3 comments about Financial Statecraft: The Role of Financial Markets in American Foreign Policy (Council on Foreign Relations/Brookings Institution Books).

1. Steil and Litan define economic statecraft as applying economic means to influence other actors in the international system, and financial statecraft as those aspects of economic statecraft that are directed at influencing capital flows. They cover a wide range of issues, starting from the recycling of petrodollars in the 1970s to the fight against the financing of terrorism after 9/11, with special highlights on financial sanctions against non-state actors and on the foreign policy dimension on financial crises.
   
   Capital market sanctions, the idea of restricting access to the US capital markets in the service of foreign policy aims, are increasingly popular in some quarters, reflecting the growing importance of capital transactions over trade flows. The authors demonstrate that it is also an incredibly stupid idea: money is fungible, and the capital that is not raised in New York can be easily raised elsewhere at the same cost. Even if all major stock markets cooperated to bar access to targeted companies that operate in certain rogue states or participate in arms dealings, the small rise in the cost of capital that these firms would incur would be vastly offset by the gains accrued from these operations.
   The authors raise the example of PetroChina, which Congress tried to ban from listing on the New York Stock Exchange because of its involvement in the Sudanese energy sector. The public campaign against the Chinese company assembled a motley crew of activists, ranging from organizations associated with the Christian Right to the AFL-CIO and human rights advocates. In the end, the IPO was scaled down and the campaigners claimed victory, as the AFL-CIO convinced some pension funds not to invest in the Chinese company.
   
   Meanwhile, the share price of PetroChina quadrupled in four years, and Sudan now exports 85% of its oil to China. Interestingly, the main foreign investor in the company is the US mogul Warren Buffet, known for his investment acumen and who acquired 14% of the company through the Hong Kong Stock Exchange, where most of its shares are listed. The idea that foreign firms can raise capital only on Wall Street and that US investors wait at home for them to come is simply wrong.
   
   This book is a reminder that "policymakers frequently apply financial statecraft with a poor understanding of how financial markets actually work, leading to policy actions which are inadequate or which exacerbate the problems they are trying to remedy."



2. I must respectfully disagree with the esteemed reviewers of this book listed above. I expected so much more from a book with such a fine pedigree (Brookings and the US Council on Foreign Relations).
   
   The topic of how states use financial instruments towards their foreign policy goals is an area which certainly requires more understanding. As such, I expected this book to be an in-depth study of the various ways states have used such tools, and how the authors expect such tools to be used in the future. I thus expected analyses of topics such as how states respond to currency crises of allies and enemies and how states use counterfeiting of enemies' currencies as foreign policy (i.e. as Iran is alleged to do with the US dollar). I also expected a study of how states manipulate access to important currencies (as when the US cut Panama off from receiving dollars as part of an effort to topple Noreiga) and how they have sought to manipulate the foreign financial press (as is alleged to have happened during the classical Gold Standard era).
   
   Some of these topics did receive mention. The issue of how the US should respond to allies' crises received good coverage, especially regarding South Korea. There was also one paragraph acknowledging that countries have counterfeited others' currencies, and a brief discussion of petro-dollar recycling. Moreover, I found the chapter on how interest groups have attempted to restrict access to US capital markets to further other goals very illuminating, and there was a nice summary of anti-terrorism finance legislation. Overall, I found the first half of the book very enlightening.
   
   Unfortunately, the other half of the book dealt predominantly with the authors' assertions that dollarization should be the way forward for developing countries to prevent currency crises, and in particular, that the US should encourage this and absorb some of the costs. The issues of whether countries should use floating, dirty float, pegged or dollarized exchange rates is an important one. However, I did not pick up this book to read about the authors' assertions about dollarization--I picked it up to read about financial statecraft.
   
   Financial statecraft will only grow in importance, and as the authors note, it is critical that policymakers understand how it functions and what tools are at their disposal. This book only discusses financial statecraft primarily in its first 80 pages (and scattered in some places in the latter part of the book as well). I feel eighty pages was just too little to adequately examine financial statecraft. Instead, the reader is unfortunately left with a quick gloss-over of only a few aspects of such an important and under-analyzed topic.



3. Very naive - these guys need to work harder before publising. Some terrible naive comments - reads like a bad essay at university and perhaps even high school. waste of money... Terrible stuff a shame that anyone published this.

5 comments about Global Crises, Global Solutions.

1. I enjoyed Bjorn Lomborg's latest work as a thought provoking alternative to conventional wisdom on different aspects of globalisation. Unfortunately, much of the scientific and political community have become prisoners to theories which have dubious merit. They are followed more out of political correctness and the prevailing winds of public opinion, than research and testing.
   
