The Democratic PeaceDemocracyInternational OrganizationsInternational TradePeaceWar

UK v. USSimilar CulturalForeign policyLegal traditions Car Culture???Opposite ends of the spectrum ongasoline tax policy addressing climate change

Car culture: gasoline taxes and prices per liter in 31 countries (2004):

Who needs the most gasoline per capita?Urban v Rural

Does need translate into policy preference?

Policy outcome?Weve got Interests & IncentivesNow, to get the policy outcome, We interact interests/incentives with a domestic political institution: Malapportionment!

Malapportionment tends to weigh RURAL preferences more than URBAN (i.e., Proportional representation tends to weigh URBAN preferences more than RURAL)Does this have an effect on NATIONAL policy?

Test:Does malapportionment affect:Gasoline pricesKyoto ratification

Kyoto Protocolto the UN Framework Convention on Climate Change Stabilize atmospheric greenhouse gas1997 (enter into force: 2005)2009: 187 states ratifiedCommitment to reduce greenhouse gases:carbon dioxidemethanenitrous oxidesulphur hexafluoride

Ratifiers, signers, and non

Which came first?Car culture?Malapportionment?Once created, however, car-culture may reinforce malapportionmentCar-culture may have other effects:Crash:It's the sense of touch.... Any real city, you walk, you know? You brush past people. People bump into you. In L.A., nobody touches you. We're always behind this metal and glass. I think we miss that touch so much that we crash into each other just so we can feel something.Hypothesis: car-culture exacerbates racial/ethnic tensionOperationalized: automobiles/capita inter-ethnic/racial violent crime

Main take-home from last time:What is it to explain?to state the conditions under which it always or usually takes place (perhaps probabilistically)The BRIDGEThe BRIDGE between historical observations and general theory is the substitution of variables for proper names and dates

Religion vs. Science(Faith vs. Skepticism)RELIGION & SCIENCE both respond to mysteryThe key to religion is faithin the religious hierarchyin the Biblein the KoranClear your mind of questions; there is no whyThe key to science is skepticismtheories must be tested, and tested, and testedwe never achieve Truth with a capital Twe never prove

COMPARATIVE INSTITUTIONAL ANALYSIS:The Politics of International FinanceJames Raymond VreelandSchool of Foreign ServiceGeorgetown University*

2008 Financial Crisis & The rise of the G20Unipolarism is over.We live in a multipolar world.*

The future of the IMF?...*

Changes to Global GovernanceWho has the power at the IMF?*

The IMF Executive Board Directors, dominated by Western Europeans.Global governance is at a crossroads G20 = arrival of the emerging markets IMF governance is out of whack with reality*

G20Calls for a reevaluation of the BWI vote sharesWhy care about the G20?Doesnt do anythingArbitrary membership (out of date)Represents the arrival of the emerging markets! More representative?Who is the G20?*

Who is the G20?G7+ BRIC11 down, 9 to go?NO! Only 8 to go.Only 19 countries in the G20.+ EU+ MAKTISAS*

Wrong guessesEUSpain, Poland, NetherlandsEuropeSwitzerland, NorwayThe bad guyIranLarge populationsPakistan, Bangladesh, NigeriaBig economiesThailand, Taiwan, Malaysia, Venzuela, Egypt, *

Seats around the G20 table*

Seats around the IMF table 2012*

WEOG PresenceG20: 40%IMF Executive Board seats: 46%IMF Executive Board votes: 58%*

How do they do it?Inflated vote shares?*

IMF vote shares have been out of whackTop 5 members:United States (16.8%)Japan (6.0%)Germany (5.9%)France (4.9%)UK (4.9%)Other important members:China (3.7%)Saudi Arabia (3.2%)Russia (2.7%)Italy? (3.2%)Belgium? (2.1%)Brazil? (1.4%)India? (1.9%)Turkey? (0.55%)*

