《国际政治经济学》文献资料（Political Economy of Regionalization and Globalization）The Causes of Globalization.pdf_P6-P10

Garrett CAUSES OF GLOBALIZATION 945 market integration or that international institutions may mitigate these prob- lems.But I am skeptical that this Alexrod-Keohane paradigm gives us much leverage over the big picture of the contemporary trend to globalization.It would be hard to make the case with respect to the liberalization of interna- tional finance and the multinationalization of production-simply because policy liberalization in these areas has not required international cooperation or international institutions (i.e.,the evidence suggests that they are not inter- national prisoner's dilemmas or even coordination games). The prima facie case for the importance of international institutions is stronger with respect to trade integration.The WTO,North American Free Trade Agreement(NAFTA),and the EU all contain mechanisms for generat- ing common standards and policing free riding.To argue that these institu- tions caused trade integration,however,one would have to contend (implau- sibly,in my opinion)that they were truly innovative-that is,representing radically new technologies for dealing with the problems of cooperation that were heretofore unavailable.It seems more reasonable to contend that prefer- ence convergence among participating governments was a precondition for the effectiveness of these institutional solutions (Goldstein,1997; Moravcsik,1998).Thus,we should focus on explaining why this conver- gence in preferences occurred. The comparative politics objection to my approach is very different.Not- withstanding the secular trend of ever-greater market integration,there clearly still are ins and outs in the putative global economy.For globalization pundits,these differences may be merely ephemeral bumps that will soon be smoothed over on the road to a truly seamless global marketplace. Comparativists are likely to demur,arguing that cross-national variations in international market integration are sticky and well worth exploring in their own right. This move to assaying cross-national differences in market integration is important,but in my judgment it is a second-order move that should follow analysis of the broader,over-time trend to more integration.A good portion of the cross-national variation in international integration is certainly explained by essentially unalterable features of countries,such as their size and geographic location.There are also well-developed theoretical approaches to the problem that emphasize the impact of a country's eco- nomic structure on societal preferences and coalitions(Frieden Rogowski, 1996)and the role of political institutions ranging from trade unions to con- stitutional systems (Garrett Lange,1995). I offer a brief analysis of these perspectives with respect to three promi- nent classes of variables:levels of development,the extent of democracy,and the balance of power between the left and right.The strongest result is that Dowrloaded from http://cps.sagepub.com at CORNELL UNIV on February 11.2008 2000 SAGE Publications.All rights reserved.Not for commercial use or unauthorized distribution

market integration or that international institutions may mitigate these problems. But I am skeptical that this Alexrod-Keohane paradigm gives us much leverage over the big picture of the contemporary trend to globalization. It would be hard to make the case with respect to the liberalization of international finance and the multinationalization of production—simply because policy liberalization in these areas has not required international cooperation or international institutions (i.e., the evidence suggests that they are not international prisoner’s dilemmas or even coordination games). The prima facie case for the importance of international institutions is stronger with respect to trade integration. The WTO, North American Free Trade Agreement (NAFTA), and the EU all contain mechanisms for generating common standards and policing free riding. To argue that these institutions caused trade integration, however, one would have to contend (implausibly, in my opinion) that they were truly innovative—that is, representing radically new technologies for dealing with the problems of cooperation that were heretofore unavailable. It seems more reasonable to contend that preference convergence among participating governments was a precondition for the effectiveness of these institutional solutions (Goldstein, 1997; Moravcsik, 1998). Thus, we should focus on explaining why this convergence in preferences occurred. The comparative politics objection to my approach is very different. Notwithstanding the secular trend of ever-greater market integration, there clearly still are ins and outs in the putative global economy. For globalization pundits, these differences may be merely ephemeral bumps that will soon be smoothed over on the road to a truly seamless global marketplace. Comparativists are likely to demur, arguing that cross-national variations in international market integration are sticky and well worth exploring in their own right. This move to assaying cross-national differences in market integration is important, but in my judgment it is a second-order move that should follow analysis of the broader, over-time trend to more integration. A good portion of the cross-national variation in international integration is certainly explained by essentially unalterable features of countries, such as their size and geographic location. There are also well-developed theoretical approaches to the problem that emphasize the impact of a country’s economic structure on societal preferences and coalitions (Frieden & Rogowski, 1996) and the role of political institutions ranging from trade unions to constitutional systems (Garrett & Lange, 1995). I offer a brief analysis of these perspectives with respect to three prominent classes of variables: levels of development, the extent of democracy, and the balance of power between the left and right. The strongest result is that Garrett / CAUSES OF GLOBALIZATION 945 © 2000 SAGE Publications. All rights reserved. Not for commercial use or unauthorized distribution. Downloaded from http://cps.sagepub.com at CORNELL UNIV on February 11, 2008

