International Political Economy Zone

Brazil's Anti-World Cup Graffiti

♠ Posted by Emmanuel in Latin America,Sports at 6/11/2014 02:00:00 AM

It takes a lot to take soccer-mad Brazilians' minds off soccer, but the upcoming World Cup seems to have done the trick. To be fair, hosting the soccer spectacle comes at a very inopportune time as Brazil's economy has become moribund after a long growth spurt powered by the China-led commodities boom. However, with the prices of commodities having come down to earth even if they remain elevated, they are merely hovering the stratosphere instead of the exosphere.

Against this backdrop, vastly underestimated costs of building stadiums in multiple cities--at Brazil's insistence, not even FIFA's--has drawn widespread criticism. Some of the frustrations are being vented in often-violent street protests. Let them eat football? However, others have chosen to express these sentiments through more artful means. As it so happens, Yahoo! has a photo essay on this very topic--World Cup-bashing by ordinary Brazilians with some artistic abilities.The Guardian has more.

The debate rages on whether graffiti is street art or a public nuisance. The world-famous Banksy for one would argue that it's art since he's exhibited in any number of famous museums, but not all of it reaches his standards. In any case, it's certainly gotten the attention of Brazilian government officials, especially the current left-of-center government since social issues and development are foremost in its voters' concerns.

UPDATE: See Quartz on why Brazil is in a sour mood for the World Cup.

Can LatAm Regain Choco Mkt Share Lost to Africa?

♠ Posted by Emmanuel in Africa,Agriculture,Europe,Latin America at 6/10/2014 02:00:00 AM

History 101: Sharing chocos with white people wasn't such a marvy idea.

Murder, pillage, disease and conquest followed early American empires giving Europeans a taste of chocolate (see Jared Diamond's book Guns, Germs and Steel for a mini-history). After the white people developed a taste for the stuff, let's just say the history of what happened to the Incas, Aztecs and others wasn't so hunky-dory as they were wiped out shortly thereafter. Let's just say the Cadbury version of chocolate history concerning the deeds of Don Hernan Cortes is, ah, whitewashed. As the saying goes, no good deed goes unpunished.

With chocolate consumption going global, one of the trends was for Europe to become the largest consumer of it. However, since European climates proved unsuitable for cocoa growing, this proved to be something of a quandary for sourcing cocoa. The Dutch colonized Indonesia and cocoa was grown there since its climate proved to be amenable. Other Europeans followed suit: Today's largest growers trace their cocoa production to colonial times: Cote d'Ivoire (France) and Ghana (Great Britain). See the Guardian's infographic on where chocolate is produced and consumed today:

It is against this background of lost choco-hegemony to West Africa that Central and Southern American regions are attempting a comeback. First, connoisseurs of the finest European chocolates know that the best cocoa beans are grown in the place they were first "discovered." To be honest, cocoa quality is not as important for American consumers who prefer chocolates full of sugar and milk (milk chocolate) unlike European consumers who focus on the taste and texture of largely unadulterated cocoa (dark chocolate):

The cocoa beans from Central and South America are known as being of high quality — fulfilling a certain niche, especially among consumers in Europe...

But Latin America can make a dent if demand for high-quality cocoa rises. Cocoa production “could change depending on how the market evolves,” said Moises Gomez of the ICCO [International Cocoa Organization; it should be ICO then]. “Most of world demand is for normal cocoa and it comes mainly from West Africa. Fine cocoa, which accounts for five percent of demand, comes from Latin America,” Gomez said. “Europe is the biggest buyer of top-grade cocoa,” he said.

“Americans are used to chocolate with a high milk and sugar content, and for that, you do not need high-quality cocoa [read: Hersheys]. But when you want a dark cocoa with good taste, you look for cocoa from Latin America or Madagascar,” he added...

Weather conditions and soil are the things that contribute most to the taste of the various grades of cocoa, said Gomez. He said while several high grades of cocoa were planted in Africa, they were not of the same quality as those in Latin America. All the different strains, from garden variety to hybrids, grow well in Latin America. And this happens in much of the region.