Who controls the IMF? (2010)Top 5 members:United States (16.7%)Japan (6.0%)Germany (5.9%)France (4.85%)UK (4.85%)Other important members:Italy? (3.19)Saudi Arabia? (3.2%)Canada? (2.9%)Russia (2.7%)Belgium? (2.1%)China (3.65%)India? (1.9%)Spain? (1.4%)Brazil? (1.4%)Korea? (1.3%)*

http://www.imf.org/external/np/sec/memdir/members.aspx accessed 2 May 2012*

New vote-shares (for 2012)??Has not happened yet!United States: 16.48Japan: 6.14China: 6.07Germany: 5.31France: 4.02United Kingdom: 4.02Italy: 3.02India: 2.63Russia: 2.59Brazil: 2.22Canada: 2.21Saudi Arabia: 2.01Spain: 1.92Mexico: 1.80Netherlands: 1.76Korea: 1.73Australia: 1.33Belgium: 1.30*

Who controls the IMF? (2010)Top 5 members:United States (16.75%)Japan (6.23%)Germany (5.81%)France (4.29%)UK (4.29%)Other important members:Italy? (3.16)Saudi Arabia? (2.80%)Canada? (2.56%)Russia (2.39%)Belgium? (1.86%)China (3.81%)India? (2.34%)Spain? (1.63%)Brazil? (1.72%)Korea? (1.37%)*

But real distortions also occur in the elections for the Executive Board*

Appointed & Elected DirectorsAppointed:US, Japan, Germany, France, UKElected:China, Saudi Arabia, RussiaRegionally elected (ad-hoc)AustraliaSouth Pacific, New Zealand, Korea, UzbekistanBrazilLatin American countriesTogoAfrican countries IranAfghanistan, Algeria, Ghana, Morocco, Pakistan, Tunisia

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Really ad-hoc elected Directors:ItalyGreece, Malta, Portugal, San Marino, Albania, & Timor-LesteBelgiumAustria, Luxembourg, Belarus, Czech Republic, Hungary, Kosovo, Slovak Republic, Slovenia, & TurkeyNetherlandsArmenia, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, Macedonia, Moldova, Montenegro, Romania, & UkraineSwitzerlandAzerbaijan, Kazakhstan, Kyrgyz Republic, Poland, Serbia, Tajikistan, & Turkmenistan*

How do they do it?Foreign aid?*

Buying Bretton Woods James Raymond VreelandGeorgetown Universityjrv24@georgetown.edu Paper prepared for presentation at the AidData Conference, University College, Oxford, March 22-25, 2010 *

Switzerland?New IMF member (1992)Bloc does not have deep historical ties other than joining around the same timeData for the entire period are availableSwitzerland has added incentivesOut of the EU, out of the G20*

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The risk:Irrelevance of the IMF in a Multi-Polar world!*

Regional Monetary Funds? Lipscy, Phillip Y. 2003. Japan's Asian Monetary Fund Proposal. Stanford Journal of East Asian Affairs 3 (1):93-104.

http://www.youtube.com/watch?v=HyrTypTRDbk *

Asian Monetary Fund Proposal?Going back to the aftermath of the US/IMF bailout of Mexico in 1995: TEQUILA CRISISJapanese policy-thinkers/makers begin thinking about an Asian Monetary Organization ($20 billion)Why? Believed that the US would not act as vigorously in the event of a crisis in AsiaThen: East Asian Financial Crisishttp://www.xtimeline.com/timeline/Asian-Financial-Crisis *

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Why did Japan (not US or EU)lean towards liquidity provision in the East Asian Crisis?25% of Japanese lending to all developing countries went to Thailand!*

Japans position at the IMF re: IndonesiaJapan opposed major structural reforms (eliminate national projects, reduce subsidies, restructure financial structure)Japan supported a loan package to stabilize the exchange rateIMF ignored Japan*

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Asian sense of solidarity AMF vision$100 billion10 members:Australia, China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, ThailandNOT the United StatesSecretary of State Summers to MOF official Sakakibara:I thought you were my friend!*

Flash-forward: March 2010Chiang Mai InitiativeA multilateral currency swap arrangement Members: Association of Southeast Asian Nations (ASEAN), China (including Hong Kong), Japan, and South KoreaASEAN members: http://www.aseansec.org/74.htm Foreign exchange reserves pool of US$120 billion Launched: March 2010The ASEAN flag*

Power:Matters in international institutionsBut emerging markets have outside optionsCan we keep China at the table?Or does China go for outside options?*

AsideHow do you see China?What does China look like?*

Rise of the Rooster*

Will China play this game?Increasingly using foreign aid & access to Chinese markets for political goalsRecognition of TaiwanDalai LamaLiu XiaoboChiang Mai alternative*

One more triangle

Is this a Bretton Woods Moment?

