The Trilemma of International Finance

In IS210, we will be reading about domestic political economy next week. Understanding the role of state and market, politics and economics, we can learn about what causes some countries’s economies to grow quite rapidly and other countries’ economies to grow more slowly. We’ll look at the role of domestic institutions and policy choices as key root causes in economic development. [How does this contrast with Inglehart’s arguments, or Weber’s idea of the ‘Protestant work ethic?’] Increasingly, though, our ever more globalized and interdependent world economy provides domestic economies with opportunities and threats that didn’t exist to nearly this extent even 50 years ago. We’ll look at economist N. Gregory Mankiw’s New York Times editorial piece on the “trilemma of international finance.”

Have a look at this Frontline excerpt on the Asian financial crisis of 1997 and the role that fixed exchange rates played:

Indicators and The Failed States Index

The Failed State Index is created and updated by the Fund for Peace. For the most recent year (2013), the Index finds the same cast of “failed” characters as previous years. There is some movement, the “top” 10 has not changed much over the last few years.

The Top 10 of the Failed States Index for 2013

The Top 10 of the Failed States Index for 2013

Notice the columns in the image above. Each of these columns is a different indicator of “state-failedness”. If you go to the link above, you can hover over each of the thumbnails to find out what each indicator measures. For, example, the column with what looks like a 3-member family is the score for “Mounting Demographic Pressures”, etc. What is most interesting about the individual indicator scores is how similar they are for each state. In other words, if you know Country X’s score on Mounting Demographic Pressures, you would be able to predict the scores of the other 11 indicators with high accuracy. How high? We’ll just run a simple regression analysis, which we’ll do in IS240 later this semester.

For now, though, I was curious as to how closely each indicator was correlated with the total score. Rather than run regression analyses, I chose (for now) to simply plot the associations. [To be fair, one would want to plot each indicator not against the total but against the total less that indicator, since each indicator comprises a portion (1/12, I suppose) of the total score. In the end, the general results are similar,if not exactly the same.]

So, what does this look like? See the image below (the R code is provided below, for those of you in IS240 who would like to replicate this.)

Plotting each of the Failed State Index (FSI) Indicators against the Total FSI Score

Plotting each of the Failed State Index (FSI) Indicators against the Total FSI Score

Here are two questions that you should ponder:

  1. If you didn’t have the resources and had to choose only one indicator as a measure of “failed-stateness”, which indicator would you choose? Which would you definitely not choose?
  2. Would you go to the trouble and expense of collecting all of these indicators? Why or why not?

R-code:


install.packages("gdata") #This package must be installed to import .xls file

library(gdata) #If you find error message--"required package missing", it means that you must install the dependent package as well, using the same procedure.

fsi.df<-read.xls("http://ffp.statesindex.org/library/cfsis1301-fsi-spreadsheet178-public-06a.xls")  #importing the data into R, and creating a data frame named fsi.df

pstack.1<-stack(fsi.df[4:15]) #Stacking the indicator variables in a single variable

pstack.df<-data.frame(fsi.df[3],pstack.1) #setting up the data correctly

names(pstack.df)<-c("Total","Score","Indicator") #Changing names of Variables for presentation

install.packages("lattice")  #to be able to create lattice plots

library(lattice) #to load the lattice package

xyplot(pstack.df$Total~pstack.df$Score|pstack.df$Indicator,  groups=pstack.df$Indicator, layout=c(4,3),xlab="FSI Individual Indicator Score", ylab="FSI Index Total")

The Partition of India in 1947

The importance of international borders can not be overstated. Despite predictions that the combined forces of globalization would undermine the importance and political meaning of borders, the territorially-defined state remains the world’s predominant form of political organization. As multi-national empires/states collapse, much of the violence that ensues is the result of efforts to draw and redraw what had once been internal borders. Here is a fascinating documentary about the partition of the Indian sub-continent, into India and Pakistan. The narrator observes:

As a British barrister draws a line on a map, the once peaceful land implodes. People are forced out of the villages they have lived in for generations. Fifteen million scramble to be on the right side of the border. At least one million die in the process.

 

A Wave of Protests across North Africa and the Middle East

Following closely in the aftermath of the dramatic changes that have taken place in Tunisia recently, the political unrest seems to have swept its way across northern Africa, with the situation in Egypt now drawing most of the attention. Alan Cowell of the New York Times writes:

After days of protests that have toppled one president and shaken many others, governments across the Middle East braced on Friday for http://www.guardian.co.uk/global/blog/http://www.guardian.co.uk/global/blog/2011/jan/25/middleeast-tunisia://www.guardian.co.uk/global/blog/2011/jan/25/middleeast-tunisia/jan/25/middleeast-tunisia outbursts of rage and discontent directed at entrenched regimes confronting an exceptional clamor for democracy.

