Globalization state of the art and perspectives

Weisskopf 57 Global Political Economy and the Wealth of Nations Performance, institutions, problems and policies Edited by Phillip Anthony O’Hara 58 Structural Economics Thijs ten Raa 59

Is the state weakened by globalization? Does national economic policy convergeunder the competitive pressure of globalization? Who is gaining or losing fromglobalization, and why? For the last ten years, these questions have been in thefocus of the public debate and political science research Meanwhile researchhas produced substantial empirical analyses on many aspects of globalizationleading to a substantiation of some arguments and to a weakening of others

In view of the increasingly differentiated research on globalization, a host ofinternational experts in the field are brought together to systematically presentthe core fields and results of research on globalization The chapters follow anactor-centred approach and are theoretically guided empirical analyses Eachchapter presents the international state of the art of research on globalization onthe respective issue area as well as the individual author’s cutting edge Theareas covered in this volume include an analytical overview on globalizationresearch, fiscal policy adjustment to globalization, tax competition, internationalmonetary policy, transnational policy regimes, governance through private busi-ness and public–private partnerships, developing countries, regionalism andtrade liberalization in transformation countries For each of these issues, thechapters introduce the relevant theoretical approaches and analyse the empiricalfindings

This volume will be of interest across a number of related subject areasincluding international political economy, international relations, comparativepolitics, international economics and area studies

Stefan A Schirm is Professor of Political Science at the University of Bochum,

Germany, where he holds the Chair for International Relations

Routledge frontiers of political economy

1 Equilibrium Versus

Understanding

Towards the rehumanization

of economics within social

Malvern after ten years

Edited by Steven Pressman

4 The End of Economics

Michael Perelman

5 Probability in Economics

Omar F Hamouda and

Robin Rowley

6 Capital Controversy, Post

Keynesian Economics and the

History of Economics

Essays in honour of Geoff

Harcourt, volume one

Edited by Philip Arestis,

Gabriel Palma and

Malcolm Sawyer

7 Markets, Unemployment and Economic Policy

Essays in honour ofGeoff Harcourt, volume two

Edited by Philip Arestis, Gabriel Palma and Malcolm Sawyer

Edited by Roy J Rotheim

10 The Representative Agent in Macroeconomics

James E Hartley

11 Borderlands of Economics

Essays in honour of Daniel R Fusfeld

Edited by Nahid Aslanbeigui and Young Back Choi

12 Value, Distribution and Capital

Essays in honour ofPierangelo Garegnani

Edited by Gary Mongiovi and Fabio Petri

13 The Economics of Science

Methodology and epistemology as

if economics really mattered

James R Wible

14 Competitiveness, Localised

Learning and Regional

Development

Specialisation and prosperity in

small open economies

Peter Maskell, Heikki Eskelinen,

Jill Rubery, Mark Smith,

Colette Fagan and Damian

18 Subjectivity in Political Economy

Essays on wanting and choosing

20 The Active Consumer

Novelty and surprise in consumer

choice

Edited by Marina Bianchi

21 Subjectivism and Economic Analysis

Essays in memory of LudwigLachmann

Edited by Roger Koppl and Gary Mongiovi

22 Themes in Post-Keynesian Economics

Essays in honour ofGeoff Harcourt, volume three

Edited by Claudio Sardoni and Peter Kriesler

23 The Dynamics of Technological Knowledge

Cristiano Antonelli

24 The Political Economy of Diet, Health and Food Policy

Ben J Fine

25 The End of Finance

Capital market inflation, financialderivatives and pension fundcapitalism

Edited by Charlie Dannreuther

29 Hahn and Economic Methodology

Edited by Thomas Boylan and Paschal F O’Gorman

30 Gender, Growth and Trade

The miracle economies of the

postwar years

David Kucera

31 Normative Political Economy

Subjective freedom, the market

and the state

David Levine

32 Economist with a Public

Purpose

Essays in honour of

John Kenneth Galbraith

Edited by Michael Keaney

36 Power in Business and the State

An historical analysis of its

concentration

Frank Bealey

37 Editing Economics

Essays in honour of Mark Perlman

Hank Lim, Ungsuh K Park and

Geoff Harcourt

38 Money, Macroeconomics and

Keynes

Essays in honour of

Victoria Chick, volume one

Philip Arestis, Meghnad Desai and

Sheila Dow

39 Methodology, Microeconomics and Keynes

Essays in honour ofVictoria Chick, volume two

Philip Arestis, Meghnad Desai and Sheila Dow

40 Market Drive and Governance

Reexamining the rules foreconomic and commercial contest

Ralf Boscheck

41 The Value of Marx

Political economy forcontemporary capitalism

Alfredo Saad-Filho

42 Issues in Positive Political Economy

S Mansoob Murshed

43 The Enigma of Globalisation

A journey to a new stage ofcapitalism

46 Unpaid Work and the Economy

Edited by Antonella Picchio

47 Distributional Justice

Theory and measurement

Hilde Bojer

48 Cognitive Developments in Economics

Edited by Salvatore Rizzello

49 Social Foundations of Markets,

Money and Credit

52 Kalecki’s Economics Today

Edited by Zdzislaw L Sadowski

and Adam Szeworski

53 Fiscal Policy from Reagan to

Blair

The left veers right

Ravi K Roy and Arthur T Denzau

54 The Cognitive Mechanics of

Economic Development and

56 Affirmative Action in the United

States and India

A comparative perspective

Thomas E Weisskopf

57 Global Political Economy and

the Wealth of Nations

Performance, institutions,

problems and policies

Edited by Phillip Anthony O’Hara

58 Structural Economics

Thijs ten Raa

59 Macroeconomic Theory and Economic Policy

Essays in honour of Jean-Paul Fitoussi

Edited by K Vela Velupillai

60 The Struggle Over Work

The “end of work” andemployment alternatives in post-industrial societies

Shaun Wilson

61 The Political Economy of Global Sporting Organisations

John Forster and Nigel Pope

62 The Flawed Foundations of General Equilibrium Theory

Critical essays on economic theory

Frank Ackerman and Alejandro Nadal

63 Uncertainty in Economic Theory

Essays in honor of DavidSchmeidler’s 65th birthday

Edited by Itzhak Gilboa

64 The New Institutional Economics of Corruption

Edited by Johann Graf Lambsdorff, Markus Taube and Matthias Schramm

65 The Price Index and its Extension

A chapter in economicmeasurement

S.N Afriat

66 Reduction, Rationality and Game Theory in Marxian Economics

Bruce Philp

67 Culture and Politics in

73 Marx for the 21st Century

Edited by Hiroshi Uchida

74 Growth and Development in the

Global Political Economy

Social structures of accumulation

and modes of regulation

Phillip Anthony O’Hara

75 The New Economy and

Macroeconomic Stability

A neo-modern perspective

drawing on the complexity

approach and Keynesian

economics

Teodoro Dario Togati

76 The Future of Social Security

Policy

Women, work and a citizens basic

income

Ailsa McKay

77 Clinton and Blair

The political economy of the thirdway

Flavio Romano

78 Marxian Reproduction Schema

Money and aggregate demand in acapitalist economy

A.B Trigg

79 The Core Theory in Economics

Problems and solutions

of social costs

Edited by Wolfram Elsner, Pietro Frigato and Paolo Ramazzotti

82 Globalization and the Myths of Free Trade

History, theory and empiricalevidence

Edited by Anwar Shaikh

83 Equilibrium in Economics

Scope and limits

Edited by Valeria Mosini

84 Globalization

State of the art and perspectives

Edited by Stefan A Schirm

State of the art and perspectives

Edited by Stefan A Schirm

First published 2007

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

Simultaneously published in the USA and Canada

by Routledge

270 Madison Ave, New York, NY 10016

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2007 Selection and editorial matter, Stefan A Schirm; individual chapters, the contributors

