th of that of the United States. Most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies. A particularly interesting historical example comes from the diffusion of railways in the 19th century. While railways are regarded as a key technology driving the Industrial Revolution, there were large lags in their diffusion. For example, in 1850 the United States had 14,518 km of track, Britain 9,797 km, and Germany 5,856 km; in the Russian and Hapsburg empires there were just 501 km and 1,357 km, respectively (all date from Brian R. Mitchell [1993]). Why do societies, as in this example, fail to adopt the best available technologies?
Ungerer, Herbert. 2000. “Access Issues Under Eu Regulation and Anti-Trust Law”.Abstract
In the Internet age, access has become a key issue for regulation and antitrust. Many Internet libertarians count on low costs of entry and a robust competitive environment, but many segments of the new Internet-based economy, driven by the perceived requirement to show worldwide presence to reach scale economies, might develop towards structures controlled by highly dominant enterprises.Against this background, this paper reviews, from a European Union perspective, three issues which in the view of the author are fundamental to driving theory and practice with regard to access to telecommunications and the Internet in the European Union: it reviews the current EU framework of access and interconnection to the basic layer of Internet access, the telecommunications network; it then takes a closer look at the recent changes of the system, even if the current reform process has not yet concluded; and it discusses access and control of the Internet and the concept of "top-level Internet connectivity" which has lately become central in this context.Behind the global effects of "top-level-connectivity" looms a fundamental challenge for global antitrust governance. Given the lack of efficient multilateral structures to deal with this challenge, the major regions are struggling to deal with this new phenomenon in existing frameworks– unilaterally within their local markets, as well as through bilateral cooperation in global markets.In conclusion, the paper assesses the critical role now played by bilateral international antitrust cooperation–global governance by default.
Kornai, Janos. 2000. “Hidden in an Envelope: Gratitude Payments to Medical Doctors in Hungary”.Abstract
What is the economic significance of "grey market" payments to physicians in Hungary? Let us look at the question first from the angle of theconsumer of medical provisions, the "buyer" in this unusual market transaction.
Kornai, Janos. 2000. “What the Change of System from Socialism to Capitalism Does and Does Not Mean (In Journal of Economic Perspectives: V.14, No. I”.Abstract
Two systems can be said to have dominated the 20th century: the capitalist system and the socialist system. This paper discusses the complexities of this seemingly simple statement.
Kim, Wi Saeng. 2000. “Does Fdi Increase Firm Value in Emerging Markets?”.Abstract
The study finds that positive and statistically significant abnormal returns occur around the announcement date of foreign direct investments. The finding suggests that security prices in the Korean stock market do reflect firm-specific information, and that FDI by Korean MNCs are, on average, value increasing investment decisions. The finding is consistent with the studies of Doukas and Travlos (1988) and Fatemi (1984) which found similar results for U.S. MNCs. Interestingly, however, the speed of price adjustment is not instantaneous as has been observed in event studies of the U.S. market. The price adjustment to firm–specific information is slower, and the magnitude of abnormal returns is greater, for the firms that are subject to investor herding behavior.
Kim, Wi Saeng. "Does FDI Increase Firm Value in Emerging Markets?" Working Paper 00–03, Weatherhead Center for International Affairs, Harvard University, 2000.Download PDF
Giersch, Carsten. 2000. “Multilateral Conflict Regulation (Mcr): The Case of Kosovo”.Abstract
This paper analyzes the problems of multilateral conflict regulation in violent ethnic conflicts using the war in Kosovo as a case study. The NATO intervention in the Kosovo conflict culminated in the air campaign "Operation Allied Force" against Yugoslavia (Serbia and Monte–negro) from March 24 through June 10, 1999.
Giersch, Carsten. "Multilateral Conflict Regulation (MCR): The Case of Kosovo." Working Paper 00–04, Weatherhead Center for International Affairs, Harvard University, 2000.Download PDF
Eisold, Diane E. 2000. “Nato Enlargement: Poland's Response”.Abstract
I will examine relevant aspects of the activities of Poland both leading up to and since its accession into the NATO Alliance. As Poland is generally credited with being the catalyst that precipitated the dissolution of the Soviet Union, its activities are particularly germane. Not only was it the most aggressive in its pursuit of unfettered sovereignty, it represents other important factors that illustrate challenges and opportunities for any alliance.
Dzung, Vu Dang. 2000. “A New Balance of Power in Asia-Pacific Implications for Asean's Posture”.Abstract
The purpose of this paper is to look into and understand a variety of factors, particularly the relationship between the United States and China, and how it affects the rallying of forces and the shaping of a new balance of power in the Asia–Pacific. Based on this, an attempt is made here to arrive at a critical evaluation of ASEAN?s current posture, the problems that may arise, and the policy options taken by ASEAN that can contribute to the strengthening of its role and position.