Second, even the likes of the Ivory Coast and Ghana may not be able to produce enough cocoa to meet global demand as China and India become populous consumers of chocolate:

Thomas Pugh, a commodities specialist with the British investment consultancy Capital Economics, predicts a fairly strong increase in Latin American supply in the coming years. “The biggest producers will continue to be in West Africa, but the forecasts for Latin America are good,” he told AFP.

Demand for cocoa from emerging countries is booming, especially in China, said Florence Pradier, the secretary general of Paris-based chocolate association Alliance 7. That, paired with a strong resurgence in demand from traditional chocolate consumers in Europe and North America, is good news for producers. According to a recent report by the French commodity research group Cyclope, demand in Asia is also being driven by India, with the strongest growth in the world at 20-25 percent a year.

So many years after the barbarity of Hernan Cortes that's been immortalized in song, it appears the Americas are on the cusp of cocoa comeback after being marginalized for so long. What's interesting is how Europeans prefer (Central and South) American chocolates to the sorts produced in their former West African colonies if given a choice, while average North American consumers couldn't care less about cocoa quality. As long as the stuff is milky and sweet, the Yanks will eat it. I guess geography was not arranged to suit tastes.

Anyway, cue up the Neil Young. Cortez, what a killer:

He came dancing across the water
With his galleons and guns
Looking for the new world
In that palace in the sun.

On the shore lay Montezuma
With his coca leaves and pearls
In his halls he often wondered
With the secrets of the worlds.

A College Degree is Wasteful...Even in China

♠ Posted by Emmanuel in China,Education at 6/09/2014 01:00:00 AM

I have written at some length about the crisis in higher education that is occurring in its heartlands of North America and Europe [1, 2]. To make a long story short, a university education is costing more and more--far outstripping the rate of inflation--while earnings of college graduates are becoming less and less. With US college debt surpassing $1.2 trillion and counting, the next crisis to hit the American financial system may come from students overleveraging themselves. College boosters will of course say that employment and earnings prospects for graduates are significantly better than those of non-graduates, but few will argue that the cost/benefit ratio is falling rather quickly. Graduates have it hard nowadays.

Apparently, this is not just a debate confined to American and British institutions of higher learning. Even in the developing world, the same questions are being rehearsed time and again. Over the past few years, PRC leaders have encouraged higher enrollments at state universities (which is nearly all of them). Alike in the West, however, there is growing public resistance to the often questionable platitudes that college is the key to future success. From out favorite official publication, the China Daily:

At least seven provinces and one region did not meet their recruitment goals in 2013, according to the College Enrollment Report released on Wednesday by eol.cn, one of the country's largest education portals. The provinces are Henan, Shandong, Fujian, Anhui, Hebei, Guizhou and Qinghai, along with the Xinjiang Uygur autonomous region. They are the only areas that have disclosed such figures in the past year, eol.cn reported [my emphasis; so that's everyone observed].

What's to blame? Partly it's demographics and the reluctance of parents to shell out serious cash for uncertain returns:

Chen Zhiwen, editor-in-chief of eol.cn and one of the report's authors, said the situation was caused by a drop in the birth rate. "The number of newborns has been falling after peaking at 20 million in 1990 and dropped to 12 million around 2000. This is to say that the number of people aged 18 - the age when most students in China start college - will continue to drop before reaching the bottom in around 2018," Chen said. Chen also said some students and their parents had been disappointed with higher education in China and had abandoned the opportunity to go to college even after being admitted, which was a significant factor in the current situation.

Last year, a series of cases were reported in which parents opposed their children going to college. This sparked heated debate over the necessity to receive a higher education. In September, a father in Chengdu, Sichuan province, objected to his daughter's decision to go to college, saying it was a waste of time and money as employment prospects for college graduates were not good. He said it was more sensible to find work after graduating from high school. In an online survey, more than 70 percent of the 10,000-plus respondents supported the father. "The case indicates that students and parents are losing their confidence in a college education," Chen said. "Universities, education specialists and officials should pay great attention to such cases, reflect on higher education and improve the situation to help people regain confidence."

The worrying thing for educators form a neoclassical economic perspective is that returns to human capital should become higher as developing countries like China move up the value-added ladder. Consequently, young people and their parents should respond to these signals. However, this may not be happening (yet) as enrollments continue to fall in China. It's in part likely that Chinese universities do not provide skills required by employers (job-skill mismatches).