All rights reserved No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

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ISBN10: 0-415-40566-1 (hbk)

ISBN10: 0-203-96226-5 (ebk)

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ISBN 0-203-96226-5 Master e-book ISBN

3 Fiscal policy and adjustment: adjusting fiscal policy to

R E I M U T Z O H L N H Ö F E R

4 Taxation and cooperation: international action against

T H O M A S R I X E N

5 Money and power: markets and governance in international

H U B E R T Z I M M E R M A N N

6 Political transnationalization: the future of the nation-state –

E D G A R G R A N D E , M A R K U S K Ö N I G , P A T R I C K P F I S T E R A N D

P A U L S T E R Z E L

7 Business and governance: transnational corporations and

10 Regionalism in the world economy: building block or

A N D R E A S D Ü R

11 Transformation and trade liberalization: the integration of

the transition countries into the world economy 200

T H I L O B O D E N S T E I N

x Contents

2.1 Publications per year on globalization, 1985–2004 24

11.1 Founding elections and foreign economic openness 211

Joachim Betz is Senior Research Associate at the German Institute of Global

and Area Studies in Hamburg and Professor of Political Science at the versity of Hamburg Previously he worked as a Research Associate at theUniversity of Tübingen, Germany

Uni-Thilo Bodenstein holds the Jean Monnet Chair at the Jean Monnet Centre of

Excellence, Freie Universität Berlin He received his PhD at the University ofKonstanz and was a Senior Researcher at the Centre for DevelopmentResearch at the University of Bonn

Tanja Brühl is Assistant Professor of Political Science with a focus on Peace

and Conflict Studies at the University of Frankfurt am Main Previously shewas Research Associate for Comparative Politics at the University of Frank-furt and Teaching Assistant at the TU Dresden

Andreas Busch is Reader in Politics and International Relations in the

Depart-ment of Politics and International Relations at the University of Oxford andFellow at Hertford College, Oxford After a Kennedy Fellowhip at HarvardUniversity and his post-doctoral thesis (Habilitation) he taught at the Univer-sity of Heidelberg, Germany

Andreas Dür is a Lecturer in the School of Politics and International Relations,

University College Dublin He holds a PhD from the Department of Politicaland Social Sciences at the European University Institute in Florence, Italy.Before taking up his current position, he was a Postdoctoral Fellow at theMannheim Centre for European Social Research in Germany

Doris Fuchs is Professor of Political Science and Chair of the Department of

International Relations and European Integration at the University ofStuttgart Prior to joining Stuttgart, she has taught at the Handelshochschule-Leipzig Graduate School of Management, the University of Munich,Louisiana State University and the University of Michigan

Edgar Grande holds the Chair for Comparative Politics at the

Geschwister-Scholl Institute for Political Science of the University of Munich He is alsothe director of the Munich research centre on “Reflexive Modernization”,

funded by the German Research Association (DFG) Previously he wasProfessor of Political Science at the Technische Universität München andwas DAAD Chair in German and European Politics at the University ofToronto.

Markus König is Researcher at the Chair for Comparative Politics at the

Ludwig-Maximilians-University Munich He studied political science, ology, social psychology and economics at the University of Hannover

soci-Patrick Pfister is Researcher at the Chair for Comparative Politics at the

Ludwig-Maximilians-University Munich He studied political science, ology and communication studies at the Universities of Bamberg (Germany)and Kingston upon Thames (UK)

soci-Thomas Rixen is Research Associate at the International University Bremen

(IUB) and a member of the Collaborative Research Center “Transformations

of the State” funded by the German Science Foundation (DFG) He studiedPolitical Science and Economics in Bonn, Paris, Hamburg and at the Univer-sity of Michigan, Ann Arbor

Stefan A Schirm is Professor of Political Science at the University of Bochum,

where he holds the Chair for International Relations Previously he taught atthe Universities of Munich and Stuttgart, was Research Associate at theInstitute for International Relations of the Stiftung Wissenschaft und Politik(SWP) and John F Kennedy Fellow at the Center for European Studies,Harvard University

Paul Sterzel is Researcher at the Chair for Comparative Politics at the

Ludwig-Maximilians-University Munich He studied political science, economics andhistory at the Universities of Freiburg (Germany) and Rennes (France)

Hubert Zimmermann is DAAD Visiting Associate Professor at Cornell

Uni-versity Previously he taught at the University of Bochum, worked as Editor

at the Institut fuer Zeitgeschichte (Bonn) and wrote his PhD at the EuropeanUniversity Institute, Florence

Reimut Zohlnhöfer is Assistant Professor at the Institute of Political Science at

the University of Heidelberg Previously he has worked at the Center forSocial Policy Research (Bremen) and was a John F Kennedy MemorialFellow at the Center for European Studies, Harvard University

xiv Contributors

This volume assesses the state of the art of political science research on nomic globalization Since globalization has been one of the core issues forpolitical science research in the last ten years, it seemed necessary as well aspromising to analyse its most important results The intention of this volume is

eco-to present the international state of the art of globalization research as well as thespecific expertise of the contributors in this book Therefore, nearly all chaptersfollow the same structure in dedicating their first part to the assessment of thetheoretical and empirical state of the art while exploring the projects andapproaches of the respective author in the second part With this double-edgedstructure the volume differs from most other publications, because it not onlyencompasses the cutting edge of the authors involved, but also systematicallyassesses the results of international political science research on core issues ofglobalization All chapters are characterized by theoretically guided empiricalanalysis Although certainly not all elements of globalization research are con-sidered to the same degree, this volume gathers the most important topics,approaches and results

This project started with a call for papers within the German political sciencecommunity Therefore, the authors of this volume come from Germany, buthave all spent part of their professional career abroad, mostly at American,British or Canadian universities The 15 papers selected originally among 30proposals submitted to the call, were presented, commented and discussed at abook-making workshop in November 2005 in Arnoldshain near Frankfurt I amgrateful to the Fritz-Thyssen Foundation for funding the workshop The authorsdeserve special compliments on thoroughly revising their papers in light of thecomments received and the participants for the productive and stimulating dis-cussions Routledge was immediately interested in the idea of assessing the state

of the art of research on globalization and has professionally embraced theproject I would like to thank the anonymous reviewer for valuable comments.Special thanks also go to Karsten Ronit for valuable comments on all papers and

to Gitta Lauster and Christa Landsberger for competently and enthusiasticallyhelping with editing and formatting the manuscripts

