Financial Statecraft: No Longer Limited to the Incumbent Powers (SWP 62)

Traditional analyses of financial statecraft typically assume the term refers to major powers exercising influence over weaker states by such means as foreign aid blandishments or banking system sanctions. Newer scholarship highlights the subtler political influence advanced capitalist democracies also wield through their centrality to global monetary and financial markets and governance networks. Not surprisingly, rising powers are keen to expand the venues through which they too can support their larger foreign policy visions through tapping into state levers of control over cross-border currency, credit, and investment flows, as well as tilting international regulatory reforms toward their preferences. The article concludes with a comparison of United States’ and China’s financial statecraft capabilities and recent actions. &nbsp

Equality and multilateral financial cooperation in the americas

The paper explores the concepts of interpersonal, inter-firm, and interstate equality embedded in three contending visions for the evolution of international financial links within the Western Hemisphere. The free market- oriented regional financial project of the United States envisions extension of a NAFTA-like regulatory framework throughout the hemisphere. It promises Latin American citizens better financial services and their firms greater access to U.S. and Canadian loans and investment, in exchange for U.S.-style legal protections for foreign banks and (implicitly) for dramatically reduced financial policy space for Latin American governments. Venezuela’s vision of “Bolivarian” finance, exported to some of the circum-Caribbean and upper Andean region, promotes assertive state management vis-à-vis both foreign and domestic investors, populist redistribution, and increasing reliance on non- market financial transactions. It emphasizes equal credit access for poorer citizens and government retention of national financial policy space, but downplays the need for predictable financial regulation and property rights. Brazil’s regional financial project would unite South America through creation of continent-wide physical infrastructure and capitalist financial markets, while retaining an on-going role for public sector banks responsive to central government priorities. Brazil’s approach shares with the Venezuelan vision an emphasis on Latin American governments’ need for financial policy space, and with the U.S. vision a concern for regulatory predictability and financial deepening

Global Finance Meets Neorealism: Concepts and a Dataset (SWP 59)

How might one conceptualize the international political dimensions of money and finance? As the world moves from a post-Cold War “unipolar moment” toward the greater uncertainty associated with multipolarity – or bipolarity/multipolarity – the zero-sum aspects of economic resources may take on heightened significance in national calculations. The paper proposes five national financial characteristics that sovereign governments sometimes wield as power capabilities: the country’s (1) position as an international creditor, (2) home financial market attractiveness, (3) currency strength, (4) international debtor presence, and (5) leverage in global financial governance. A new dataset on the global monetary and financial powers of states (GMFPS), covering 180 countries and 27 indicators from 1995 to 2013, constructs indices for four state financial power concepts, and also provides an updated overall material capabilities index. After profiling the US, Britain, Germany, Japan, and China, we suggest a recurring, although not inevitable, financial life cycle of major powers. &nbsp

The Persistent Problem: Inequality, Difference, and the Challenge of Development

This report highlights the complex, multidimensional nature of inequality in the era of globalization. It documents that despite the impressive strides by nations like China and India, absolute inequality between the richest and poorest countries is greater than ever before in history. It demonstrates that the rise of China and India creates a new dimension to the persistent problem of inequality

International Coercion, Emulation and Policy Diffusion: Market-Oriented Infrastructure Reforms, 1977-1999

Why do some countries adopt market-oriented reforms such as deregulation, privatization and liberalization of competition in their infrastructure industries while others do not? Why did the pace of adoption accelerate in the 1990s? Building on neo-institutional theory in sociology, we argue that the domestic adoption of market-oriented reforms is strongly influenced by international pressures of coercion and emulation. We find robust support for these arguments with an event-history analysis of the determinants of reform in the telecommunications and electricity sectors of as many as 205 countries and territories between 1977 and 1999. Our results also suggest that the coercive effect of multilateral lending from the IMF, the World Bank or Regional Development Banks is increasing over time, a finding that is consistent with anecdotal evidence that multilateral organizations have broadened the scope of the “conditionality” terms specifying market-oriented reforms imposed on borrowing countries. We discuss the possibility that, by pressuring countries into policy reform, cross-national coercion and emulation may not produce ideal outcomes.http://deepblue.lib.umich.edu/bitstream/2027.42/40099/3/wp713.pd

Enhanced Immunogenicity, Mortality Protection, and Reduced Viral Brain Invasion by Alum Adjuvant with an H5N1 Split-Virion Vaccine in the Ferret

Pre-pandemic development of an inactivated, split-virion avian influenza vaccine is challenged by the lack of pre-existing immunity and the reduced immunogenicity of some H5 hemagglutinins compared to that of seasonal influenza vaccines. Identification of an acceptable effective adjuvant is needed to improve immunogenicity of a split-virion avian influenza vaccine.No serum antibodies were detected after vaccination with unadjuvanted vaccine, whereas alum-adjuvanted vaccination induced a robust antibody response. Survival after unadjuvanted dose regimens of 30 µg, 7.5 µg and 1.9 µg (21-day intervals) was 64%, 43%, and 43%, respectively, yet survivors experienced weight loss, fever and thrombocytopenia. Survival after unadjuvanted dose regimen of 22.5 µg (28-day intervals) was 0%, suggesting important differences in intervals in this model. In contrast to unadjuvanted survivors, either dose of alum-adjuvanted vaccine resulted in 93% survival with minimal morbidity and without fever or weight loss. The rarity of brain inflammation in alum-adjuvanted survivors, compared to high levels in unadjuvanted vaccine survivors, suggested that improved protection associated with the alum adjuvant was due to markedly reduced early viral invasion of the ferret brain.Alum adjuvant significantly improves efficacy of an H5N1 split-virion vaccine in the ferret model as measured by immunogenicity, mortality, morbidity, and brain invasion