946 COMPARATIVE POLITICAL STUDIES/August-September 2000 countries at higher levels of development are more likely to open their bor- ders to the international economy,which can be easily explained from a Frieden-Rogowski perspective.Of course,if growth economists are right that differences in levels of development must diminish over time("conditional convergence"),this implies that cross-national variations in market integra- tion will diminish over time.The debate would then move on to how long this might take. The remainder of this article explores in more detail the causes of the secu- lar trend to more globalized markets in recent decades and of persistent cross-national differences in participation in the global economy.The first section lays the foundation for my analysis by describing the landscape with respect to international economic movements of trade and capital and to gov- ernment policies concerning these flows.The second section discusses the case for the proposition that contemporary globalization is nothing new.The merits of a technological determinist perspective on market integration are assessed in the third section.The fourth section addresses the issue of whether the opportunity costs of closure have risen in recent years.The fifth section explores the causes and consequences of ideological shifts in favor of liberalization.The sixth section then changes gears to focus on the reasons for enduring cross-national differences in market integration.The final sec- tion briefly summarizes what we know about the causes of globalization and sketches the implications of this article for analyses of the consequences of globalization. THE PARAMETERS OF CONTEMPORARY GLOBALIZATION No matter how many different numbers are presented or how frequently one hears them,the growth of international economic activity in the past 30 years remains staggering.Figure I plots the growth of global flows in trade, foreign direct investment,and international portfolio investment (equities and bonds).Although the scales for trade and capital are very different,the trend lines are similar and familiar.International economic activity grew at increasingly rapid rates over the period,and the rates of growth were faster in more liquid markets(foreign exchange>portfolio>FDI>trade).3 In 1970, exports plus imports constituted roughly one quarter of worldwide gross 3.Global foreign exchange transactions increased fully 50-fold between 1980 and 1998 to reach $2trillion perday ("Finance,"1999,p.91:"Meddling."1999,p.96).Thisoutstrips the for- eign exchange reserves of all the Organization of Economic Cooperation Development(OECD) countries combined.The world gross domestic product(GDP)in 1997 was approximately $34 trillion. Dowrloaded from http://cps.sagepub.com at CORNELL UNIV on February 11.2008 2000 SAGE Publications.All rights reserved.Not for commercial use or unauthorized distribution

countries at higher levels of development are more likely to open their borders to the international economy, which can be easily explained from a Frieden-Rogowski perspective. Of course, if growth economists are right that differences in levels of development must diminish over time (“conditional convergence”), this implies that cross-national variations in market integration will diminish over time. The debate would then move on to how long this might take. The remainder of this article explores in more detail the causes of the secular trend to more globalized markets in recent decades and of persistent cross-national differences in participation in the global economy. The first section lays the foundation for my analysis by describing the landscape with respect to international economic movements of trade and capital and to government policies concerning these flows. The second section discusses the case for the proposition that contemporary globalization is nothing new. The merits of a technological determinist perspective on market integration are assessed in the third section. The fourth section addresses the issue of whether the opportunity costs of closure have risen in recent years. The fifth section explores the causes and consequences of ideological shifts in favor of liberalization. The sixth section then changes gears to focus on the reasons for enduring cross-national differences in market integration. The final section briefly summarizes what we know about the causes of globalization and sketches the implications of this article for analyses of the consequences of globalization. THE PARAMETERS OF CONTEMPORARY GLOBALIZATION No matter how many different numbers are presented or how frequently one hears them, the growth of international economic activity in the past 30 years remains staggering. Figure 1 plots the growth of global flows in trade, foreign direct investment, and international portfolio investment (equities and bonds). Although the scales for trade and capital are very different, the trend lines are similar and familiar. International economic activity grew at increasingly rapid rates over the period, and the rates of growth were faster in more liquid markets (foreign exchange portfolio FDI trade).3 In 1970, exports plus imports constituted roughly one quarter of worldwide gross 946 COMPARATIVE POLITICAL STUDIES / August-September 2000 3. Global foreign exchange transactions increased fully 50-fold between 1980 and 1998 to reach $2 trillion per day (“Finance,” 1999, p. 91; “Meddling,” 1999, p. 96). This outstrips the foreign exchange reserves of all the Organization of Economic Cooperation Development (OECD) countries combined. The world gross domestic product (GDP) in 1997 was approximately $34 trillion. © 2000 SAGE Publications. All rights reserved. Not for commercial use or unauthorized distribution. Downloaded from http://cps.sagepub.com at CORNELL UNIV on February 11, 2008

