Layna Mosley

Room to Move: International Financial Markets and National Welfare States

A central research question in international political economy concerns the influence of financial markets on government policy outcomes. To what extent does international capital mobility limit government policy choices? I evaluate the relationship between international financial markets and government policy outcomes, with a focus on the government bond market in developed democracies. Evidence includes interviews with financial market participants and a cross-sectional time-series analysis of the determinants of interest rates. This evaluation suggests that governments of developed democracies face strong but narrowly defined financial market pressures. Financial market participants are concerned with a few macroeconomic policy indicators, including inflation rates and government deficit/GDP ratios, but not with micropolicy indicators, such as the distribution of government spending across functional categories. In these areas, governments retain policymaking autonomy. I conclude by exploring the role of financial market influences within domestic politics and offering suggestions for further research.

Trade-based Diffusion of Labor Rights: A Panel Study, 1986-2002

This article investigates the nature of the linkages between trade and labor rights in developing countries. Specifically, we hypothesize that a “California effect” serves to transmit superior labor standards from importing to exporting countries, in a manner similar to the transmission of environmental standards. We maintain that, all else being equal, the labor standards of a given country are influenced not by its overall level of trade openness, but by the labor standards of its trading partners. We evaluate our hypothesis using a panel of 90 developing countries over the period 1986–2002, and we separately examine the extent to which the labor laws and the actual labor practices of the countries are influenced by those of their export destinations. We find that strong legal protections of collective labor rights in a countrys export destinations are associated with more stringent labor laws in the exporting country. This California effect finding is, however, weaker in the context of labor rights practices, highlighting the importance of distinguishing between formal legislation and actual implementation of labor rights.

Globalisation and the state: Still room to move?

In recent years, scholars and policy makers have questioned the extent to which the nation-state – specifically, the modern welfare state, marked by intervention and publicly-provided social protection – is compatible with economic globalisation. While transnational actors, including multinational corporations, institutional investors, banks and non-governmental organisations, undoubtedly influence contemporary national policy making, they have not brought about the demise of the nation-state. Nor have the pressures generated by such actors eliminated crossnational diversity in policy outcomes and political institutions. In the face of economic globalisation, governments retain ‘room to move’, particularly in the developed world but also in developing nations. This essay reviews the empirical and theoretical evidence in support of this claim, beginning with the general issue of economic globalisation and government policy making. I then turn to the relationship between global capital markets and government autonomy. In conclusion, I ask why the ‘race to the bottom’ (RTB) logic remains a feature of contemporary public debates and explore variation across countries and investors in the pressures emanating from global capital markets. Economic globalisation and national government policies Many popular discussions of economic globalisation invoke the ‘race to the bottom’ hypothesis, which is grounded in the imperatives of cross-national competition and economic efficiency. 1 Nations benefit, in aggregate terms, from trade and financial openness, but openness forces them into competition with one another. Competition reduces governments’ abilities to provide goods and services to their citizens and renders governments more accountable to external economic agents than to citizens. This hypothesis implies not only a convergence of national policies, but also a convergence toward the lowest common denominator. It has become a favourite straw man of comparative and international political economists. There are myriad reasons to be sceptical of the claim that the competitive pressures set off by economic openness will lead nations to pursue a similar, bare bones set of economic and social policies. First, domestic institutions play

The Global Financial Crisis: Lessons and Opportunities for International Political Economy

The global financial crisis that began in 2007 is a once-in-a-lifetime event with wide-ranging consequences for government policymaking. The crisis has prompted much soul-searching among economists and financial experts who failed to anticipate it, or whose warnings were not taken seriously by regulators and investors. Scholars of international political economy (IPE), however, are generally not in the business of predicting financial crises or recessions, and so the field is unlikely to see the crisis as a manifestation of scholarly failure. Yet the crisis may have an appreciable impact on the trajectory of IPE, just as the downfall of the Soviet Union shaped subsequent scholarship on international relations and great-power conflict and prompted a movement away from grand, and toward mid-range, theories. We discuss three categories of inquiry—or puzzles within the realm of global finance—that have received relatively little attention within the field of IPE, but which should receive greater scrutiny as a result of the crisis: the determinants of cross-national variation in financial regulation; patterns of cooperation and discord within global regulatory bodies and the involvement of emerging-market countries in these bodies; and the interplay between individual firms-as-political-actors and public policy outcomes.