Stefan A Schirm

1 Analytical overview

State of the art of research on

globalization

Stefan A Schirm

1 Questions, hypotheses and theoretical approaches

Is the state being weakened by globalization? Does national economic policyconverge under the competitive pressure of globalization? Who is gaining orlosing from globalization, and why? For the last ten years, these questions havebeen in the focus of public debate and political science research Meanwhile,research has produced substantial empirical analyses on many aspects of global-ization, leading to a substantiation of some arguments and to a weakening ofothers While the coverage of globalization in the media is often still shaped byspecial interests and myths, political science has achieved cognitive progress inseveral instances These advances in political science research benefited fromeconomics and included several fields of political science, especially “inter-national relations”, “comparative politics” and “political economy” In view ofthe increasingly differentiated research on globalization, this volume attempts tosystematically present the core fields and results of research on globalizationfocusing on the advances made in the last ten years

The aim of this introductory chapter is to deliver a selective overview of themost important issues and results of research and to delineate the links betweenthe core topics This chapter does not attempt to introduce the following special-ized chapters, a task which is undertaken in each of these chapters Theoverview will be guided by three arguments First, research on globalization isincreasingly based on connecting the above-mentioned fields of political scienceinto “international political economy” (see Frieden and Lake 2000; Grieco andIkenberry 2003; Oately 2006; Schirm 2004a), thus leading to a partial integra-tion of formerly more separated approaches to the study of empirical questions.Second, research has been increasingly converging around an actor-centred andtheoretically guided approach to the empirical analysis of globalization Third,contrary to the dominant focus in the mid-1990s on the “weakening of thenation-state”, globalization research recently centres around the persistent roleand autonomy of national politics and institutions vis-à-vis globalization.Theoretical approaches to globalization are based on different claims in polit-ical science and often recur to economics and sociology One way to distinguishthe approaches is to focus on the theoretical role globalization plays as an

analytical variable Part of the studies conceptualizes globalization as a ent variable in analysing how power, ideas, institutions or interests cause and

depend-shape globalization These works employ such theories as neorealism, ism, constructivism and institutionalism In other parts of research, globalization

liberal-is conceptualized as an independent variable in the analysliberal-is, for example, of the

reform of the welfare state, of the convergence or divergence of national nomic policies and global economic governance Studies focus on the impact ofglobalization on the state, interest groups and societies and on the questions ongovernmental autonomy in economic policy making vis-à-vis global competi-tion These works are often guided by theories of the state, by institutionalism(“varieties of capitalism”), approaches from economics (trade theories etc.),societal norms (constructivism) and interests (liberalism)

eco-Another way to structure the multitude of theoretical approaches to tion is to examine the different cognitive goals pursued: (1) If the impact ofglobalization on state and society is to be explained, then globalization is mostlyanalysed as a structural, ideational or power-related phenomenon (2) If the –converging or diverging – reactions to globalization are to be analysed, thennational policy autonomy, interests, institutions and societal values build theexplicative focus (3) If multilateral forms of governing globalization (such asinternational organizations and global governance) shall be examined, then theo-ries are employed which focus on cooperation and conflict (such as neorealismand regime theory), on public-private-partnership-hypotheses, principal-agent-arguments and on the potential domestic causes (such as interests and norms) forthe foreign economic policy responses of governments These questions andarguments are often connected in such a dense way that they can hardly be sepa-rated clearly Most of today’s research is characterized by actor-centredapproaches, which emphasize the role of governments, international organi-zations, private business, non-governmental organizations and so on as thedriving or reacting forces vis-à-vis globalization Therefore, in large parts ofresearch, globalization is no more examined as an anonymous structure, as a

globaliza-“process without a subject” (Hay 2002: 379)

The theoretically guided analysis of empirical questions has increasingly efited from recurring to economics in the last years Authors such as Frankel,Frieden and Rogowski, Garrett, Hall and Soskice, Mosley, Swank and so on.integrate approaches from political science and economics reaching fromqualitative to quantitative methods (see also Chapters 7, 10 and 11) Recently,the question on the causes of our knowledge on and perception of globalization

ben-is also frequently examined Thben-is “ideational matter of globalization“ mond 2003: 669) is largely studied through discourse analyses, which focus onthe meanings attached to globalization beyond its empirically measurabledimensions and processes Normative approaches to research on globalization,which could often be observed in the mid-1990s, have ceded and given way toanalytical approaches Therefore, the precondition is now given to reach conclu-sions on the possibilities for the future governance of globalization based onplausible proof and reasoning on the causal implications globalization had so

(Rosa-2 Stefan A Schirm

far Summing up, research on globalization today shows a refreshing cognitivepragmatism by avoiding normative interpretations and pretentious postulates onthe superiority of single theories Instead, research focuses on the – often com-peting – uses of theoretical approaches in order to explain empirical puzzles.This chapter is structured as follows The next section delineates the dimen-sions and causes of globalization as well as the most important divisions on itsinterpretation I then turn to the interlinked core elements of research in the lastten years and to their theoretical conceptualizations as well as empirical find-ings: the debate on the convergence and divergence of national economic pol-icies, the question of a “weakening of the state”, a “race to the bottom” ofwelfare and environmental standards and the discussion about the advantagesand disadvantages of free trade for national economies and specific interestgroups These sections are followed by a short appraisal of research on thepossibilities of multilateral and private governance of the world economy Thechapter ends with conclusions on the perspectives for further research.

2 What is globalization?

The different definitions of globalization in the research community increasinglyconverge around a common understanding of globalization as an integration ofmarkets, a cross-border interconnectedness of economic spaces and thus a de-nationalization of economic processes Therefore, economic globalization shall

be defined here as the increasing share of private cross-border activities in the total economic output of countries With this basic definition, globalization can

be measured as the share of foreign trade, foreign direct investment and financialtransactions in the gross domestic product of a country or a region and as a share

in the world product This definition encompasses the magnitude and the opment of economic globalization beyond individual perceptions, non-economicaspects of transnationalization (such as culture) and political “globalization” (onglobal governance, see section 6) The data clearly show that the share of cross-border activities in national product(s) has risen considerably in the last decadesand therefore give empirical substance to the claim of an increasing integration

devel-of national economies (see Tables 1.1 and 1.2)

The numbers also show the limits of globalization (and the consequences ofthe stock market and regional financial crises for FDI flows after 2001).However, while the share of cross-border activities increased, the largest part of

Analytical overview 3

Table 1.1 Growth of world trade compared to world real GDP

World trade, volume 6.6 6.1 8.3

Source: IMF 2006: World Economic Outlook, Statistical Appendix, Washington, DC: 251 Online Available www.imf.org/external/pubs/ft/weo/2006/01/pdf/statappx.pdf (accessed 26.5.2006).

national product is still and persistently created and consumed within nationaleconomies It is also interesting to note that globalization possesses a regionalfocus, as more than two-thirds of world trade, foreign direct investment andfinancial transactions occur between the industrialized countries of the OECD(Organization for Economic Cooperation and Development) plus some emerg-ing economies such as Brazil and Malaysia (see Table 1.3) Therefore, accu-rately spelt, globalization is an “OECDization plus” The problem of manydeveloping countries seems not to be a negative impact of globalization butinstead, no impact at all because they are (nearly) not affected by globalization.Research shows a widespread consensus on the crucial role of governmentaldecisions regarding the causes of globalization Technical novelties such as theinternet, the containerization of trade and new financial instruments on stockmarkets doubtlessly eased the cross-border activities of private actors Butincreased globalization since the 1970s would not have been possible without thedecisions of national governments to liberalize world trade, to open financialmarkets and to de-regulate markets in general (on the causes of globalization seeGarrett 2000; Hirst and Thompson 1996: 1–98; Schirm 2002a: 33–56) Inter-national governmental organizations such as the World Trade Organization(WTO), its predecessor, the General Agreement on Tariffs and Trade (GATT)and the International Monetary Fund (IMF) played a decisive role for the reduc-tion of trade barriers and for the stabilization of growing financial flows (debt and

Source: UNCTAD 2005: World Investment Report 2005, Geneva: 14.