   By including other experts who provide alternative opinions and challenge each other, Lomborg has followed the true spirit of scientific method - development of a theory and testing it through falsification. It is a shame that some purported scientists have tried to silence him in a similar way to Galileo. Poor science leads to inadequate policy.
   
   The book is a worthy successor to the Environmental Sceptic and reflects a growing concern in the scientific community about the need for more rigorous research and debate on key issues. It's content is well laid out.
   
   Clearly, the amount of material is not designed for reading in one session. However, it is a valuable resource book suited to those interested in entering into the debate on key global issues. You can pick an individual topic and obtain a good grounding in it.
   
   I look forward to Bjorn Lomborg's next offering.



2. Most people never think about the unavoidable tradeoffs involved in ameliorating social problems. With opportunity costs in mind, may we must dedicate ourselves to a better world.
   
   I have two respectful criticisms:
   
   1. If people focused only on the problems that we could do most to solve then that would reduce the pressure to solve problems. However rational it might seem to shift all foreign aid from funding education to funding AIDS prevention, the result would probably be less total aid. The way politics works, one big problem is sometimes treated less seriously than two problems that are half as big.
   
   2. It is difficult to quantify any of these problems, but some of them, like global warming, are much harder to quantify. The "worst case scenario," unlikely as it may be, has the potential to do such incredible damage, that we need to act on it. Reducing global warming might be conceived of as an insurance policy, whereas preventing AIDS is more likely an investment in mutual funds.



3. why arn't global politics based on these arguments? it's a pleasure to read the scientific arguments that lomborg uses to validate his claims. it's a shame that we cannot organise the solutions to make this world a better place for a lot of people at no expense to our own prosperity. all the hard (econometrical) stuff is almost easy to read.
   next year i'll read it again and see how far we are...



4. This book appears at the first look about economy. It is not. Its starting premise is the question: if you have limited resources and have to prioritize, what would you do in our global warming situation. It is a hard
   headed treatment of the subject matter by a multitude of subject experts. Their complete set of policy proposals then evaluated by eight of the world top economists.
   It is interesting, how fast the discussion veers off after discussing the economics into the very conditions enabling or blocking the desirable economic developments, such as conflicts, communicable diseases, sanitation and trade barriers just to mention a few.
   The book can be read on two different level.For casual reader and policy maker most the numbers are avoidable and still be a very readable and very thoughtful and interesting material. For those, who want hard numbers and hard details, that is provided too, but not necessary for understanding.
   This is the multicolored, multifaceted work of many dedicated individuals who - by the work they are dedicated to perform - are forced to set priorities in expending limited resources. I was surprised by their reasoning, and I trust, so will you be.



5. Global Crises, Global Solutions; edited by Bjorn Lomborg, who brought us The Environmental Skeptic, has produced a collection of articles where experts attempt to prioritize which global problems should be dealt with, and how they should be solved. Although an excellent idea, the actual writing is extremely academic and not very easy to read. Essentially, the articles are a series of cost-benefit analyses on specific problems of global warming, conflict, communicable disease, etc. I am not an economist, and found the writing to be almost impenetrable at times, because the authors assume the reader has a very firm understanding of economics and economic jargon. Four stars for intent, only three stars for readability.

5 comments about After Hegemony: Cooperation and Discord in the World Political Economy.

1. Robert Keohane is one of the top five International Relations theorists today. His book "After Hegemony", written in 1984, is considered to be the iniciator of the neoliberal institutionalist school of IR. In this book, Keohane shows that although states live in an anarchic world and are racional actors, they can cooperate with each other through institutions. This book revolutionalised the field and opened a fierce debate on cooperation that lasts until now. A very interesting book written by a master in the field - that is enough recommendation.



