J. C. Sharman

Policy diffusion and policy transfer

This article argues that the literatures on policy transfer and policy diffusion are complimentary, but need to focus more clearly on five key issues drawing insights from both literatures. First, work in each area can benefit from a greater focus on the changing interactions between the various mechanisms involved in diffusion/transfer. Second, the diffusion literature privileges structure, while the transfer literature privileges agency, but we need an approach which recognizes the dialectical relationship between the two. Third, the diffusion literature concentrates on pattern-finding, while the transfer literature examines process-tracing, but any full explanation of transfer/diffusion needs to do both. Fourth, both literatures suffer from skewed case selection with, in particular, too little attention paid to developing countries. Finally, while both literatures need to be interested in whether diffusion/transfer is likely to be successful/unsuccessful, neither considers any criteria that might be used to establish policy success and failure.

The Enduring Place of Hierarchy in World Politics: Tracing the Social Logics of Hierarchy and Political Change

Conventional wisdom maintains that since 1648 the international system has comprised states-as-like units endowed with Westphalian sovereignty under anarchy. And while radical globalization theorists certainly dispute the centrality of the state in modern world politics, nevertheless most assume that the state retains its sovereignty under globalization. In contrast we argue that hierarchical sub-systems (and hence unlike units) have been common since 1648, and that the international system continues to be characterized by hierarchical (as well as anarchic) relations. The article goes on to reveal the existence of these multiple hierarchic formations and uncovers the differing social logics connected with identity-formation processes that govern their reproduction. Successive religious, racial, socialist and democratic social logics not only constitute their reproduction, but the emergence of new norms, social ideas and identities have to an important extent accounted for the rise and decay of successive hierarchies.

The Money Laundry: Regulating Criminal Finance in the Global Economy

A generation ago not a single country had laws to counter money laundering; now, more countries have standardized antimoney laundering (AML) policies than have armed forces. In The Money Laundry, J. C. Sharman investigates whether AML policy works, and why it has spread so rapidly to so many states with so little in common. Sharman asserts that there are few benefits to such policies but high costs, which fall especially heavily on poor countries. Sharman tests the effectiveness of AML laws by soliciting offers for just the kind of untraceable shell companies that are expressly forbidden by global standards. In practice these are readily available, and the author had no difficulty in buying the services of such companies. After dealing with providers in countries ranging from the Seychelles and Somalia to the United States and Britain, Sharman demonstrates that it is easier to form untraceable companies in large rich states than in small poor ones; the United States is the worst offender. Despite its ineffectiveness, AML policy has spread via three paths. The Financial Action Task Force, the key standard-setter and enforcer in this area, has successfully implemented a strategy of blacklisting to promote compliance. Publicly identified as noncompliant, targeted states suffered damage to their reputation. Subsequently, officials from poor countries became socialized within transnational policy networks. Finally, international banks began using the presence of AML policy as a proxy for general country risk. Developing states have responded by adopting this policy as a functionally useless but symbolically valuable way of reassuring powerful outsiders. Since the financial crisis of 2008, the G20 has used the successful methods of coercive policy diffusion pioneered in the AML realm as a model for other global governance initiatives.

Accounts and accountability: : corruption, human rights, and individual accountability norms

Two parallel norms mandate an international duty to hold state leaders individually accountable for serious corruption and human rights crimes. The development of these new norms is poorly explained by realist and neoliberal perspectives, but there are also weaknesses in recent constructivist explanations of norm diffusion that emphasize agency at the expense of structure. Such approaches have difficulty explaining the source of and similarities between new norms, and treat norm entrepreneurs as prior to and separate from their environment. In contrast, drawing on sociological institutionalism, we present a more structural explanation of individual accountability norms. The norms derive from an overarching modernist world culture privileging individual rights and responsibilities, as well as rational-legal authority. This culture is more generative of norm entrepreneurs than generated by them. The specific norms are instantiated through a process of �theorization� within permissive post�Cold War conditions, and diffused via mimicry, professionalization, and coercive isomorphism.