Treaty of Versailles (191920): League of NationsKeynes begins discussions on an international loan1918Stock Market Crash!World War II (1939-45)United Nations (1945)Bretton Woods: IMF/World Bank (1944)GATT: 1947Smoot-Hawley (1930) Beggar-thy-neighbor194415 years from crash to institutional solutions1929

Latin American Debt Crisis (1982)1980Tequila Crisis (1995)2008 Financial CrisisBretton Woods moment 2023?...Or beyond?East Asian Financial Crisis (1997-1999)2023?Lay out architecture now, so were ready when it comes200819902000

Think Big aboutGlobal Governance!

Regionalism before globalism?

Wrap up*

Why should you care?Globalization of capital flowsFinancial crises plagued the 20th centuryBailouts will continueTension between Providing liquidityPreventing MORAL HAZARDSolution: conditionality1944-1970s conditionality light1980s & 1990s conditionality heavy2008 conditionality light?What will it be like when the shoe is on the other foot?*

The course take-away:Institutions matterHow do international institutions matter?Solve collective action problems?Informational role?Facilitate foreign policy goals?Obfuscate the pursuit of political goals?How do domestic political institutions matter?Shape the survival strategies of political leaders*

Analytical toolkitTRILEMMATime-inconsistent preference problemsCommitment problemsRemember Ulysses and the sirensUSING INTERNATIONAL ORGANIZATIONS TO LOCK-IN OR INFLUENCE POLICYVeto players (stability of policy)Stability of democracy in rich democraciesObjectives of leaders: stay in power!The optimal strategy to fulfill this goal depends on incentives/constraints shaped by institutional contextControlling for variables (holding conditions constant)*

Winners & LosersGreater economic integration greater power of Winners Economic integration greatest at the Regional LevelSo look for regional cooperationYou are winners from globalization!*

Thank you WE ARE GLOBAL GEORGETOWN! *

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Seats around the IMF table (2012)*

Chart1

16.75

5.81

4.29

4.29

4.97

4.52

4.26

3.62

3.6

3.4

2.77

2.39

2.26

6.23

3.93

3.81

2.81

2.8

3.22

1.55

3.18

2.8

4.64

1.84

United States

Germany

France

United Kingdom

Belgium

Netherlands

Italy

Australia

Canada

Denmark

Switzerland

Russia

Iran

Japan

Singapore

China

India

Saudi Arabia

Lesotho

Togo

Egypt

Brazil

Mexico

Argentina

Vote order

United States16.8

Japan6.2

Germany5.8

France4.3

United Kingdom4.3

Belgium5.0

Mexico4.6

Netherlands4.5

Italy4.3

Singapore3.9

China3.8

Australia3.6

Canada3.6

Denmark3.4

Lesotho3.2

Egypt3.2

India2.8

Brazil2.8

Saudi Arabia2.8

Switzerland2.8

Russia2.4

Iran2.3

Argentina1.8

Togo1.6

Vote order

Region

United States16.8

Germany5.8

France4.3

United Kingdom4.3

Belgium5.0

Netherlands4.5

Italy4.3

Australia3.6

Canada3.6

Denmark3.4

Switzerland2.8

Russia2.4

Iran2.3

Japan6.2

Singapore3.9

China3.8

India2.8

Saudi Arabia2.8

Lesotho3.2

Togo1.6

Egypt3.2

Brazil2.8

Mexico4.6

Argentina1.8

Region

Region (2)

United States16.8

Germany5.8

France4.3

United Kingdom4.3

Belgium5.0

Netherlands4.5

Italy4.3

Australia3.6

Canada3.6

Denmark3.4

Switzerland2.8

Russia2.4

Iran2.3

Japan6.2

Singapore3.9

China3.8

India2.8

Saudi Arabia2.8

Lesotho3.2

Togo1.6

Egypt3.2

Brazil2.8

Mexico4.6

Argentina1.8

Region (2)

United States

Germany

France

United Kingdom

Belgium

Netherlands

Italy

Australia

Canada

Denmark

Switzerland

Russia

Iran

Japan

Singapore

China

India

Saudi Arabia

Lesotho

Togo

Egypt

Brazil

Mexico

Argentina