Risk, Uncertainty, and Autonomy: Financial Market Constraints in Developing Nations

The University Archives has determined that this item is of continuing value to OSU's history.Layna Mosley is Associate Professor in the Department of Political Science at the University of North Carolina at Chapel Hill. Her research examines the influence of global capital markets on government policymaking; the politics of international financial regulation; and the relationship between multinational production and labor rights in developing nations.Ohio State University. Mershon Center for International Security StudiesEvent webpage, event photo

The Third wave in globalization theory

This essay examines a proposition made in the literature that there are three waves in globalization theory—the globalist, skeptical, and postskeptical or transformational waves—and argues that this division requires a new look. The essay is a critique of the third of these waves and its relationship with the second wave. Contributors to the third wave not only defend the idea of globalization from criticism by the skeptics but also try to construct a more complex and qualified theory of globalization than provided by first-wave accounts. The argument made here is that third-wave authors come to conclusions that try to defend globalization yet include qualifications that in practice reaffirm skeptical claims. This feature of the literature has been overlooked in debates and the aim of this essay is to revisit the literature and identify as well as discuss this problem. Such a presentation has political implications. Third wavers propose globalist cosmopolitan democracy when the substance of their arguments does more in practice to bolster the skeptical view of politics based on inequality and conflict, nation-states and regional blocs, and alliances of common interest or ideology rather than cosmopolitan global structures

A Two-Step Theory and Test of Democratic Waves *

Abstract Scholars, observing clustering in transitions to democracy, argue that democratization diffuses across borders as citizens in autocracies demand the same reforms they witness in neighboring states. We disagree. The present paper asserts that the diffusion of democracy literature rests on weak theoretical foundations and does not properly test for diffusion. We advance an alternative two-step argument to explain clustering of democratization: (1) economic shocks, which are clustered spatially and temporally, induce the breakdown of authoritarian regimes; then (2) democratic diffusion, in turn, influences whether a fallen dictatorship will be replaced by a democracy or a new autocracy. Diffusion, despite playing an important role, is insufficient to explain the clustering of transitions, notably because it cannot account for the timing of the waves. Using data on 125 autocracies from 1875 to 2004, we show that economic crises trigger authoritarian breakdowns, while diffusion determines whether the new regime is democratic or authoritarian. * Thanks t

Room to Move: International Financial Markets and National Welfare States

A central research question in international and comparative political economy concerns the in � uence of international � nancial markets on government policy outcomes. To what extent does international capital mobility limit government policy choices? Does capital market openness render impossible the public provision of education and health care, income redistribution, and active labor market policies— all hallmarks of the contemporary welfare state? I argue that the in � uence of international � nancial markets on the governments of advanced industrial democracies is somewhat strong, but also somewhat narrow. Capital market openness allows participants in � nancial markets to react dramatically to changes in government policy outcomes. Market participants, however, consider only a small set of government policies when deciding how to allocate their assets. Therefore, governments face pressures to adopt market-pleasing policies in aggregate policy areas but retain ‘‘room to move’ ’ in many other policy areas. Despite � nancial internationalization, we will observe a signi � cant amount of crossnational policy divergence among advanced industrial democracies

Taking Workers' Rights on the Road? Multinational Firms and the Transmission of Labor Practices