Workers' Rights in Open Economies: Global Production and Domestic Institutions in the Developing World

Previous large-N research suggests that globalization could have either positive or negative consequences for labor rights in developing nations. This article examines the ways in which domestic political institutions and interests conditions the effects of economic globalization. It develops several hypotheses regarding the impact of domestic factors on labor rights outcomes and uses the case of Costa Rica to assess these hypotheses. The result is that although segments of the Costa Rican economy and labor force have benefited from industrial upgrading in recent years, the enclave nature of the export-oriented economy and the historical repression of organized labor render difficult the achievement of some internationally recognized core labor rights. The article concludes by discussing some of the issues for future research that are highlighted by the Costa Rican case.

Attempting global standards: national governments, international finance, and the IMF's data regime

This article explores the conditions under which international financial standards succeed. While rationalist accounts treat the successful creation of international standards as a relatively straightforward exercise, I suggest otherwise. The cooperation of private sector agents is a necessary condition for successful standards, and this cooperation hinges on certain elements of institutional design. Using an assessment of the IMFs Special Data Dissemination Standard (SDDS), I explore issues of institutional design and effectiveness. On the basis of surveys of mutual fund managers and government officials, I argue that because the private sector has yet to become involved fully in the promulgation of the SDDS, the SDDS effort has not yet achieved its goals.

Regulating globally, implementing locally: The financial codes and standards effort

ABSTRACT This article explores the effort, during the last decade, to develop a set of global standards and codes to govern international capital markets. I posit that, despite global capital market pressures, this effort should have limited success in low and middle-income countries. Drawing upon a historical institutionalist framework, I suggest that domestic political institutions, as well as interests, often will lead to the failure of governments to implement global codes and standards. After describing briefly the motivations for and substance of the standards and code project, I summarize trends in the national implementation of such standards. I then point to several instances of policy feedback, in which the existing domestic regulatory institutions in middle-income countries rendered the adoption of new international rules difficult, technically as well as politically.

Government–Financial Market Relations after EMU New Currency, New Constraints?

The European Monetary Union (EMU) has generated a variety of changes, including the loss of national monetary policy autonomy and the creation of deeper integrated intra-European markets for goods, services, and financial instruments. This article explores the extent to which EMU has changed the ways in which and the extent to which international financial markets influence national policy choices. There are important reasons to expect that financial markets exert greater influence on governments after EMU; for instance, governments now borrow in what is essentially a foreign currency. This change might serve to heighten the perceived danger of default in Europe. At the same time, however, financial markets appear to reward governments for the fiscal consolidation and increased market liquidity that flow from the single currency. I argue that, as a result of these offsetting trends, there have thus far been no dramatic changes in financial market–government relations. Although governments continue to face external pressures on domestic policy-making, these pressures may be only slightly more severe for EMU than for non-EMU countries. As in the past, domestic politics and institutions will be as important as, if not more important than, financial market pressures in EU governments’ policy decisions.

Workers’ rights in global value chains: possibilities for protection and for peril

ABSTRACT I consider the effect of global supply chain production – in contrast to directly owned overseas production – for labour rights in low- and middle-income countries. I develop a set of hypotheses regarding the conditions under which supply chain workers are most likely to experience improvements in their working conditions and procedural rights. In doing so, I highlight the importance of host country governments in the protection of labour rights: while private governance efforts have intensified in recent years, their success is conditional on local political actors’ interests in the protection of workers’ rights. Put differently, appropriate protections for labour require that the incentives of participating firms (foreign or domestic) and host country governments align. I also suggest how future research might best explore these dynamics, by focusing its attention at the firm and supply chain (rather than at the country) level.