Research Library

1997

The pattern of alliance commitments among states is commonly assumed to reflect the extent to which states have common or conflicting security interests. For the past twenty years, Kendall's tau–b has been used to measure the similarity between two nations' "portfolios" of alliance commitments. Widely employed indicators of systemic polarity, state utility, and state risk propensity all rely upon tau–b. We demonstrate that tau–b is inappropriate for measuring the similarity of states' alliance commitments. We develop an alternative measure of alliance portfolio similarity, S which avoids many of the problems associated with tau– b, and we use data on alliance among European states to comparare the effects of S versus tau–b in measures of utility and risk propensity. Finally, we identify several problems with inferring state interest from alliance commitments and we provide a method to overcome those problems using S in combination with data on alliance, trade , UN votes, diplomatic missions, and other types of state interaction. We demonstrate this by comparing the calculated "similarity of interests" when using solely alliance data versus that using alliance data supplemented with UN voting data.

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Working Paper 97–07, Weatherhead Center for International Affairs, Harvard University, 1997. 

In this paper we examine closely the financial events following the Mexican peso devaluation to uncover new lessons about the nature of financial crises. We explore the question of why, during 1995, some emerging markets were hit by financial crises while others were not. To this end, we ask whether there are some set of fundamentals that help explain the variation in financial crises across countries or whether the variation just reflects contagion. In what follows, we present a simple model identifying three factors that determine whether a country is more vulnerable to suffer a financial crisis: a high real exchange rate appreciation, a weak banking system, and low reserves. We find that for a set of 20 emerging markets, differences in these fundamentals go far in explaining why during 1995 some emerging markets were hit by financial crises while others were not. We find also that alternative hypotheses that have been put forth to explain such crises often do not seem to be supported by the data.

Working Paper 97–10, Weatherhead Center for International Affairs, Harvard University, January 1997. 


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Sachs, Jeffrey, and Wing Thye Woo. 1997. “Understanding China's Economic Performance”. Abstract

Broadly speaking, two schools of thought have emerged to interpret China's rapid growth since 1978: the experimentalist school and the convergence school. Perhaps the best test of these two approaches is whether China's policy choices are in fact leading to institutions harmonized with normal market economies or to more distinctive innovations. In this regard, the recent policy trend has been towards institutional harmonization rather than institutional innovation, suggesting that the government accepts that the ingredients for a dynamic market economy are already well–known.

The twentieth century has seen a major innovation in the context of international politics: the institutionalization of interactions between sovereign states. While this process has seen its ebbs and flows, successes and failures, over the last hundred years, the trend toward institutionalization now seems entrenched and shows no signs of abating. If anything, experiences since the end of the Cold War suggest that states value the institutionalization of their relations ever more highly. New studies show that while many international organizations die every year, new ones are being created at an even faster rate (Shanks et al., 1996). The trend toward institutionalization is not accidental, or something that is being imposed on reluctant governments; it is the result of government choice. This paper examines the state strategy of institutionalization, asking about the causes and consequences of increasing reliance on international institutions throughout the globe.

LaPorta, Rafael, Florencio Lopez-de-Silanes, Oliver Hart, and John Moore. 1997. “A New Bankruptcy Procedure That Uses Multiple Auctions”. Abstract

We developed a new bankruptcy procedure that makes use of multiple auctions. The procedure is designed to work even when capital markets do not function well (for example in developing economies, or in economies in transition)–although it can be used in all economies.

It is often argued that low tax rates on owner–occupied housing divert investment from equipment. This paper demonstrates that if people are heterogeneous in their propensity to save, and if there are constraints on borrowning, favorable tax treatment of owner–occupied housing up to a certain value increases equipment investment. This is because low housing taxes encourage renters to become owner–occupiers, and this leads existing owner–occupiers to shift their portfolio of other assets from rental housing to equipment.

Kremer, Michael. 1997. “Why are Worker Cooperatives So Rare?”. Abstract

This paper argues that worker cooperatives are prone to redistribution among members, and that the redistribution distorts incentives. I assume that employment contracts are incomplete. In the model cooperative members pay in a capital contribution to purchase equipment. They then receive shocks to ability. Each worker's outputs depend on ability and on effort, neithr of which can be observed seperately. Whereas workers in firms owned by outside shareholders would quit if the firm redistributed away from them, cooperative members will be reluctant to leave, since this entails forfeiting the dividends on their capital contribution. The model can explain why cooperatives typically have egalitarian wage policies.