Abstract: This paper investigates the influence of multinational firms on labor-related outcomes in host economies. I posit that, under some conditions, and contrary to a "race to the bottom" logic, multinational corporations can promote the upgrading of labor-related practices. This potential for upgrading stems from the incentives faced by firms, both in terms of ensuring the efficiency of their global operations, and in terms of avoiding negative externalities for which they may be held accountable. Such incentives will vary across industries and types of firms; national-level analyses may obscure variation in these mechanisms. I begin by situating research on multinational corporations and labor rights in the context of recent scholarship in international political economy. I then describe the causal processes through which multinational firms may affect labor-related practices in host economies. I draw from literature that considers foreign direct investment as a source of spillovers, both in terms of technology as well as human resource practices. I suggest that the propensity of firms to generate spillovers depends on multinational firms' structure: where firms are organized hierarchically, we can expect a spillover from home to host economies. But, where firm structure is flat, or where the acquisition of subsidiaries is motivated by the parent firm's desire to access affiliates' technologies, such spillovers are unlikely to occur. Third, for situations in which spillover is likely, I consider the nature of labor-related practices that are likely to be transmitted. This relates to the prevailing practices in the home economy -a "varieties of capitalists" argument, as well as to the sector of the firm (labor versus capital intensive) and the extent to which the firm is exposed to the "spotlight" of shareholders and consumers. In the fourth section, I provide an initial analysis of the some of the paper's empirical implications, using data on firm attitudes and behaviors related to labor. I report evidence that foreign-owned firms, firms that produce for the export sector and firms that produce capital-intensive goods are more likely to protect labor rights than their domestically-oriented or labor-intensive counterparts. behaviors that generate externalities for host countries -for instance, to exploit their workers by exposing them to dangerous chemicals, or to repress workers' attempts at collective mobilization -many firms face another set of contradictory material incentives. These incentives, which can contribute to the upgrading of labor-related practices in host economies, relate to the benefits of standardizing practices across affiliates, as well as the potential costs to firms for violating corporate social responsibility commitments. Put differently, the benefits to firms of engaging in behaviors that generate negative externalities for workers are often offset by the costs of doing so. Therefore, understanding the potential effects of MNCs on host country laborrelated outcomes requires greater attention to firm-and sector-level variation in firm attitudes and behaviors. I begin by situating research on multinational corporations and labor rights in the context of recent scholarship in international political economy. In Section II, I describe the mechanisms by which multinational firms may affect labor-related practices in host economies. In doing so, I rely on literature that considers foreign direct investment as a source of spillovers, both in terms of technology as well as human resource practices. I suggest that the propensity of firms to generate spillovers depends on the type of multinational structure: where firms are organized hierarchically, we can expect a spillover from home to host economies. But, where firm structure is flat, or where the acquisition of subsidiaries is motivated by the parent firm's desire to access affiliates' technologies, such spillovers are unlikely to occur. Third, for situations in which spillover is likely, I consider the nature of labor-related practices that are likely to be transmitted. This relates to the prevailing practices in the home economy -a "varieties of capitalists" argument, as well as to the sector of the firm (labor versus capital intensive) and the extent to which the firm is exposed to the "spotlight" of shareholders and consumers. In the fourth section, I test some of the empirical implications of this claim, using data on firm attitudes on labor-related issues. Are foreign-owned firms, firms that produce 2 for the export sector and firms that produce capital-intensive goods more likely to protect labor rights than their domestically-oriented or labor-intensive counterparts? Section V concludes with a discussion of additional empirical tests that would further explore the causal claims presented. I. Multinational Production, Labor Rights and International Political Economy Human rights activists, consumers and corporate shareholders often are concerned with workers' rights and working conditions, especially in the developing world. Activists note that workers often suffer various sorts of repression, ranging from exposures to hazardous chemicals and forced overtime without pay that the way in which multinational production is structured -whether it occurs via arm's-length subcontracting or via directly owned production -affects its consequences in developing host economies. I predict that, all else equal, greater levels of FDI will be associated with greater respect for workers' rights; but higher levels of subcontracting activity will be associated with weaker protections for workers. To test these expectations cross-nationally, I employ newly-developed measures of collective labor rights outcomes, which cover a wide set of low-and middle-income countries. I report that, indeed, developing countries with higher levels of trade openness exhibit greater violations of collective labor rights -a pattern consistent with "race to While this research helps to advance the debate regarding economic globalization and labor rights, it is conducted largely at the country (rather than industry or firm) level. 2 Although firm-and industry-level work that seeks to assess the effects of global production on labor-related outcomes certainly exists, its focus is usually on single firms or sectors, and often with an emphasis on the most visible industries (e.g. factories owned by, or that subcontract for, brands such as Nike, Gap or Reebok). Much of this work, undertaken by activists as well as scholars, focuses on demonstrating that violations exist in foreign-owned or foreignsubcontracted factories, rather than on evaluating whether violations exist, and the extent to which they exist in foreign-oriented versus domestically-oriented firms and sectors. Within international and comparative political economy, however, research that explores the consequences of foreign direct investment for policy outcomes has retained a national-level focus, especially in terms of its empirical content. Yet firms, and particularly multinational corporations, are central to many research programs: for instance, the debate regarding the extent to which globalization generates crossnational policy convergence puts businesses at its center: capital's cross-border mobility allows it to make Similarly, firms' preferences over trade polic