Table 1.3 Share of OECD countries in world trade and foreign direct investment

Source: Trade: own calculations based on data from OECD 2006: Main Economic Indicators,

in www.oecd.org/dataoecd/55/27/18628014.pdf (accessed 18 4 2006); FDI: own calculations based on data from OECD 2006: OECD Factbook: Economic, Environmental and Social Statistics, in: caliban.sourceoecd.org/vl=4285439/cl=19/nw=1/rpsv/factbook/data/11–02–01-t02.xls;caliban.sourceoecd org/vl=4285439/cl=19/nw=1/rpsv/factbook/data/11–02–01-t03.xls (accessed: 18.4.2006) and UNCTAD 2005: Handbook of Statistics, in: www.unctad.org/en/docs/tdstat30_enfr.pdf (accessed: 30.04.06).

investment) Therefore, globalization has been an intended process with whichthe involved governments aimed at stimulating national and worldwide growth.This strategy of liberalization corresponded to the change in the economic policyparadigm in the 1970s and 1980s in many industrialized countries away from(neo-)Keynesianism (see Gourevitch 1987; Hall 1987; Helleiner 1994: 123–68;Schirm 2002a: 57–101) In sum, globalization has been crucially a result ofdecisions made by democratically legitimized governments on the national leveland of agreements reached in international organizations, which were also domi-nantly influenced by the democratically legitimized governments of industrializedcountries Thus, liberalization can also be reversed, if voters wish it so.

Several positions mark the interpretation of the consequences of globalization(see the overviews in Drezner 2001; Held and McGrew 2000; Morton 2004;Rosamond 2003) They shall be subsumed under two groups in the following:

1 One group of authors argues that the state is weakened by globalizationbecause it is limited to its territory while the private actors of globalizationmove across borders and can thus evade the control of the state with moreease Susan Strange (1996: 65) articulates this position when stating thatTransnational Corporations (TNCs) increasingly possess a “parallel author-ity alongside governments in matters of economic management” KenichiOhmae (1995) even sees the “The End of the Nation State” and the “Rise ofRegional Economies” approaching According to Vincent Cable (1995), thestate is “diminished” by a “loss of economic power” These hypotheses of aweakening of the nation state dominated the debate in the 1990s

2 A second group of authors considers these arguments on the implications ofglobalization as exaggerated and sees the state as politically capable toshape globalization Daniel Drezner (2001: 78) concludes after a review ofempirical results of research on globalization that TNCs are embedded to ahigher degree in national political institutions than often claimed and thatstates can decide on the degree of adjustment to globalization: “globaliza-tion is not deterministic” Robert Wade had already opposed the argument

of a de-nationalization of the economy in 1996 and wrote: “reports of thedeath of the national economy are greatly exaggerated” Mosley (2000) andGarrett (1998b) acknowledge the pressure by global financial markets onthe state to conduct a stability- and world market-orientated policy, butobserve autonomy in other areas such as diverging policies with regard tothe use of governmental budgets and latitude for different party politics.After the analysis of several case studies, Linda Weiss concludes that glob-alization has indeed strengthened the relevance of political institutions forsocio-economic changes (Weiss 1998, 2003) Summing up, research is con-troversial as to the form of changes brought by globalization but agreesupon an increasing integration of national economies

Globalization constitutes a new challenge for the nation state insofar as itexposes national governments to changed costs and benefits for economic policy

Analytical overview 5

decisions These changes stimulate an adjustment to the expectations of globalmarkets in order to retain or attract increasingly mobile resources (Frieden andRogowski 1996; Garrett 1998a; Schirm 2002a: 33–56; Wolf 2004) With thisimpact, globalization as the growing share of cross-border activities in the totaleconomic product changes the conditions for governmental as well as privateactions States and companies compete more and on a global scale for compara-tive advantages and markets due to the increased mobility of capital, technologyand production This does not necessarily imply a weakening of the state Even

if governments lose influence on transnational actors, they are not necessarilyweakened with regard to basic tasks of the state such as the provision of suitableconditions for growth and wealth Obviously states can be affected by globalcompetition in different ways and to different degrees (see above)

With regard to the public interest in economic wealth and welfare, tion implies changing constraints for governments through a modification of thecosts and benefits of specific economic policies Economic success as a coreelement of a government’s chances for sustaining its power and for re-election isincreasingly dependent on a successful use of mobile resources Protectionistand interventionist policies seem to reach only suboptimal results in the long runcompared to approaches orientated towards the world market A combination ofexport-led growth and protectionism, like in China in the 1990s, links interven-tionism and world market orientation but seems to be viable only temporarilyand is subject to considerable pressures as the liberalizations show, which Chinahas been and still is undertaking in the course its membership of the WTO (seeSaich 2000) The connection between wealth and world market integration isunderlined by the fact that those countries which integrated most into the worldeconomy are also those with the highest level of wealth – the industrializedcountries At the same time, the countries showing a poor performance withregard to wealth are often those with a low degree of openness to world markets.This long-term correlation between the degree of participation in world markets

globaliza-in form of direct globaliza-investment, financial transactions as well as trade on the onehand and the level of wealth on the other is empirically substantiated in numer-ous studies on industrialized as well as developing and newly industrializingcountries (see e.g Frankel 2000; Oatley 2006: 366f; Wolf 2004: 143, 161;

Dollar and Kray 2001; The Economist 29 September 2001: 10–15) Thus, wealth

and growth seem to correlate positively with openness to world markets ously, this connection does not imply that all domestic groups in a given country

Obvi-benefit to the same degree The internal distribution of wealth and growth is

only partially driven by the form of a country’s global integration (see section5), but instead is predominantly shaped by the national distribution of politicalpower and by socio-economic structures These can be very asymmetrical, espe-cially in many newly industrializing and developing countries (see Chapter 9)