Chinese Capital Flows and Offshore Financial Centres

Abstract Why is the British Virgin Islands a bigger source of foreign direct investment into China than the USA, the European Union and Japan combined? Why is there 10 times more investment from China in the Caymans Islands than there is in the USA? This paper argues that these flows represent the efforts of Chinese and foreign investors to reduce governance and measurement transaction costs. Investors avail themselves of efficient institutions in offshore centers that are absent locally. These institutional attractions include the ease of raising capital on foreign stock markets, access to reliable courts, and more flexible and sophisticated financial products. Existing explanations of these capital movements, characterizing them as criminal money or tax arbitrage, are insufficient. Evidence is drawn from government statistics, private legal advice and interviews in offshore financial centers.

Offshore and the new international political economy

ABSTRACT Offshore finance provides an incubator and testing ground for propositions concerning fundamental debates in international political economy. The common feature among offshore financial products is calculated ambiguity: the ability to give diametrically opposed but legally valid answers to the same question from different quarters. Thus offshore allows individuals and firms to enjoy simultaneous ownership and non-ownership, to be high profit and loss-making, heavily indebted but also debt-free, and for investment to be foreign and domestic. The advantages conferred to individuals and firms, however, tend to undermine the stability of the financial system. Using indirect governance techniques, transnational networks of regulators have sought to coercively simplify offshore finance, with mixed results. Focusing on ambiguity as central to offshore finance complements earlier theoretical treatments of this realm from law, anthropology and international relations. Empirically, the recently enhanced surveillance of offshore centers has produced new data facilitating future quantitative studies, which complement more anthropological approaches to this subject.

International hierarchies and contemporary imperial governance: A tale of three kingdoms

The growing body of literature on hierarchy in international relations has overlooked instances of contemporary imperial governance. These imperial arrangements constitute a strong test of rationalist contractual theories of hierarchy. They support the contention that some polities will eschew sovereign prerogatives, or even renounce sovereignty altogether. Contrary to historical instances of empire, current dependencies receive prominent material benefits from the continuation of their relationship with the metropole. But the failure of the metropoles to obtain equivalent benefits shows why contractual scholarship on hierarchy is incomplete in failing to incorporate logics of appropriateness. Thus the primary theoretical goal of the article is to show that such scholarship is right in claiming that there is more to the international system than just sovereign-like units under anarchy, but also that it is too narrow in seeking to explain all instances of hierarchy as mutually beneficial bargains. Evidence is taken from fieldwork and interviews in dependencies of the Netherlands, Denmark and New Zealand.

South Pacific tax havens: From leaders in the race to the bottom to laggards in the race to the top?

Abstract This paper examines the fortunes of South Pacific tax havens in light of recent international campaigns to raise minimum regulatory standards. The paper is structured around three puzzles. The first is that although offshore sectors have generated meagre returns and are now associated with rising costs, this has not prevented existing players mounting a spirited defence of their offshore sectors. Secondly, although Pacific islands states would seem to be highly vulnerable to international pressure, they have also been the most recalcitrant in response to international regulatory initiatives. The third puzzle is that although onshore countries and international organisations bemoan the negative consequences of Pacific tax havens, they have been unwilling to offer the tiny sums necessary to buy out these offshore centres.

Regional Deals and the Global Imperative: The External Dimension of the European Union Savings Tax Directive

This article examines how an internal deal to tax non-resident EU savings came to depend on the co-operation of non-member jurisdictions. These efforts were both motivated and sabotaged by a policy narrative asserting that increased capital mobility poses a new global imperative for national and regional policy-making.

Using Field Experiments in International Relations: A Randomized Study of Anonymous Incorporation1

Efforts to fight international money laundering, corruption, and terrorist financing depend crucially on the prohibition barring the formation of anonymous shell companies. To study the effectiveness of this prohibition, we perform the first international relations (IR) field experiment on a global scale. With university institutional review board (IRB) clearance, we posed as consultants requesting confidential incorporation from 1,264 firms in 182 countries. Testing arguments drawn from IR theory, we probe the treatment effects of specifying (1) the international standards (managerialism), (2) penalties for noncompliance with these standards (rationalism), (3) the desire to follow norms through complying with international standards (constructivism), and (4) status as a U.S. customer. We find that firms prompted about possible legal penalties for violating standards (rationalism) were significantly less likely to respond to inquiries and less likely to comply with international law compared to the placebo condition. Some evidence also suggests that the constructivist condition caused significantly greater rates of noncompliance. The U.S. origin condition and the managerial condition had no significant effects on compliance rates. These results present anomalies for leading theories and underscore the importance of determining causal effects in IR research.