2. In After Hegemony neoliberal institutionalist Robert O. Keohane deals with the 'central political dilemma': How to organize international cooperation without hegemony? Or in other words, is cooperation possible in the post-hegemonic world? Keohane audaciously contends that cooperation is possible without hegemony since international regimes make this cooperation possible. In this sense, he criticizes hegemonic stability theory (HST) since HST necessitates a hegemon for regime maintenance specifically and for international cooperation in general. This book, however, might not be considered as a fundamental criticism of the realist theory since it accepts basic realist premises of international cooperation. For instance, he takes states as the major actors in international politics in which they have interest maximizing goals. On the other hand, Keohane also basically argues that 'although hegemony can facilitate cooperation, it is neither a necessary nor a sufficient condition for it...hegemony is less important for the continuation of cooperation, once after began, than for its creation'.In this respect, he differentiates hegemon's role in creation of international regimes from their maintenance. While he keeps hegemonic power important in creating regimes he does not see hegemon so significant for the their maintenance. What are the functions and/or benefits of international regimes? Institutions/regimes provide information, decrease transaction costs, monitor compliance, create issue linkages and prevent cehating. Then, they serve states' self-interests and generate international cooperation. Fear of retaliation and search for reputation are the key reasons why states eschew to break the rules of international regimes. The concept of 'bounded rationality' is also important in Keohane's functionalist theory of regimes. In this framework, states are willing to uphold international regimes for their self-interests. According to him 'bounded rationality' relaxes the strict assumptions of rationality and they make states emphatically interdependent to each other. Then it leads to shifts in state preferences and they will be more likely to cooperate by means of international regimes. In this respect, Keohane tends generally to see interdependence as a beneficial element for international cooperation. Moreover, After Hegemony have case studies in three issue areas; trade, money, and oil. Keohane examines international regimes in these areas for post-hegemonic period when the US power began to decline by the early 1970s. He finds hegemonic stability theory relevant for oil while he does not for the issue areas of trade and money. in this sense, he also point out the limits and possibilities of both HST and his regime theory.Overarall, he makes the point: non-hegemonic cooperation is difficult but not impossible.



3. Hegemony is a popular buzz word in international politics these days. Talking heads throw it around every Sunday morning. So one might expect a book entitled After Hegemony to be discussion on American foreign policy "after hegemony." In this case - Wrong! This is a nearly 20 year old book with a title that is currently a trendy topic. And it deals with political economy and "regime" formation, such as international monetary regime, international trade regime, and international oil regime, how these regimes were founded during the time period the author considers the time of US economic (and military) hegemony (the 1950's and 60's) and how they evolved during the years after US hegemony had passed according to the author.

   For students and academics who are interested in the political and economic theory of how organizations are created and evolve, how "rational actors" (governments) behave on the macro scale, how preponderance of power allows a nation to create regimes (that is rules sets) that favor its policies, how these regimes become self-perpetuating, this is the book. It is an academic analysis of the subjects.

   If you are looking for something relating to the oft discussed current "American Hegemony" and its likely impact on US and world relations, this is not the book. Look on.




4. I have never shared realism's pessimism towards international politics in general and international cooperation in particular. For me, cooperation among states was logical and practical. It was logical, because in the long run cooperative states were better off than non-cooperative ones; it was practical, because most international problems -such as nonproliferation of nuclear weapons, setting up an international monetary system, and alleviating international poverty- required collective solutions. What makes Robert Keohane's After Hegemony important in my eyes is its logical and empirical support to the possibility and existence of cooperation among states.
   
   The aftermath of WWII witnessed a mushrooming of international organizations/institutions to facilitate international cooperation in political as well as economic issues. The dominant realist theory of international relations did not have a well-defined theory of international organizations. But a sub-theory of realism -hegemonic stability theory- argued that the unchallenged hegemony of the United States was the driving force behind this international institutionalization and the relative peace it espoused (Gilpin 1981). All these institutions were established under the hegemony of the US and therefore their influence on world politics was dependent on the hegemonic status of the US. Thus, when in 1970's and 1980's the hegemony of the US declined with the recuperation of the Japanese and the West European economies, hegemonic stability theory expected a reversal in the impact of international institutions on world politics.
   
   Keohane's central aim in After Hegemony is to challenge these pessimist realist evaluations of the decline in US hegemony. Keohane rejects realism's pessimist evaluations on two grounds. First, he argues that international cooperation is possible among nations and does not require a hegemon in the first place. Second, he argues that even though the national interests of states have a role in the establishment of international institutions, these institutions take a life of their own once they start rolling.
   
   Keohane first challenges the neorealist link between states' egoism and the rarity of cooperation among them. He states, "Realist assumptions about world politics are consistent with the formation of institutionalized arrangements, containing rules and principles, which promote cooperation," (67). He maintains that egoistic governments "can rationally seek to form international regimes on the basis of shared interest," which actually reflects "rational egoism," (107). From his perspective, only a "myopic self-interest" understanding prevents states from cooperating when it is actually in their interest if the issue is evaluated with other issues (99).
   