6 Stefan A Schirm

3 The debate on convergence and divergence

Research has reached a widespread consensus on the competition-enhancingeffects of globalization for states and companies First, companies have to adjust

to global competition if they wish to compete on world markets into which theirhome markets are increasingly integrated Second, states are also increasinglycompeting with each other on the world market for locational advantages forinvestment and production (see Cerny 2000; Garrett 1998a; Krugman and Obst-feld 2003) As globalization eases the cross-border movement of resources, theincentive for governments rises to adjust their economic policies to the expecta-tions of transnational actors in order to participate in the dynamics of the worldmarkets (Epstein 1996: 219) The hypothesis deriving from these implications ofglobalization is that economic policies will converge around a common (neo-)liberal paradigm (see Drezner 2001; Yamamura and Streeck 2003 and Chapter 2

in this volume) In fact, many industrialized and newly industrializing countrieshave shown a tendency towards stability-orientated liberalization and away fromthe formerly often dominant interventionist and (neo-) Keynesian policies.Examples of this tendency abound: beyond all differences, Margaret Thatcherand François Mitterrand were the front runners in turning away from (neo-)Keynesian recepies in Europe in the 1980s Tony Blair’s New Labour in GreatBritain and the socialist as well as the conservative governments in France con-tinued the market-orientated tendency in the last decade – obviously embedded

in different national institutional settings Mexico has been the front runner inliberalizing the former model of interventionist and protectionist industrializa-tion, followed by other countries such as Argentina and Brazil in Latin America

At the same time, considerable space for the divergence of national economicpolicies has been observed within this trend towards world market orientation(see Busch 2004: 90; Cox 2001; Drezner 2001; Lütz 2004; Scharpf and Schmidt2000) Clear differences in regulating labour markets, taxation and socialwelfare can be noticed when comparing western European countries WhileGreat Britain continued to be more liberal and the Netherlands as well asDenmark have restructured their welfare systems but maintained high socialsecurity levels, Germany has only moderately reformed recently A comparison

of the United States with continental European countries also shows persistentnational autonomy in choosing social and economic courses The trade barriers

in Europe and the US (for agricultural products, for instance) exemplify thatdomestic pressures by protectionist lobby groups can still be stronger than theincentives and pressures for liberalization set by globalization Thus, states donot have to adjust to globalization if they do not wish to do so and if they arewilling to bear the costs, such as higher price-levels for protected goods andpotentially less economic dynamic due to less competition

The causes of the persistent divergence of national economic and social icies and of the form of national reactions to globalization seem to be the institu-tions and norms given in the respective societies (see Hall and Soskice 2001;Holzinger and Knill 2005; Weiss 2003: 302f; Scharpf and Schmidt 2000;

pol-Analytical overview 7

Schirm 2002b) The body of literature dealing with these questions can be sumed under the rubric of “varieties of capitalism” “VoC” research concentrates

sub-on the diverging forms of regulating the ecsub-onomy by the government andpublic-private action in such policy fields as the labour market, the bankingsystem, education and public administration Another relevant topic is the ques-tion of whether trade unions and employer associations have an institutionalizedinfluence on economic development as they do in corporatist countries such asthe Netherlands and Germany In these “coordinated market economies”, theinterest of corporatist organizations in the status quo may prevail over the inter-est of, for example, the unemployed in liberalizing the conditions for dismissals,which may prevail in “liberal market economies” such as in Britain

Societal norms as collective expectations about appropriate behaviour by thegovernment also seem to have a strong influence on the form of political reactionstowards globalization If, for example, the norm of “collective solidarity” domi-nates over the norm of “individual responsibility”, then crisis-ridden companies canexpect governmental help to a higher degree than pressure to adjust to new circum-stances It is interesting to note that Denmark and the Netherlands reached funda-mental reforms through a re-definition of the societal norm of “solidarity” byadding the norm of “reciprocity” In these countries, the recipients of “collectivesolidarity” (transfer payments), such as the unemployed, have to show a higherdegree of “solidarity” with the society today in the form of, for example, socialwork, geographical mobility and lower levels of transfer payments (see Cox 2001).Thus, the differences between societal norms and institutions contribute to theunderstanding of persistent national divergence with regard to globalization.Another important endogenous determinant for national policies towards globaliza-tion is the partisan composition of governments Party politics matter with regard toliberalization because social democratic parties seem to be less prone to undertakethe first steps to liberalization than conservative parties (see Garrett 1998b; Kastnerand Rector 2005 and Chapter 3 in this volume) Summing up, empirical studies on

“varieties of capitalism” point at a tendency towards a convergence aroundstability-orientated liberalization but also emphasize persistent divergence concern-ing the regulation of specific policy areas among the countries of the OECD

4 Race to the bottom?

A large part of research on globalization empirically examines the hypothesisthat the state is weakened with regard to its ability to maintain specific standardsand social provisions The argument is that the government in industrializedcountries is forced to lower its share in total spending, leading to a reduction ofthe level of social spending and of environmental standards due to the increasedpressures from global competition with developing and newly industrializingcountries Both aspects have been widely studied and can meanwhile be evalu-ated in a more differentiated way Regarding the “strength” of the state in form

of its access to the financial resources of a given country, the share of the state intotal output has not diminished in the last decades (see Table 1.4)

8 Stefan A Schirm

Contrary to the hypothesis of falling levels of taxation and of the states’ share

in GDP, in Europe, the states with the highest taxes and the highest share ofgovernmental outlays in GDP were also among those with the highest degree ofopenness to world markets Denmark and Sweden are examples of this correla-tion In principle, global (financial) markets seem not to react negatively to theshare of the state in GDP but to budgetary deficits, because they tend to triggerinflation, which corrodes the value of financial assets (see Garrett 1998a; Mosley2000) From a different angle, Garrett and Mitchell (2001) show in an empiricalcomparison of OECD countries that increases in foreign trade and in opennesstowards global financial markets went hand in hand with lower levels of govern-mental expenditure However, spending for welfare provisions was not reduced

In addition, increased integration into global markets neither correlated with areduction of capital taxation, nor with a shift of taxation from capital to con-sumption Therefore, the hypothesis of a reduction of the states’ share in totalGNP and of levels of welfare spending was not substantiated by this studyeither Research on this subject does not show an overall clear picture In ananalysis of the respective literature, Genschel (2004: 633) concludes that neitherdoes welfare spending show a “race to the bottom” nor do persistent nationaldifferences mean that globalization does not have any effects at all

Research also points at another crucial feature of the welfare–competitivenessnexus: The competitiveness of nations apparently does not depend primarily onthe level of the states’ revenues or expenditures, but instead on their quality Thequestion is not whether or not there is “more” or “less” on the input-side, butwhether the state can perform more efficiently on the output-side of its activity.The reforms of the welfare state in Sweden, the Netherlands and Denmark areexamples of the compatibility of the redistributive-egalitarian thought of welfareand the liberal-individual basis of (global) competitiveness In these countries,reforms pursued the goal of increasing flexibility on the labour market and socialsecurity in order to boost competitiveness without weakening the welfare state

in its strategic substance (see Benner and Vad 2000; Cox 2001; Scharpf and

Schmidt 2000; The Economist – A Survey of the Netherlands, 4 May 2002).