The immediate epicenter of the protests was Egypt, where Internet and cellphone connections were closed or restricted in Cairo, Alexandria and other places. Riot police took to the streets of Cairo before the Friday noon prayers that in http://www.guardian.co.uk/global/blog/2011/jan/25/middleeast-tunisia parts of the Islamic world have been a prelude to unrest as worshippers pour onto the streets.

The protests have underscored the blistering pace of events that have transformed the visage of the Arab world, particularly among regimes that have traditionally enjoyed the support of successive administrations in Washington.

Note the words that I have changed to red in the quote above. Is this author using these words as synonyms? If so, is he using them as precisely as he could be? Is he using them incorrectly?

For more information, here’s a useful set of reports, with myriad links to video and audio, from the UK Guardian’s Jack Shenker reporting in Cairo. In addition, the CBC website has an interesting flash-type graphic showing how the geographical extent of the spread of the protests.

Failed States and the Fund for Peace’s Failed States Index 2010

On Thursday, September 23rd we will begin to analyse the exceptionally important concept–the state. It will become strikingly obvious that a strong state is a necessary–but not sufficient–condition for political stability, political and personal liberty, democracy, and economic well-being. Conversely, citizens living in weak, failing, or failed states face lives of economic destitution, personal insecurity (think of Hobbes’ state of nature, where life is nasty, brutish, and short), and lack of basic rights and freedoms. The Fund for Peace publishes an annual index of failed and failing states. A quick look at the results over the last decade or so finds that the same dozen or so states are continually at the top of the list of failed/failing states. Here is a map depicting the results of the most recent index:

Notice the geographical concentration of failed states (in red). Why are the vast majority of the world’s failed states found in central Africa and southwest Asia?

What are the characteristics of failed states that distinguish them from more stable states? Maybe this video of life in Somalia will provide some clues:

Citizenship, Jus Soli, and “Anchor Babies”

As we learned in Chapter 3 of O’Neil, there are two (main) types of citizenship (remember that citizenship describes the nature of one’s relationship to the state): jus sanguinis and jus soli.  Like many states, the United States of America grants citizenship to individuals on the basis of both (and also on the basis of naturalization).  The principle of jus soli gives persons citizenship status on the basis of being born on territory that the state formally controls.  

The legitimacy, efficacy of jus soli has increasingly become questioned in some political circles in the United States (and in other countries that grant citizenship on that basis.  Watch the clip below on the “anchor baby” phenomenon between U.S. Representative Virgil Goode (R-VA) and his challenger:

Comparative Politics–Paper One Assignment

Here is the prompt for the first paper in Comparative. The state is an extremely important concept in comparative politics and we will refer to it and its characteristics again and again over the course of the semester. As such, it is important to develop a strong understanding of the state as a concept, and it is, therefore, the topic of the first paper assignment.

Introduction to Comparative Politics Paper 1

O’Neil writes that while many different types of political organization have existed throughout orld history, the

globe is now clearly demarcated by only one type of political organization–the state–that over the past few hundred years has displaced vitually all other political structures. Almost no inhabitable territory or people on the face of the earth is not claimed by some state.

For this paper, please select two states as the subject of your paper, one of which is s developed state and the other of which is a “Top-40” state on the Failed States Index (i.e. it falls in either the red or orange categories). Your task is to comparatively analyze the nature of the state in each of these two states. I want you to mostly describe (i.e., what, where, when, etc.), but also explain (how, why) the similarities and differences between the state in these two states by answering the following questions:

  • When was the state formed? How was it formed? That is, was it formed through revolution, secession, de-colonization, etc.
  • What is the nature of the current ruling regime (democratic, authoritarian), how long has this regime been in place, and does this state have a tendency to rotate types of regime frequently?
  • The nature of the government? Do governments tend to last? Are they replaced democratically?
  • Assess the nature of the legitimacy of the regime. Is the regime seen as legitimate? On which of the three Weberian ideal-types of legitimacy does the legitimacy of the regimes mostly rest?
  • Is this state centralized or decentralized?
  • Is the state strong and does it have high capacity? What kinds of evidence have you used to support the previous claim?
  • Lastly, is state autonomy high or low? Please explain.

Please use chapter 2 of the O’Neil book (Essentials of Comparative Politics) as a source for the paper. For information related to your specific states, you will have to consult at least 3 other academically reputable sources. Note that this means Google1 is not your friend here!! This will entail a trip down to the library by foot, or a virtual trip to the library’s electronic resources. In addition, pleaes avail yourself of the many posts on my link to resources that collect data on different aspects of the state. Finally, use the course page at the Library’s website for further sources to use, such as Country Watch.
Your paper should be 4 − 5 pages long, double-spaced on 8.5X11 − inch paper, with 1-inch margins on the top, bottom, and the sides. The paper must be written in Times Roman 12pt. The paper is due electronically via Digital Dropbox in Blackboard by the beginning of class on…