   Keohane then develops a theory of international institutions in which he argues that international institutions, or more broadly international regimes, influence the way and the extent to which states cooperate with each other. He states that by providing principles, norms, rules, and decision-making procedures, regimes "prescribe certain actions and proscribe others," (59). However, international regimes are valuable to governments not because they enforce binding rules on others, "but because they render it possible for governments to enter into mutually beneficial agreements with one another," (13). Regimes do that through multiple channels. First, they create an environment whereby states obtain information about other states' intentions and preferences. Second, international regimes can be regarded as "quasi agreements", which, although lacking a legally binding force, "help to organize relationships in mutually beneficial way," (89). Once a regime is established, states' concern about `retaliation' and `reputation' makes them "forward looking" and generally urges them to cooperate. And third, Keohane argues that international regimes decrease "transaction costs" for parties involved, thereby increasing incentives to cooperate (90).
   Keohane was heavily influence by Ernst Haas who challenged the statist view in international politics and argued that the actors in international relations are all entities capable of putting forth demands effectively; "who or what these entities may be cannot be answered a priori," (1964, 84). Thus, Keohane is opposed to the realists' argument on the insignificance of international institutions and argues that regimes can affect the interests and policies of states by influencing their "expectations and values," (63). Although he accepts that international regimes are not "beyond the nation-state," he maintains that they are not pure "dependent variables" as argued by neorealists, but rather "intervening variables" with semi-independent effects on states' behavior (63-4). Therefore, international regimes are easier to maintain than to create (50).
   
   I do not have significant problems with the institutionalist theory Keohane develops in After Hegemony. Yet I must confess that institutional theory is more a theory of international cooperation than a theory of international relations. By borrowing from both realism and liberalism, Keohane succeeded in developing a concrete and persuasive theory of cooperation among states. Also, like some others (Moravscik 1997, Mearsheimer 1995, Gilpin 2001) I do not think that Keohane's institutional theory can be regarded as a "neoliberal" argument. Keohane shares realism's assumptions of anarchy, rationality, and egoism but maintains a more optimistic view on the cooperation among states. Hence, as he himself states elsewhere, his position is not "against" structural realism, but "beyond" structural realism (1984, 191). Personally, I would rather consider him an "optimistic realist" than a "neoliberal institutionalist". Yet this does not undermine the strength of his arguments.
   
   Finally, if empirical evidence is a support to the accuracy of theories, the history of the European Union since the end of the Cold War gives extensive support to Keohane's argument on international institutions. Some realist (Mearsheimer 1990) expected a reversal in the integration of European countries after the end of the Cold War. By contrast, Keohane argued that because common interests are likely to persists and the institutions of the European Community are well-entrenched, we should expect further integration in Europe (1993, 291). The current deepening as well as expansion of European integration after the Cold War confirms Keohane's prediction and gives further support to Keohane's institutional arguments.



5. Robert Keohane's 'After Hegemony' provides important tools to understand post cold war international relations and international order. While the end of the cold war provided the most appropritate international political ambience to evaluate the role of hegemony, as Dr. Keohane does, his coinage of the term 'bounded rationalism' comes handy in explaining the fact that capitalist and developed powers may be prepared to gravitate towards cooperation by sacrificing some of their 'hegemonic' or 'dominating' instincts. One example is trade. Gone are those days when the imperialist-capitalist powers went to war for possession of overseas markets. The post cold war era, at the behest of the liberal United States, believes in trade cooperation and in mutual discussions. Dr. Keohane's is a very useful book in changing the realistic concept of the overriding role of force and power in settling international issues. It is true that Dr. Keohane, rightly, never discount the role of power altogether but he shows enough ingenuity in dishing out a more rational and positive approach towards understanding the undercurrents of hegemonic psychology. All these simply go to show how increasing democratization on a global scale in so many spheres render the role of hegemony redundant. Although, this will take some time if that road is pursued and Dr. Keohane's fine book shows how.
   
   Gautam Maitra
   Author of 'Tracing the Eagle's Orbit: Illuminating Insights into Major US Foreign Policies since Independence.

1 comments about Can Germany Be Saved?: The Malaise of the World's First Welfare State.

1. Although a bit technical even for the educated layperson, this book is an amazing analysis of the economic situation in Germany. We in the United States should study this material carefully in order that we may avoid the problems that afflict welfare states, including a precipitous drop in reproduction rates, which tends to be an unintended but very serious consequence of such systems.

No comments about Japan Since 1980 (The World Since 1980).

No comments about The Turbulence of Migration: Globalization, Deterritorialization and Hybridity.

4 comments about Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil.