Several studies conclude that welfare provisions often served as preconditionsfor the public acceptance of the structural change necessary for higher global

competitiveness (see Rieger and Leibfried 2003; Ruggie 1982; Swank 2003).The argument is that a country has to undertake structural reforms in order tobetter compete on world markets and that these reforms are politically moreacceptable if the “losers” of adjustment are compensated by transfer payments.Empirically, openness in trade and investment does not preclude high levels ofwelfare expenditures However, the increased mobility of capital leads to aneasing of tax evasion and might indeed trigger a shift in taxation away frommobile factors and towards immobile factors such as labour This raises ques-tions on fairness and legitimacy which could be answered, for example, withinthe European Union or the OECD by multilateral agreements on the taxation ofmobile capital in order to control evasion through mobility (on tax competition,see Chapter 4).

The second part of the “race to the bottom” hypothesis can not be confirmedempirically either: there was no substantial reduction of environmental andsocial standards in the industrialized world due to increased foreign trade and

investment (see Antweiler et al 2001; Drezner 2001; Rajan and Bird 2001: 12; The Economist Survey 29 September 2001: 24) A “race to the bottom” caused

by competition with countries which possess lower and therefore less costlystandards could mostly not be observed Instead, examples abound for thestrengthening of those standards in developing and newly industrializing coun-tries – reaching from the Kyoto Protocol over ILO-standards (InternationalLabour Organization) to the inclusion of social and environmental standards inthe multilateral negotiations of the WTO ever since the meeting in Seattle in

1999 (see Oately 2006: 363–81; Senghaas-Knobloch 2005; Ruloff 2002 andChapter 9 in this volume) Regional associations such as the European Union(EU) and the North American Free Trade Agreement (NAFTA) also includeenvironmental and social standards and contributed to different degrees tohigher standards in the less developed member states Both Mexico in the case

of NAFTA and the new eastern European members as well as Portugal, Spainand Greece in the case of the EU have higher standards today than before theireconomic opening and integration (see Hartmann 2005; LSE European Observa-tory on the Social Situation 2005) Thus, multilateral agreements have led to a

“race to the top” in these cases Obviously, these are spotlights on a generaltrend whose complete presentation would have to include exceptions and thedifferentiation between product- and production-related standards

Summing up, research on the “convergence-divergence” and the “race to thebottom” hypotheses shows that the state is not weakened by globalization in itsfundamental tasks, such as the provision of macroeconomic wealth Only whendefined as a (neo-) Keynesian state can it be considered as weakened by global-ization due to the limits to the efficiency of, for example, deficit spending set byglobal markets (see Garrett 1998a, 2000; Schirm 2002a) However, if the state isdefined in a more fundamental way as being responsible for the political frame-work for economic prosperity, then it might be able to perform even better onthis responsibility by more efficiently using the dynamics of globalizationthrough pursuing market liberalization and embedding it in welfare provisions

10 Stefan A Schirm

In order to pursue such a course, the state (the government) might have to come resistance by those groups which benefit from upholding the status quo.Thus, a “strong” state can also be defined as “a state, which can implement itsgoals against special interests in a given society” (Morisse-Schilbach 2005: 33).From this perspective, the state might even be strengthened by globalization –for example if liberalization and privatization induced by globalization reducesthe influence of special interests on the state and their grip on its resources.Another aspect in which globalization may stimulate a strengthening of the statefollowing the above definition are the incentives brought by global competition

over-to reform traditional (for example corporatist) structures A reduction of theinstitutionalized influence of trade unions and employer associations on eco-nomic policy can be observed in the process of labour market flexibilization.Another way to increase the autonomy of the government vis-à-vis special inter-ests is the transfer of regulative competences to independent regulatory agenciesfor markets which were formerly dominated by public companies and/or oligop-olies as, for instance, in some cases in telecommunication, post, railway andenergy markets (see Schirm 2001; Weiss 1998)

5 Interest groups, free trade and distribution

A major part of research on globalization deals with the question on who isaffected in which way by economic integration Specific policy areas and interestgroups are in the analytical focus here Like any other new economic develop-ment, globalization may lead to structural change and thus produces “winners”and “losers” Frieden and Rogowski argue that a liberalization of trade as an

“exogenous easing of international exchange” (1996: 26) leads to a higher neration of formerly abundant resources (such as capital in the industrializedcountries) and to a lower remuneration of formerly scarce resources (such

remu-as labour in industrialized countries) This further development of theStolper–Samuelson Theorem from economics allows analysis of the con-sequences of trade liberalization for the positions of politically relevant interestgroups and power structures in a given country (on trade theory, see Chapter 11).The share of employees and capital owners whose jobs and profits depend onthe competitive situation of their companies on the world market increased withthe growth of the share of foreign trade in total economic output In Germanyand the Netherlands, for example, the share of Exports in GDP rose from 27 percent (NL: 51 per cent) in 1980 to 33 per cent (NL: 67 per cent) in 2000 and 40per cent (NL: 71 per cent) in 2005.1The political interest of sectors producingcompetitive products and that are heavily involved in trade basically favours lib-eralization and world market orientated policies These sectors and the respec-tive interest groups structurally depend on easy access to cheap componentsfrom abroad for their production and on the openness of foreign markets, whichwould be jeopardized if their government raised trade barriers, because the nega-tively affected countries would probably retaliate with equally raising barriers

At the same time, it is in the structural interest of these sectors to further ease

Analytical overview 11

access to other markets, for example, through successful WTO negotiations Theeconomic and political relevancy of this “exporter group” increased with thegrowth of its share in total GNP and with its improved opportunities to transferproduction abroad This latter “exit option” and the pressure to compete onworld markets give transnational actors additional political power vis-à-vis gov-ernments (see Milner and Keohane 1996: 244; Schirm 2002a: 48–9) The “exitoption” and their cross-border way of operation can give TNCs more influence

on governments, as was often pointed out in the 1990s (see Strange 1996).According to more recent studies, this potential increase of the power of privatebusiness might have been exaggerated in the literature (see Chapter 7)

Structurally opposed to these positions is the interest of those companies orsectors involved in non-competitive production (Frieden and Rogowski 1996).This group is not interested in liberalization because its products are either nottraded internationally (“non-tradables”), such as local services, or because it fearsimports because its products are not competitive, as is the case in large parts ofEuropean agricultural and textile industries Therefore, governments see them-selves as exposed to opposite pressures by lobby groups when it comes to tradenegotiations Globalization partly eliminates the classical divide between employ-ers and employees because both sides increasingly share similar interests depend-ing on the competitive position of the respective sector or company This implies

a new challenge for corporatist organizations because they have to representdiverging interests – for example in Germany, the Union of Metal Workers (IGMetall) and the Association of Metal Employers (Arbeitgeberverband Gesamt-metall) both have to represent the interest of the export-orientated automotivecompanies and the interest of the protectionist steel-producing sector