Many Chinese, especially those outside of major urban centers, are practically-oriented and see more value in the employment prospects from education instead of the college experience by itself. Me? As I've said before, the German apprenticeship system certainly looks attractive to those valuing employment prospects above all. It certainly beats the US/UK uni-jobless system if you ask me, and is something I would advise China and other developing countries to consider before the Anglophone model for obvious, instrumental reasons.The US needs an overhaul, and its system of higher education would be an excellent place to start since others have come up with rather better solutions to providing employment for young people.

Where Do Major Countries Project Their Soft Power?

♠ Posted by Emmanuel in China,Soft Power,South Korea at 6/08/2014 02:00:00 AM

Today's up-and-coming soft power enthusiasts need no introduction.

While doing some current research on soft power, broadly characterized as influencing others through persuasion rather than coercion, I returned to an earlier post I made on the topic. (There's lots of good stuff in the archives, but of course I'm biased ;-) Repeating a theme of that post, it is difficult to quantitatively measure "soft power." On the tangible end, you can measure exports of cultural products such as books, motion pictures, music, telenovelas, cartoons, comics and so on. However, just because people buy a certain country's creative output doesn't mean they favor that country. Think of Oliver Stone's movies with anti-American themes, or Bruce Springsteen's parody of USA#1 flag-waving moronicity. On the intangible end, you could probably just ask folks worldwide of their opinions of certain nations. But again, this is another imperfect measure due to the usual considerations associated with survey-based methods compounded by cross-cultural variations.

At any rate, the point I wish to make here is that even if "soft power" is difficult to measure, that hasn't stopped any number of major countries from attempting to project better images of themselves worldwide by establishing cultural centers. The current heavyweight favorites in this respect are the Koreans, who have unleashed a Gangnam Style-torrent of entertainment products on an unsuspecting world post-Asian financial crisis. Throughout the world there are now any number of well-funded, often architecturally stunning buildings that show off the best Korean culture has to offer, from Taekwondo to, er, T-ara.

Anyway, the British Council compiled a rudimentary list on soft power deployment by indicating which regions different countries have established cultural centers in. Some of the results are surprising, while the rest are obvious...

Some observations both weighty and quirky:

That the PRC's Confucius Institutes are concentrated in Asia is no surprise, but that there are comparatively few in Africa relative to other soft power projectors is since sub-Saharan Africa is the largest regional destination for Chinese foreign aid.
China's outsized push in the Americas is also remarkable. Is it trying to bring countries that have grown wary of US pushiness into its fold with the usual non-intervention jazz?
Aside from the British Council, it is remarkable that no other Anglophone countries are establishing cultural centers globally. Either they think their reputation is good enough elsewhere, or they do not think establishing these centers will do much to improve their image. I cannot help but wonder how amusingly different our world would be if there were, say, US Seinfeld Institutes and Canadian Beiber Foundations to impress upon the world the desirability of their cultures. (Dear American and Canadian readers, I'm just kidding. I'm sure there are better examples.)
While the large number of Institut Francais in sub-Saharan Africa is understandable given its colonial history in the region, the even larger number in the Middle East is unexpected and is certainly an investigable phenomenon.

Interesting stuff I hope you'll agree, and I'll be performing more research soon on this subject matter.

It's Official: Venezuela, World's Most Miserable Country

♠ Posted by Emmanuel in Currencies,Latin America at 6/06/2014 02:00:00 AM

Talk about clever marketing. This feature was originally the answer to a question nobody asked. What if you took American economist Arthur Okun's "Misery Index," as expanded by Robert Barro, and applied it to the rest of the world? As originally formulated, this index was made up of two macroeconomic indicators, the rates of consumer price inflation and unemployment. Subsequently, Barro threw in the prevailing long-term interest rate and Δ in GDP.