This paper examines a mechanism under which governments would use an auctuion to extimate the private value of patents and then offer to buy out patents at this private value, times a fixed markup. Patent buy–outs may be particularly appropriate for pharmaceuticals.

Theories of international relations commonly rely upon strong assumptions about state preferences, or derive them from ancillary theories that themselves make strong assumptions about the sources of state preferences. By means of a detailed explanation of interest-formation and interest–specification in a particular case (the Japanese interest in the recovery of the Northern Territories), supplemented by comparative discussion, this paper argues that national “interests” are idiosyncratic and best treated exogenously. It assesses the implications for international relations theory, and addresses some common objections.

Working Paper 97–03, Weatherhead Center for International Affairs, Harvard University, March 1997. 


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The events surrounding the recent closure of a Renault automotive factory in Belgium suggest the emergence of a European realm of social movement activity. Increasingly, domestic actors engage not only nation states, but also participate in coordinated cross–national activity, and target the institutions and policies of both international governments and multi–national corporations. We sketch the dimensions of this European realm of social movement activity, and outline our efforts to set the Renault case – and other recent examples of transnational movement activity – into a longitudinal and cross–national context, drawing from machine coded, media–generated events data.

Available in print format only.

Working Paper 97–10, Weatherhead Center for International Affairs, Harvard University, 1997. 

Countries differ greatly in R&D spending, and these differences are particularly striking when comparing developed with developing countries. The paper examines the extent to which the benefits of R&D are concentrated in the investing countries. It is argued that significant benefits spill over to other countries in the world. The argument is supported by quantitative estimates of such cross–country effects.

Tucker, Richard. 1997. “Conflict in Time and Space”. Abstract

Scholars in international relations (IR) are increasingly using time-series cross-section data to analyze models with a binary dependent variable (BTSCS models). IR scholars generally employ a simple logit/probit to analyze such data. This procedure is inappropriate if the data exhibit temporal or spatial dependence. First, we discuss two estimation methods for modelling temporal dependence in BTSCS data: one promising based on exact modelling of the underlying temporal process which determines the latent, continuous, dependent variable; The second, and easier to implement, depends on the formal equivalence of BTSCS and discrete duration data. Because the logit estimates a discrete hazard in a duration context, this method adds a smoothed time term to the logit estimation. Second, we discuss spatial or cross–sectional issues, including robust standard errors and the modelling of effects. While it is not possible to use fixed effects in binary dependent variable panel models, such a strategy is feasible for IR BTSCS models. While not providing a model of spatial dependence, Huber's robust standard errors may well provide more accurate indications of parameter variability if the unit observations are intra-related. We apply these recommended techniques to reanalyses of the relationship between (1) democracy, interdependence and peace (Oneal, Oneal, Maoz and Russett); and (2) security and the termination of interstate rivalry (Bennett). The techniques appear to perform well statistically. Substantively, while democratic dyads do appear to be more peaceful, trade relations, as measured by Oneal, et al., do not decrease the likelihood of particpation in militarized disputes, Bennett's principal finding regarding security and rivalry termination is confirmed; his finding on common external threats, however, is not; his results on the influence of issue salience are even more robust.

Working Paper 97–08, Weatherhead Center for International Affairs, Harvard University, November 1997. 


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Conventional wisdom brings into question the utility of a foreign policy of neutrality in the post–Cold War era. Yet, while neutrality is clearly evolving, the European neutrals continue to maintain at least military neutrality. In Switzerland there is a much deeper affinity for neutrality — so much so that it is a part of the national ethos. The Swiss case is interesting because Switzerland is, at the same time, a microcosm of the European Community, and a pedantic democracy where the will of the majority can be obstructed by the few and old institutions are often more valued than progress and internationalism. Rather than greeting a new world order with open arms, Switzerland is nibbling at the margins of European and global integration, attempting to show neutrality is useful to the world, and picking and choosing its international relations á la carte.

Working Paper 97–04, Weatherhead Center for International Affairs, Harvard University, April 15, 1997.