Garrett CAUSES OF GLOBALIZATION 949 Figure 3 reveals a similar pattern with respect to international capital flows(combined portfolio and FDI)and the portion of countries in the world with open capital accounts (i.e.,no significant restrictions on cross-border capital movements according to the IMF).4 There is,however,one interesting divergence in these trends evident in the figure.International capital flows took off in the mid-1980s(fueled largely by mushrooming portfolio flows), with a brief blip down during the international recession at the end of the decade.But the trend to open capital accounts postdates the takeoff in capital flows by about 5 years-it was only in the 1990s that countries in large num- bers opened their capital accounts.3 This suggests that flows preceded policy change,consistent with the technological determinism thesis.5 As Rodrik(2000)and Wade(1996)have emphasized,one should not con- clude from the steep growth curves on international economic flows and pol- icy liberalization that a truly seamless worldwide market is emerging.Table 1 summarizes flows and policy data for all the countries for which data are available in the 1990s(see the appendix for the national-level data).?The first thing to note about this table is that the standard deviations for the different measures of globalization on the whole world sample (the bottom panel) were typically larger than the means on these variables,implying consider- able cross-national variation in market integration.The coefficient of varia- tion (i.e.,standard deviation/mean)was in fact only substantially less than one for trade flows.The variations in trade taxes may seem surprising given 4.International economists are quick to point out that increased international capital flows are not necessarily indicative of capital market integration (i.e.,the absence of obstacles to inter- national capital flows).But there is no consensus as to the extent to which capital markets are integrated these days.Feldstein and Horioka (1980)argued in a seminal paper that because national savings drove national investment in the 1970s OECD countries,there must have been considerable barriers to international capital movements.This result has been replicated many times (with some modifications)in the subsequent two decades.Frankel(1993)and Marston (1995).in contrast,use the relevant (covered)interest rate comparisons to argue precisely the opposite-that OECD capital markets were highly integrated by the late 1980s.Extending these analyses outside the OECD is fraught with difficulty,and preliminary results are inconclusive (Montiel.1995). 5.Though systematic data are not readily available,this liberalization trend in the 1990s is also apparent with respect to the regulation of foreign direct investment.For example,United Nations Conference on Trade and Development (UNCTAD)reported that in the 1991-1994 period there were 373 significant changes in foreign direct investment(FDI)regulations enacted in countries throughout the world,and all but 5 of these were in the direction of fewer restrictions on inflows and outflows (UNCTAD,1995,p.xx). 6.Also note that even in 1997.more than half the countries in the world still imposed signif- icant restrictions on the capital account. 7.Note that these means are unweighted averages for all countries.Hence,the flows data are not comparable with the global flows statistics reported in Figure 1. Dowrloaded from http://cps.sagepub.com at CORNELL UNIV on February 11.2008 2000 SAGE Publications.All rights reserved.Not for commercial use or unauthorized distribution

Figure 3 reveals a similar pattern with respect to international capital flows (combined portfolio and FDI) and the portion of countries in the world with open capital accounts (i.e., no significant restrictions on cross-border capital movements according to the IMF).4 There is, however, one interesting divergence in these trends evident in the figure. International capital flows took off in the mid-1980s (fueled largely by mushrooming portfolio flows), with a brief blip down during the international recession at the end of the decade. But the trend to open capital accounts postdates the takeoff in capital flows by about 5 years—it was only in the 1990s that countries in large numbers opened their capital accounts.5 This suggests that flows preceded policy change, consistent with the technological determinism thesis.6 As Rodrik (2000) and Wade (1996) have emphasized, one should not conclude from the steep growth curves on international economic flows and policy liberalization that a truly seamless worldwide market is emerging. Table 1 summarizes flows and policy data for all the countries for which data are available in the 1990s (see the appendix for the national-level data).7 The first thing to note about this table is that the standard deviations for the different measures of globalization on the whole world sample (the bottom panel) were typically larger than the means on these variables, implying considerable cross-national variation in market integration. The coefficient of variation (i.e., standard deviation/mean) was in fact only substantially less than one for trade flows. The variations in trade taxes may seem surprising given Garrett / CAUSES OF GLOBALIZATION 949 4. International economists are quick to point out that increased international capital flows are not necessarily indicative of capital market integration (i.e., the absence of obstacles to international capital flows). But there is no consensus as to the extent to which capital markets are integrated these days. Feldstein and Horioka (1980) argued in a seminal paper that because national savings drove national investment in the 1970s OECD countries, there must have been considerable barriers to international capital movements. This result has been replicated many times (with some modifications) in the subsequent two decades. Frankel (1993) and Marston (1995), in contrast, use the relevant (covered) interest rate comparisons to argue precisely the opposite—that OECD capital markets were highly integrated by the late 1980s. Extending these analyses outside the OECD is fraught with difficulty, and preliminary results are inconclusive (Montiel, 1995). 5. Though systematic data are not readily available, this liberalization trend in the 1990s is also apparent with respect to the regulation of foreign direct investment. For example, United Nations Conference on Trade and Development (UNCTAD) reported that in the 1991-1994 period there were 373 significant changes in foreign direct investment (FDI) regulations enacted in countries throughout the world, and all but 5 of these were in the direction of fewer restrictions on inflows and outflows (UNCTAD, 1995, p. xx). 6. Also note that even in 1997, more than half the countries in the world still imposed significant restrictions on the capital account. 7. Note that these means are unweighted averages for all countries. Hence, the flows data are not comparable with the global flows statistics reported in Figure 1. © 2000 SAGE Publications. All rights reserved. Not for commercial use or unauthorized distribution. Downloaded from http://cps.sagepub.com at CORNELL UNIV on February 11, 2008