Johns Hopkins University's Steve Hanke should be familiar to Asia followers as the would-be Svengali of the late Indonesian President Suharto. A colorful fellow as far as economists go, he recently applied the Misery Index globally and finds that (surprise!) economies run by the enemies of freedom generally score lowest on this compound measure (see table above). Actually, Hanke suggests, their actual performance could be worse since they often fudge their inflation figures (see Argentina). Using the black market exchange rate--the fourth of Venezuela's four-tiered rates and that which is not massaged by the government--things actually look even worse in Venezuela:

One way to estimate the rate of true, open inflation, in cases such as Venezuela’s, would be to track down the free-market prices — including the black-market prices — for all goods in the official basket. But such a procedure would be very difficult, if not virtually impossible, to implement. That is why no country has ever accomplished such a herculean task.

As an alternative, I have developed a procedure for estimating the true, open inflation rate for an economy in the grip of high inflation and price controls. While it is impractical to determine the free-market (read: black-market) prices for all items in an official basket, it is often quite easy to observe the free, black-market exchange rate. Since this is the most important price in the economy, changes in the free, black-market exchange rate can be used to estimate the true, open inflation rate for an economy.

By using the most important free-market price in Venezuela — the black — market bolivar / U. S. dollar rate — we can accurately estimate Venezuela’s annual open inflation rate (see the accompanying chart). At the end of 2013, this true, open inflation rate was five times higher than the official rate. And the associated true misery index was 301, not 79.

I do not necessarily believe that anti-Americanism is responsible for scoring high on this index since regimes friendly to the US fare pretty poorly too. Rather, the regimes that use the United States as a scapegoat for domestic ills use it as an excuse for their economic mismanagement. Simply put, they are poorly run, that's all. Maybe the death metal band Misery Index should visit Caracas soon.

Sympathy for the Pirate? Gulf of Aden Overfishing

♠ Posted by Emmanuel in Africa,Environment,Underground Economy at 6/05/2014 02:00:00 AM

Give a man no fish to catch...and he grabs an AK-47 & boards a skiff?

Fisheries management does not top the list of attention-grabbing international studies topics, but maybe we should pay more attention to it. (Unless you're an environmental studies or geography studies major perhaps.) Increased patrolling in the Gulf of Aden by various international forces coupled with better-prepared transit by commercial vessels--don't hog the shoreline, don't overload the boat so its deck sags and is easy to get ahold of, increase speed through the danger area, etc. have done their part in reducing maritime piracy. That said, the danger still hasn't entirely gone away:

The World Bank noted that "piracy imposed a hidden tax on world trade [...] Piracy costs the global economy roughly US$18 billion a year in increased trade costs — an amount that dwarfs the estimated $53 million average annual ransom paid since 2005," the bank said in a 2013 report. "It's expensive, so the day when the shipping companies say 'That's enough,' the whole thing can kick off again quite quickly," warned [Eurocrat] de Poncins.

And given that attacks are becoming rare, ship owners and captains are starting to let their guard down, EU Naval Force officials say, reporting that ships are again navigating at slower speeds and sailing closer to the coast in order to save fuel. "We are becoming victims of our own success," said Lieutenant Michael Quinn of Atalanta, adding, however, that "the conditions on the Somali coast have not changed and industry must not relax."

The EU Naval Force's mandate applies only to the sea; it is not authorised to launch land attacks on the pirates who still control, notably in Puntland, large sections of the Somali coast. Clan militia, pirate networks, and criminal gangs share power in this country deprived of an effective government since 1991.

As long as the factors which drove piracy remain--lawlessness, civil breakdown and a lack of "legitimate" livelihoods--the problem cannot be entirely solved since there will always be those willing to risk being caught in the absence of other alternatives. One of the more intriguing arguments has been that these pirates were formerly fishers driven to hijacking vessels by large commercial (read: Asian and Western) vessels overfishing the Gulf of Aden. There is some geographic evidence that this area has been overfished [1, 2] and the argument goes like this:

In looking at the fisheries maps, I noticed that the coast of Somalia was one of those places where overfishing had taken place; in a subsequent conversation with a colleague I learned that one hypothesis about the Somali pirates was that they were unemployed fishermen, who had to find another way of earning a living now that they had no place available to catch fish. At the time, this was a hypothesis and not backed up with a scientific survey; advocates never really mentioned the threat of piracy as a reason why we shouldn’t overfish our oceans to the point of depletion.

