2012 Conference

Political Survival in a Global Economy

GSPIA will host its 2012 International Political Economy Colloquium at 9:00 a.m. - noon, Thurs. March 22 in the William Pitt Union, Lower Lounge.  Guest lecturers include professors Dr. Pablo M. Pinto and Dr. Yotam Margalit from Columbia University, and Dr. Megumi Naoi from University of California, San Diego.

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Yotam Margalit will present “Sharing the Pain: Social Disposition, Self-interest, and Mass Support for International Financial Bailouts.”

In the face of growing potential for sovereign defaults, several euro-zone countries have decided to contribute massive sums to bail out struggling EU economies. Why do voters agree to bear the costs of bailing out other countries? Despite the prominent role of public opinion in the ongoing debate in Europe, extant research offers little empirical insight about the factors that underlie attitudes towards contributions to international bailouts. This paper studies individual preferences regarding bailouts among voters in Germany, the country shouldering the largest share of the EU's financial rescue fund. We conducted two large-scale national studies that provide both observational and experimental data to test competing explanations for differences in citizens' attitudes. We find that while the economic features of the bailout package itself strongly affect citizens' willingness to support the transfers, individuals' own economic standing has very little explanatory power in accounting for their position on the bailouts. In contrast, traits such altruism and cosmopolitanism are robustly associated with support for the bailouts. We assess the implications of these findings for understanding the ongoing debate over the bailouts as well as for broader research on the formation of economic policy preferences.

Megumi Naoi will present “Surviving Globalization: Building an Open Economy Coalition Without Welfare States.”

How do governments unilaterally reduce barriers to foreign trade and investment?  Unilateral liberalization has been a pervasive feature of the post-War world economy, yet still very little is known about the domestic political conditions under which it occurs.  In particular, post-War unilateral liberalization is a puzzle in light of two conventional wisdom – one emphasizes the role of reciprocal international agreements in empowering exporters (Gilligan 1997) and the other underscores the importance of the expansion of welfare states to “buy off” losers’ support (i.e., compromise of embedded liberalism)(Ruggie 1982).   The bulk of post-War unilateral liberalization, however, occurred in countries without large welfare states, most prominently in Asia. 

This book project examines this question with a focus on two parliamentary economies with similar electoral systems that achieved drastic reductions of trade and investment barriers unilaterally: Japan and Thailand.  I argue that even in the absence of welfare state expansion, party leaders can build an open economy coalition by targeting side-payments to legislators who are fence-sitting on liberalization, in the form of pork barrel projects and personnel appointments.  I demonstrate that the distribution of side-payments in these two economies was based on the political needs of the party or legislators in power for the majority coalition-building, and was not based on the sheer needs of industries that were hurt by liberalization. The prediction differs from the widely claimed and tested “compensation hypothesis,” which predicts that big net losers of globalization, when they are sufficiently well-organized, obtain compensation.

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