1. The book is real silly. The writing style of the author suggests that he really doesn't know what he's talking about. He uses words that unnecesarrily cumbersome. He also uses them out of context. This is my review. A real silly book that is difficult reading.



2. Just the quickest of all notes: a very good book, a classic. Not "silly with cumbersome words," as described by another reviewer. You must pay attention to what you are reading here, hence not for all readers



3. An important case study of Brazilian economics and dependent develpoment. By no means an easy read, but more than well worth the time.



4. While a challenging read, Evans offers us an invaluable look at Brazil's shift from "classic dependence" to "dependent development". This is not a look at class struggle but rather an in-depth look at the internal make-up of the Brazilian elite. Evans shows us that Brazil's economy at the beginning of the Twentieth Century based on primary exports, though profitable, was simply too volatile and too susceptible to pressure from emerging competitors. What followed was a shift towards industrialization and a place in the semi-periphery, based on "a delicate combination of social forces and historical circumstances". The nature of the subject matter is complex but the importance of Evans' leftist take on the evolution of the Brazilian economy is too important to have this put you off. For those interested in the Brazilian case, or those curious as to how a state makes the shift from the classically dependent periphery to the less dependent semi-periphery, this book is a valuable addition.

4 comments about Development Centre Studies The World Economy: A Millennial Perspective (Development Centre Studies).

1. This book is seemingly a culmination of the painstaking works taken by Angus Maddison for decades. As I liked his previous works such as the Phases of Capitalist Development, so I like this book very much. Of course, the book contains many 'guesstimations' that are unacceptable to today's economists' rigor. This is more so when the author ventures into almost two millenia before 1820, for which he did relatively little work previously. But even here the book apparently provides reasonable figures synthesizing existing evidences with a lucid interpretation, providing illuminating starting points for future studies.



2. Attempting to put numbers on past economic activity is a deeply fraught exercise, as the author freely admits.

   That being said, this is a book full of useful information and striking estimates. I know of no better place to get a genuine feel for the economic history of the last millennia, but particularly the last two centuries. There is something to startle or surprise anyone within these pages. A necessary edition to the library of anyone seriously interested in history.




3. Angus Maddison's The World Economy: A Millennial Perspective is highly unique because of the long historical perspective it brings to the understanding of global economic development and fluctuations. Maddison provides data on population growth, per-capita income, and gross domestic product on regional, national, and global levels for the last 1000 years. The last two centuries receive special attention. For more books on economic development go to my profile and see my Amazon Listmania "Future Studies Reading List."



4. In the last few years I have been searching books offering a general overview of the past, and I have realized that many books entitled "History of ...whatever" only provide information about the West, the rest of the world being almost ignored.
   
   Maddison's on world economy is different, it is truly global. It offers historical statistics of the last two thousand years and is to be read together with "The world economy: Historical Statistics " (a combined edition of both volumes is to be published on December 2007). In my opinion this is masterful work that can be savored by the professional historian and educated layperson alike, so my rate is between 5 (content) and 4 (pleasure, sometimes falling to 3, sometimes raising to 5). I highly recommend the two volumes.
   
   Other works whose scope is as amazingly global as Maddison's and which I would suggest reading (hoping that will be of use for those looking for a broad framework to understand ourselves) are the following: 1. Agrarian cultures: "Pre-industrial societies" by Patricia Crone; 2. Government: "The History of Government" by S.E. Finer; 3. Ideas: "Ideas, a History from Fire to Freud", by Peter Watson; 4. Religion: "The Phenomenon of Religion: A Thematic Approach" by Moojan Momen; and 5. War: "War in Human Civilization" by Azar Gat.

No comments about Foreign Direct Investment and the Multinational Enterprise (CESifo Seminar Series).

3 comments about Providing Global Public Goods: Managing Globalization.

1. This books is an excellent follow-up of the Global Public Goods: International Cooperation in the 21st Century. It helped me visual and understand the provisionary measures needed to bring about GPGs.



2. Global Public Goods and Multilateralism must intertwine in order for progress and provision to come about. This is an idea that is so often neglected and forgotten. This book places an importance role that nations must carry out...it also provides recommendations for issues that arise in the midst of GPG provision. This book does not negate the global issues that exist within and surrounding the international realm...yet the book does a fabulous job on highlighting the importance of addressing these issues as a means of furthering the progress of Global Public Goods.



3. I think that this book closes the knowledge gap surrounding this topic. It is one thing to theorize about the benefits or negative impacts of global public goods (or bads) and another to suggest ways to go about dealing with GPG. This book is extremely enlightening and presents realistic solutions!