The issue of the varying impact of globalization on sectors and interestgroups is one of the focal points in research and leads directly to trade theory(see Chapters 3, 10 and 11) In this field, approaches from political science andeconomics often interlink Results show empirically that trade liberalization ismostly beneficial on the aggregate because competition, mobility, division oflabour and innovation lead to a more efficient allocation of resources, which inturn allows production to occur at those sites where it is most cost-efficient (seeFrankel 2000: 59–63; Siebert 2003) The hypothesis is well known since DavidRicardo that the use of comparative advantage through free trade increases thewealth of nations New trade theory as in publications by Paul Krugmann(Krugman and Obstfeld 2003) and Jagdish Bhagwati (2004) develops on thesimplistic hypotheses of neoclassical approaches and explains why the largestpart of world trade today occurs between countries which produce similar prod-ucts (this is between industrialized countries) This form of trade is not driven bytraditional comparative advantages (like between developing and industrializedcountries) but instead by consumer preferences and economies of scale relevant

in intra-industry trade, as seen in the case of exports and imports of cars betweenGermany and France New trade theory also explains strategic trade policywhich might enhance wealth by directly or indirectly subsidizing national orregional champions such as Airbus in Europe and Boeing in the US

12 Stefan A Schirm

What trade theory has argued for a long time can also be observed within thecontext of globalization: there is a clear correlation between openness to tradeand the wealth of a nation (see above) This is only partially due to the above-mentioned static gains from free trade which occur through a more efficient allo-cation of resources and specialization In addition, wealth is stimulated bydynamic gains from competition and economies of scale, which allow lowerprice levels due to mass production and therefore lead to higher purchase power(see Krugman and Obstfeld 2003) New trade theory also explores the influence

of the political process (lobby groups, party competition) and political tions on trade policy, production and locational advantages Besides the “direct”production factors such as labour and capital, recent studies substantiate the rele-vance of political stability, educational systems, legal protection of economicactivity and governmental surveillance of fair competition (see the literature on

institu-“varieties of capitalism” above, on new institutional economics in Williamson

2000, and on institutions in developing countries in Chapter 9 of this volume).The lack of appropriate political institutions can lead to failed liberalizationwhich does not contribute to increasing wealth Examples of the relevance ofinstitutions are those developing countries which liberalized their financialmarkets without having appropriate institutions for controlling their banking andstock market systems and were thus often crisis prone (on the causes of thefinancial crisis in Asia and Latin America see Desai and Said 2004)

6 Global economic governance

One of the core topics of research on globalization has been the possibilities forgoverning the world markets The questions in this area focus on the role ofinternational economic organizations, on the influence of private business andnon-governmental organizations (NGOs) and on the relevance of public–privatepartnerships (PPPs) as new forms of governance The analysis of these actorsand processes with regard to their performance in shaping globalization consti-tutes the research field of “global economic governance” (see Schirm 2004b).Multilateral governmental organizations like the International MonetaryFund, the World Trade Organization and the World Bank have been studied for

a long time already and thus belong to the traditional body of research of ical science Analyses of regional cooperation such as the EU, NAFTA and theCommon Market of the South (Mercosur) also belong to the area of research onmultilateral economic cooperation between states With regard to the analysis ofglobalization in the last ten years, several studies examine questions on the con-tribution to and management of liberalization by multilateral organizations (see

polit-Bird 2003; O’Brien et al 2000; Shaffer 2005) Besides the performance of the

IMF, the WTO and the World Bank with regard to national and global economicdevelopments, a core issue of several studies is the democratic legitimacy of thisform of governance – a question also raised concerning NGOs (see below andScholte 2003) The question why international economic organizations have notimproved their capacity for more effective governance is only increasingly

Analytical overview 13

addressed by political scientists in the last years even though a necessity forreform became clear with the financial crises and trade disputes in the 1990s Inexplaining the lack of reform, analyses focus, for example, on the divergence ofgovernmental positions towards global governance based on different societalnorms and interests (see Schirm 2005) For a better management of economiccrises and conflicts, an explicit dialogue on diverging national attitudes on therole of the state vis-à-vis the economy (“arguing”) seems as decisive as do moreefficient mechanisms to balance diverging material interests (“bargaining”).Research shows a growing consensus towards the necessity of a better politicalarchitecture for the world economy due to the widely acknowledged empiricalrelevance of economic crises (see Drezner 2003; Higgott 2004: 9; Rodrik 2000and Chapter 5 in this volume).

Regional integration as “regional economic governance” plays a crucial rolefor research on globalization insofar as it allows the observation of liberalizationprocesses as well as their political management on a geographically smaller butoften economically deeper scale than on the global level (on regionalism, seeKatzenstein 2005) In addition, foreign trade and investment occur to a very highpercentage within and among regional groupings For example, intra-EU tradewas two-thirds of total member state trade between 1995 and 2005 and intra-EUFDI was 70 per cent of all FDI by member states in 2004 (European Communit-ies 2005; Eurostat 2006) Thus, a part of the large body of research on regional-ism (especially large on the EU) deals with the same questions as do parts ofresearch on globalization A direct connection between both levels of integrationcan be observed in studies on the question whether regionalism constitutes a

“building block” (because of its liberalizations) or a “stumbling stone” (because

of the discrimination against non-members) for globalization (see Chapter 10 inthis volume and the review in Nesadurai 2002) In sum, regional cooperationseems to have made an important contribution with regard to economic liberal-ization: The European Single Market, as well as NAFTA and Mercosur trig-gered the economic efficiency and the political acceptability of nationaleconomic reforms by embedding them in multilateral agreements and “tying thehands” of national governments (see Schirm 2002a; Spindler 2004) Thus, theregional cooperation of the liberal type (“open regionalism”) of the 1990s can beconsidered a “building block” for globalization

Several studies have been conducted on the influence of private actors – ness and NGOs – on global economic governance One focus of research hasbeen the hypothesis that TNCs have gained power and autonomy vis-à-vis thestate in governing economic processes and increasingly evade governmentalcontrol While this hypothesis dominated in the 1990s, recent studies show amore differentiated picture of the structural, ideational and material power ofprivate business, emphasizing the interdependence between states and TNCs(see Chapter 7) New governmental instruments for the governance of increas-ingly transnational private actors and their legitimacy as well as efficiency havealso been at the core of research One of the most prominent topics was thestudy of a possible tax on currency and stock market transactions in order to

busi-14 Stefan A Schirm

prevent or slow down speculative movements – a measure with doubtful ibility (on the so-called “Tobin Tax” see Palma 2004).