The theory held my attention though, and after a little research I found a map of global shipping lanes and looked for other places where a confluence of routes brought cargo ships close to countries with weak legal structures. West Africa matched the criteria, a region whose overfishing had been highlighted both on the overfishing maps as well as in the documentary, “The End of the Line.”

More formally, this is the "lack of fisheries management" (due to absent governance) argument:

The relatively small area in which fishing takes place means that most important fisheries resources can be considered as shared stocks. Many are truly highly migratory, for example the tuna and small shoaling pelagic species of the Region. However, overfishing by industrial trawlers in the Gulf of Aden nearshore waters during the 1970s and 1980s has depleted some valuable resources, such as cuttlefish and deep sea lobsters. These stocks have not fully recovered, due primarily to a lack of effective fisheries management.

However, the World Bank report cited earlier (warning: large download) disagrees with this notion:

Somalis often argue that piracy started off as self-defense by impoverished fishermen against international fleets fishing illegally in their waters. Over time, even as piracy evolved into a much broader business and despite the fact that fisheries were never a leading economic activity in Somalia, this “Robin Hook” (Shortland 2011) interpretation has by now become a powerful legitimizing narrative...

Moreover, the analysis finds no evidence of overfishing. While illegal fishing has often been associated with overfishing and the depletion of stocks available to Somali fishermen, the data do not reflect that. It was found that high total tuna production in a given year does not presage low production the next year either for an individual fleet or in the aggregate. In fact, at the aggregate level there is solid evidence that high tuna catches in one year predict high catches the next year. If stock depletion were a major problem, the productivity of the fleets remaining in piracy-affected waters should be higher after the piracy surge because so many fleets moved to safer water. However, no productivity boost can be seen in the data.

I do not think the World Bank report's argument is conclusive. It basically goes like this: since years when the Gulf of Aden area experienced elevated catches were not followed by lean years, then these waters were not "overfished" to begin with. The World Bank is more concerned with flow-level data (# of fishes caught annually) when overfishing is more a stock-level phenomenon (# of fishes left in a particular marine area). True, there is a problem of data availability regarding the true level of stocks in the Gulf of Aden area given that few international organizations currently operate there since "Somalia" is largely a collection of warlord-occupied lands.

This much the World Bank and I could probably agree on, though: If "legitimate" livelihoods were to be had in Somalia, then many of these folks wouldn't resort to this kind of low-probability opportunism. Just as cutting the "supply side" didn't work in the war on drugs, so too is the piracy problem not solvable by focusing mostly on force.

'Applecoin' Has Potential, Not Necessarily Bitcoin

♠ Posted by Emmanuel in Currencies,Underground Economy at 6/04/2014 02:00:00 AM

...or is that iCoin? Referring to a post I made earlier on all you wanted to know about Bitcoin, I did not believe it could not come into widespread usage for two reasons. First, Bitcoin did not have the support of major financial institutions that (literally) held the important cards in debit/credit cards, money transfers, bank deposits and so forth. Second, without clear regulatory approval in the United States and other major consumer markets, establishments would be wary of transactions inhabiting the 'grey' area between what's legal and illegal.

I suppose that it was only a matter of time that the most innovative of major corporations, Apple, would be first out of the blocks in experimenting with virtual currency operations. More specifically, Apple is allowing virtual currencies to ply their trade amongst apps (and is not the virtual currency developer itself). Previously, it removed apps from the iTunes store that run Bitcoin presumably since it wasn't entirely sure of the legal ramifications. The knock-on effects here could be potentially huge. With Major Name Backing and an Established Track Record of introducing new product categories, Apple has sufficient clout to get financial institutions, credit card operators, and money transfer services to sit up and take notice. If someone can deal with possible legal entanglements down the road, it's certainly Apple who faced down the challenge of the Beatles franchise when it began selling music in 2003. From Bloomberg:

While Apple didn’t mention bitcoin specifically, its developer terms now allow for certain “approved virtual currencies,” without saying what those were. Apps that use the digital money must comply with state and federal laws wherever they’re designed to work, the terms say.