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Allison, Graham T., Jr. 1997. “Towards a New Democratic Commonwealth”. Abstract

Thanks to the collapse of European communism, it is possible to envisage a new community embracing most of the states of the Northern Hemisphere. Voters in most of the former Soviet bloc countries have affirmed their commitment to democracy in repeated elections. Because of these elections, especially those in Russia, it is possible to think realistically of creating a "Commonwealth of Democracies" from Vancouver to Vladivostok to Tokyo. (ordering information)

Domínguez, Jorge I. 1997. “¿Comienza una Transición Hacia el Autoritarismo en Cuba?” Revista encuentro de la Cultura Cubana 6. Abstract

Las discusiones sobre el régimen político que impera en Cuba se caracterizan por un consenso peculiar. Fidel Castro y los más altos funcionarios del gobierno y del Partido Comunista de Cuba insisten en que no ha cambiado nada fundamental; persiste un régimen "socialista" de partido único. Por otra parte, los enemigos más acérrimos de ese régimen, sobre todo quienes radican en Estados Unidos, afirman lo mismo: nada fundamental ha cambiado y, por supuesto, no hay democratización. Sugiero en este artículo que Cuba ya transita de un régimen político hacia otro, aunque sea una transición incompleta. Hoy el régimen político cubano comienza a aproximarse a lo que se podría llamar un régimen autoritario.

685_encuentro.pdf

Vanishing Boundaries, the recently published book by Hoge, Johnson, and Luidens examines the religious lives of a cohort of baby boomers confirmed in Presbyterian churches in the 1950s and 1960s. The authors look for what has happened to them since and just what sort of religiosity, if any, they are practicing today. Among those who are currently connected to churches, a majority are what they call "lay liberals". This group scores low on "orthodox" Christian beleifs, such as traditional views about the Bible, believing that Jesus is the only way to salvation, and emphasizing the next world over this one. They are, by contrast, very this–wordly and do not think either that the Bible should be taken literally or that Christianity has a corner on the truth. They also attend church much less than others. For all these reasons, lay liberals do not get the ringing endorsements from Hoge, Johnson, and Luidens, nor from the many other sociologists and theologians who have recognized similar categories of non–orthodox churchgoers. Implicitly, most observers seem to measure strength of belief and commitment against a norm defined by evagelicalism, equating that with "religiosity" and painting these non–exclusivist, less involved practitioners as simply lower on the scale. In this essay I suggest that "lay liberals" are not simply lower on the religiosity scale. Rather, they are a pervasive religious type that deserves to be understood on its own terms.

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For over 20 years, political influential Israelis and Palestinians have met in private, unofficial, academically based, problem–solving workshops designed to enable the parties to explore each other’s perspective, generate joint ideas for mutually satisfactory solutions to their conflict, and transfer insights and ideas derived from their interaction into the policy process. Most of the work takes place in small groups, but the focus is on promoting change in the larger system. This article discusses 5 ways in which the workshop group serves as a vehicle for change at the macrolevel. It does so by functioning as a microcosm of the larger system, as a laboratory for producing inputs into the larger system, as a setting for direct interaction, as a coalition across conflict lines, and as a nucleus for a new relationship.

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Darnell, Alfred, and Darren Sherkat. 1997. “The Impact of Protestant Fundamentalism on Educational Attainment.” American Sociological Review 62: 306-315. Abstract

After the debates that raged during the 1960s and 1970s, sociologists lost interest in studying the material consequences of religious orientations. In this article, Alfred Darnell and Darren Sherkat use insider documents from conservative Protestant communities to reopen this issue. They begin by examining how fundamentalist Protestant cultural orientations discourage educational pursuits. Employing data from the Youth Parent Socialization Panel Study, they demonstrate that fundamentalist beliefs and conservate Protestant affiliation both have significant and substantial negative influences on educational attainment above and beyond social background factors.

510_sherkat_1.pdf
Cooper, Richard N. 1997. “Key Currencies After the Euro”. Abstract

This paper will address various issues. It first takes up the reasons why national currencies might be used internationally, and provides some data on the international role of currencies today, and on their recent evolution. It then takes up the factors suggesting that the euro will emerge as an international currency, possibly displacing the dollar. I then offer reasons for believing that major displacement of the dollar will not take place, at least for several decades. Next it addresses what the consequences might be if that forecast proves to be incorrect. A concluding section touches on probably more important issues that are not discussed in detail in the paper.

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Working Paper 98–03, Weatherhead Center for International Affairs, Harvard University, 1998.

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