feas-A stronger participation of non-governmental organizations in global nomic governance was considered in parts of the literature as an appropriatemeans to compensate for the supposedly weakened capability of governments togovern globalization Including civil society groups such as transnationalenvironmental organizations, unions and human rights groups into global gover-nance mechanisms, promised to increase the efficiency and the legitimacy of

eco-governance beyond the nation state (see Cuttler et al 1999; Scholte 2003) The

capacity of these NGOs to set agendas, to mobilize public opinion and to lish direct contact to affected parts of the society (“grass roots”-approach) con-tributed to the emergence of NGOs as influential actors in the last ten years.While their issue-specific competence and societal embeddedness was oftenassessed positively, the thematical one-sidedness and lack of inner-organi-zational democracy and transparency is seen in contrast to the ability of democ-ratically elected governments to pursue a broadly legitimized balancing ofinterests (see Chapter 8)

estab-An important part of research on global economic governance examines thepossibilities for governing globalization through private actors andpublic–private partnerships In analysing rule making by private business,several authors have focused on the increasing relevance of rating agencies such

as Moody’s and Standard and Poor in evaluating the creditworthiness of privateactors as well as states (see Sinclair 2005) These forms of private governancepartly seem very efficient but lack democratic legitimacy (see Pauly 2002; Halland Biersteker 2002) A solution for this dilemma might be reached with PPPs,which are characterized by the participation of private as well as governmentalactors An often-studied example is the UN Global Compact, which aims at self-binding TNCs under UN guidance, for example to invest only in countrieswhich sustain certain minimum standards for human rights and environmentalprotection (see Rieth 2004 and Chapter 8 in this volume) Research on trans-national regimes and PPPs has progressed quite far, for example on geneticallymodified food, the internet and taxation of intra-firm trade, and leads to the con-clusion that the state’s capacity is indeed transformed by globalization but thatits ability to govern has not been reduced fundamentally, if new intergovern-mental and public–private mechanisms for governing globalization are takeninto account (see Chapter 6)

7 Perspectives for globalization research

In the last ten years, political science research on globalization has been terized mainly by actor-centred and theoretically guided empirical analyses,which often crossed the boundaries between the fields of political science such

charac-as comparative politics, international relations and political economy withregard to the theories employed and the topics studied Thus, the investigation ofglobal economic integration has triggerd an increasing integration of political

Analytical overview 15

science fields After having focused on the “weakening of the state” in the1990s, empirical studies have recently come to the widespread conclusion thatnational policies and institutions continue to have autonomy and capacitytowards globalization Policies, politics and circumstances changed under theinfluence of globalization but the state is not fundamentally weakened and con-tinues to be able to shape the world economy, although increasingly in coopera-tion with other states and non-state actors With these features of globalizationresearch confirmed, the three arguments from the first section of this chaptercould be substantiated.

Thus, globalization research has made considerable cognitive progress pared to some aspects of the state of the art of the mid-1990s, but also showsseveral explorable fields for future research First, it would be worthwhile trying

com-to systematically link the various theoretical approaches incom-to a “theory of ization” This task is certainly tricky because the variety of approaches has notprecluded research to advance on the subjects studied in the last decade There-fore, a combination or even synthesis of theoretical approaches must be donewithout narrowing down and simplifying at the expense of their explanatorypower This would be counterproductive Second, several specific issue areas arestill especially in need of research While the impact of globalization seemswidely studied, the possibilities and obstacles to shape and govern globalizationstill offer questions in need of theoretically informed empirical answers In thisregard, the conceptualization of the efficiency and legitimacy of public andprivate forms of governance will be crucially dependent on assumptions aboutthe role of politics in the economy and about the interaction between individualfreedom and collective solidarity It seems important to include these basic polit-ical questions without leaving analysis in favour of normative postulates Soci-etal attitudes in the affected countries are not static but also changed in the lastdecade and should therefore equally be included in the analysis

global-With regard to its position within political science, globalization research issituated “right in the middle”, for example in the rationalism–constructivismdebate, in examining the changing role of the state, in investigating the power ofinstitutions, in the opening of the “black box” of the state by analysing endoge-nous causes for foreign economic policy positions of governments and, last butnot least, in conceptualizing and analysing changes in the form and distribution

of power on the national, international and transnational levels Continuinginterdisciplinary work also bears interesting perspectives for the future research

on globalization Systematically further connecting political science fields seems

as promising as using approaches from sociology (for instance in “cosmopolitanpolitical science”, see Beck and Grande 2004; Grande 2006) and from eco-nomics (for instance “new institutional economics”, see Williamson 2000) Thelast ten years have shown that not only did theoretically guided empirical analy-ses contribute to increasing our knowledge about globalization, but also interdis-ciplinary work within and beyond political science

16 Stefan A Schirm

1 Eurostat 2006: europa.eu.int/comm/eurostat.com (accessed 23 April 2006), data for Germany: own calculations based on Statistisches Bundesamt: Verwendung des Brut- toinlandproduktes, in: www.destatis.de/indicators/d/lrvgr02ad.htm (accessed 20 April 2006).

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Analytical overview 21

2 The development of the debate

Intellectual precursors and selected

decade-to cultural diversity presented by global media power and decade-tourism – all this ismentioned in one breath with “globalization”, even if that link is often more one

of mashing things together than of providing proper explanations

Given how often it is used, it is perhaps less surprising that the term is alsohotly contested While some have called it a “key concept” for analysing thepresent social and political condition, to others it seems a myth; and yet againothers ask for the justification of “globalization” if developments and change inreality vary quite a lot around the globe We might also be surprised to find thatthere is no agreement on the definition of what constitutes globalization Someexamples may serve to illustrate this:

Globalization, simply put, denotes the expanding scale, growing magnitude,speeding up and deepening impact of transcontinental flows and patterns ofsocial interaction

activ-their technological and organisational advantages, and reduce business costsand risks Underlying the international expansion of firms, and in partdriven by it, are technological advances, the liberalisation of markets andincreased mobility of production factors.

(OECD 1996: 9)

A social process in which the constraints of geography on social and tural arrangements recede and in which people become increasingly awarethat they are receding

cul-(Waters 1995: 3)Globalization, we can conclude, is no clearly defined concept, and, as theaforementioned examples demonstrate, its use varies from concentration onspecifically economic phenomena to very general social effects on a globalscale Beyond the very general insight that globalization denotes a continuingprocess of accelerated and deepened social interaction on a global scale betweenformerly politically independent units (from which mutual influence follows),little agreement exists concerning the characteristics of globalization Whether itconstitutes a process of a historically new quality or not; whether states caused it

or whether markets are the dominant actors; whether the economic, the social orthe political sphere is the main area of concern; whether it is a development to

be applauded or to be contested – all these questions remained unanswered.While this may initially be a cause for puzzlement to the uninitiated, the lack

of a generally accepted definition can also be regarded as a precondition for theastonishing success and the career of the term globalization For it allows count-less actors and positions a common, if vague, point of reference Throughoutacademia, scholars from a huge variety of subjects have therefore contributed tothe debate on globalization, especially from the areas of:

• international relations (e.g Clark 1999; Lawson 2002),

• comparative political economy (e.g Berger and Dore 1996; Garrett 1998),

• international political economy (e.g Strange 1986; Schirm 2002),

• political theory (e.g Gray 1998; Kagarlitsky and Clarke 1999),

• sociology (e.g Waters 1995; Goldthorpe 2002) and

• economics (e.g Rodrik 1997; Glyn 2006)

The astonishing productivity of this debate has produced a remarkable output ofprinted matter which seems to justify calling it an academic growth industry Thelist put forward here is exhaustive neither with regard to authors nor to subjects.Besides the various facets of social scientists, philosophers, geographers, lawyers,management theorists and historians have contributed to the discussion of global-ization (see further references in Busch 2003: 5ff.) As Figure 2.1 demonstrates,book and article publications discussing globalization show a steep upwards trendover the last 15 years, and only recently seem to stabilize on a high level – at(according to the database used) about 1,000 to 1,200 publications per year.2

The development of the debate 23