The change signals that Apple is warming up to virtual currencies after previously blocking programs like Blockchain.info from its App Store. Bitcoin is the most popular digital currencies, which governments are struggling to determine how to regulate because they exist only as software. “This is a sign that the ecosystem is maturing and gaining credibility,” Bill Lee, an investor in bitcoin wallet BitGo, said in an e-mail. “To be clear, I still think bitcoin is in its infancy as a technology, but its acceptance is becoming more and more mainstream.”

Bitcoin entrepreneurs were already predicting an explosion of activity. “Get ready for a plethora of bitcoin iOS apps!” bitcoin venture capitalist Adam Draper said in an e-mail. “Very exciting news!”

Unlike the Bitcoin fanboys, I's be especially wary about the proviso that these virtual currencies would only be permitted to ply their trade on Apple devices if they complied with state and federal laws. Again, this is murky legal territory that may allow Apple to (again) suspend their operations should they run into legal entanglements. Also keep in mind that this is a very limited Amerocentric framing: aren't virtual currencies also used internationally to transfer money and settle transactions?

My guess is that the legal issues that need to be hammered out will be international to meet anti-money laundering and counter-terrorist finance (AML-CTF) that were put into place largely at the American's behest after the September 11 attacks. If you are interested in the technical details of AML-CTF compliance, CGAP wrote a paper in the similar context of mobile wallets sometime back. These problems are not insurmountable, however. The Bitcoin fanboys may not have sufficient clout to sort out the legal aspects of virtual currencies, but Apple with its hundreds of billions in cash sitting around certainly can. AS I said, 'Applecoin' has potential, not necessarily Bitcoin.

BTW, the app store review guideline in question is 11.17 under 'Purchasing and currencies':

Apps may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which the app functions

Pope Bets on 'Charismatic Catholicism' in LatAm

♠ Posted by Emmanuel in Latin America,Religion at 6/03/2014 02:00:00 AM

Pope Francis entertains the 50,000.

The Latin faithful have always been a troublesome bunch for the Roman Catholic Church. Starting from the 1970s, the emergence of liberation theology [1, 2, 3, 4]--Jesus Christ's mission cast as a Marxist emancipatory struggle--was denounced by none other than Pope Benedict XVI when he was still the doctrinal enforcer. After all, how could a godless ideology be compatible with church teaching? While liberation theology is the threat from within, the threat from without has been the rise of charismatic evangelical (read: Protestant) movements who have drawn away large numbers of Catholics with their more personalized and upbeat ["God loves YA"!] message compared to the increasingly staid one of Catholicism. The numbers are not promising for the Catholic faithful in Latin America.

Losing market share from this threat from without, I guess it was only a matter of time that the bigwigs in Rome decided to fight fire with, ah, consuming fire. The (comparatively) young and energetic Pope Francis has been called our "rock star Pope." Hence, it was only a matter of time before he addressed this issue: Why does Catholicism have to be dowdy? Why can't its celebration be set to song and dance like the Protestant evangelical movements? Hence his promotion of an nascent counter-movement, "charismatic Catholicism":

As the church continues to lose members in the region with the world's largest Catholic population, the charismatic movement stands out as a source of hope, not only for fending off the formidable competition of Pentecostal Protestantism but for raising morale among the faithful as a whole.

Though not even half a century old, the movement claims that at least 120 million Catholics in 238 countries have been "baptized in the Holy Spirit," according to a 2012 document published by International Catholic Charismatic Renewal Services. The movement, which started in the United States, reports fast growth in Asia and Africa. But the world's largest concentration of charismatics today is in Latin America, where 16 percent of Catholics identify themselves as participants...

Although the Catholic charismatic renewal has strong ecumenical roots, and its members have often worshipped together with Pentecostals, it also functions as a vehicle for retaining or winning back Catholics tempted by the Protestant alternative. Like Pentecostalism, charismatic Catholicism emphasizes the Holy Spirit, features faith healing and speaking in tongues and is spread by door-to-door evangelists. But the important roles it gives to Mary and the Eucharist ensure that charismatic devotion has a clear Catholic identity.

The article above also discusses how Pope Francis was a late convert to charismatic Catholicism, viewing it earlier as folks mistaking liturgical celebration for a samba lesson [!] Now, however, it is taken as a visible sign of renewal. This brand of the faith came to mind as Pope Francis just hosted 50,000 charismatic Catholics in a stadium in Rome while delivering the familiar message that the family as an institution is under attack from modernity.

My take is that he recognizes that promoting arch-conservative movements like his predecessors did will not do much to shore up the faith in Latin America. Fight fire with consuming fire, right? It may be old sacramental wine in new bottles, but hey, the implicit argument of Pope Francis is that as long as the attempt at (popular) repackaging doesn't detract from the core contents, then it's perfectly fine.

How Large is the Domestic Footprint of MNCs?

♠ Posted by Emmanuel in MNCs,Outsourcing,Trade at 6/02/2014 02:00:00 AM

The answer is "not much." There's a very interesting thing going on worldwide as Western stock indices hit all-new highs week after week while their local economies suffer from stagnation. The archetypal example, of course, is the American joke/con-omy (its performance is laughable and is buoyed by dubious, unsustainable factors like falling incomes) which shrunk 1% in the first quarter of 2014. America #1, baby! How is it possible that the US economy is going nowhere fast but US-headquartered firms' equity valuations are zooming ever higher? Surely this is a classic case of Greenspan's "irrational exuberance"? Well, not necessarily, and the reasons why are relatively straightforward.

The Economist has an interesting feature on how (mostly) Western multinational corporations derive an ever-smaller share of their revenues at home, while their headcounts and shareholders head in a similar direction. Of course you can use stock valuation methods such as price-earnings ratios, dividend discount models and what else have you to derive how much these stocks are worth, but the important thing to keep in mind is that a lot of MNC earnings will increasingly come abroad. So their home economies may go nowhere fast--think of North America, Western Europe and Japan--but their revenues may be unaffected or likely even grow as most gains come from international operations in developing countries and the like.

It's interesting stuff, and I'll have more on how MNCs hardly act in the national interest as most IPE scholars believe. While these MNCs may successfully lobby their home governments for economic and trade favors, governments do not have the same sway over MNCs.

Is IPE in Decline as a Field of Study?

♠ Posted by Emmanuel in Education at 6/01/2014 02:00:00 AM

Out of curiosity, I used the Google Ngram Viewer which records the number of instances a term appears in the books cataloged by the search giant (from the description, it works like a quantitative content analysis across all volumes indexed by Google). Here we can partially deduce the general awareness and popularity of "international political economy" as a field of study relative to closely related ones. I chose to compare IPE with "international politics "and "international economics." Meanwhile, I began the search from 1970 since most accounts date the emergence of the discipline to the first oil crisis of 1973.

Not to any real surprise, IPE still lags behind international politics and international economics in terms of book mentions (see chart below). As an IPE blogger, I myself understand that popular awareness of the discipline is, well, next to non-existent and I thus need to constantly explain what the field is about to those who stumble upon this blog somehow. Perhaps more troubling for us IPE scholars, book mentions of IPE have been falling since around 2002 as a percentage of all cataloged works. This is certainly an investigable question: why isn't IPE making more of a popular impact? Small-but-growing would have been nice; small-and-shrinking isn't. I would put it down to a lack of diversity in viewpoints among general IPE scholarship. For a discipline that considers itself both "interdisciplinary" and "international," it tends to feature too much output from the white malestream--what I call "White PE" [sic]. Not naming names, but the top journals in this field definitely have a [white, male] hegemony of a select few American and British universities talking to each other at academic conferences and calling it "international." If you are not part of their limited conversation and schooled in its abstruse nuances, well, tough luck.

I guess things have to change if we are ever going to attract a broader audience since what Benjamin Cohen calls "mid-level theorizing"--economics envy masquerading as IPE--has lost its relevance. This may shock the white malestream, but it seems not everyone is as fascinated with the concerns and perspectives of a precious few privileged folks who often do not speak any language other than English. The evidence is clear: IPE is in decline by this measure. I would attribute this to its failure to live up to its claims of being "interdisciplinary" and "international." IMHO, we need homegrown Asian theory emerging especially out of East, South and Southeast Asia. Genuine African perspectives would be welcome, too. Certainly, more scholarship out of the white malestream won't save us since the current state of Anglophone hegemony doesn't seem to be expanding the discipline. IPE, you have been warned: change your ways by really globalizing or fall into even greater obscurity.