Economic Globalization,International Organizationsand Crisis Management

Springer-Verlag Berlin Heidelberg GmbH

Richard Tilly . Paul J. J. Welfens (Eds.)

Economic Globalization, International Organizations and Crisis Management Contemporary and Historical Perspectives on Growth, Impact and Evolution of Major Organizations in an Interdependent World

With 11 Figures and 20 rabIes

i Springer

Praf. Dr. Richard Tilly University of Miinster Institute for Economic- and Socialhistory Spiekerhof 40 48143 Miinster Germany

Prof. Dr. Paul J.J. Welfens University of Potsdam European Institute for International Economic Relations (EIIW) August-Bebel-Str. 89 14482 Potsdam Germany http://www.euroeiiw.de

ISBN 978-3-642-63010-1

Library of Congress Cataloging-in-Publication Data Die Deutsche Bibliothek - CIP-Einheitsaufnahme Economic Globalization, International Organizations and Crisis Management: with 20 tablesl R. Tilly, P.J.J. Welfens (eds.). - Berlin; Heidelberg; New York; Barcelona; Hong Kong; London; Milan; Paris; Singapore; Tokyo: Springer, 2000

ISBN 978-3-642-63010-1 ISBN 978-3-642-57110-7 (eBook)DOI 10.1007/978-3-642-57110-7

This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of trans1ation, reprinting, reuse of illustrations, recitation. broadcasting. reproduction on microfilm or in any other way. and storage in data banks. Duplication of this publication or parts thereof is permitted on1y under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law.

© Springer-Verlag Berlin Heidelberg 2000 Origina1ly published by Springer-Verlag Berlin Heidelberg New York in 2000 Softcover reprint of the hardcover l st edition 2000

The use of general descriptive names, registered names. trademarks, etc. in this publication does not imply. even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

Hardcover-Design: Erich Kirchner, Heidelberg

SPIN 10724096 43/2202-5 4 3 2 1 O - Printed on acid-free paper

This conference volume is dedicated to the late

Wolfgang Rieke

who was a leading economist at the Deutsche Bundesbank for many years. Herepresented the wisdom ofthe Deutsche Bundesbank on many occassions and hisopen critical mind enriched the discussions and deliberations of many meetings

and conferences. Wolfgang Rieke did much to further our understanding ofinternational monetary problems and issues of cooperation.

His voice will be missed.

Richard Tilly and Paul JJ Welfens

Table of Contents

Introduction

Richard Tilly and Paul J.J. Welfens

I. Early Internationalization and Present Policy Coordination

1

A. Globalization of the Economy and International Organizations:

Developments, Issues and Policy Options for Reform 13

Paul J.J. Welfens

1. Introduction 132. Internationalization of the Economy 16

2.1 Rising International Trade 172.2 The Increasing Role of Foregin Direct Investment

and Portfolio Investment 192.3 Global Telecoms Networks and New Communication

Technologies 222.4 Increasing High Technology Competition 232.5 Multinational Companies: Regional Concentration

and Issues of Innovation 242.6 Theory of Globalization: Trade and Growth Theory in a

Technological Perspective with FDI 283. Organizational Moral Hazard, Efficiency and Stability Problems

in the World 343.1 International Organizations in Historical Perspective 363.2 International Organizations as an Insurance 383.3 Efficiency and Stability Problems in the World Economy 39

3.3.1 International Crisis Management:The IMF's Medicine for Asia and Russia 43

3.3.2 Economic Stability Aspects 493.4 New Issues in International Economic Relations: Liberalization

ofTelecommunication, Green Problems and Social Standards 534. International Organizations and Sustainable Globalization 55

4.1 Towards an 1-7 Meeting 564.2 Normative Perspectives 574.3 Conclusions and Issues for the 21 SI Century 59

Appendix 63

Comment: Wolfgang Maennig 69

VIII Economic Globalization, International Organizations and Crisis Management

B. The Emergence and Growth of International Organizations

James Foreman-Peck

73

1. Introduction 73

2. International Regimes, 'Free Riding' and Transactions Costs 74

3. Nineteenth Century International Political Organization 82

4. International Trade and Communications Regulation 83

5. International Property Rights in New Technology 86

6. Monetary Unions and Co-operation 87

7. Managing Default on Sovereign Debt 94

8. Conclusion 97

Comment: Rainer Fremdling 103

C. Does Integration Globalize?

Financial Crises and Financial Geography 1831-1914

Marc Flandreau

1. The Solidarity of Financial Centers

2. Segmentation of National Monetary Territories

3. Conclusion

Comment: Gerd Hardach

107

107

112

116

119

D. Globalization and the Market for International Organizations:

The OECD Case 127

Michele Fratianni and John Pattison

1. Introduction and Summary of the Issues

2. Trends in lOs

3. The Evolution of the OECD

4. Decision-Making Rules

5. Does the OECD Have an Expansion Strategy?

6. The OECD as an Inter-bloc 10

7. A New Role for the OECD

Comment: Peter George Warr

127

130

132

137

140

143

146

153

Table ofContents IX

E. The Asian Development Bank in the Context of Rapid Regional

Development 155

Werner Pascha

1. The Issues 155

2. ADB: An Overview 156

3. ADB's Goals 158

4. Do ADB's Goals Make Sense? 160

5. Is There a Case for a Regional Development Bank? 163

6. ADB and the Economic Success of the Asia-Pacific Region 168

6.1 ADB as an Important Factor of Growth andDevelopment in the Region? 168

6.2 Japan's Role 1696.3 The Bank's Role in Regional Integration 1716.4 ADB's Role in the 1997 East Asian Financial Crisis 172

7. Winds of Change: What Place for ADB? 175

F. A First Draft of Six Major Elements of a Federal European

Constitution: Some Thoughts Using Political Economy 185

Friedrich Schneider

1. Introduction 185

2. Six Basic Elements ofa Future European Federal Constitution 185

3. The Design ofthe European Legislation 187

4. The Subsidiarity and Federalism Principles as Safeguards AgainstGovernment Growth 189

4.1 The Subsidiarity Principle 1894.2 Fiscal Federalism in a European Constitution 1904.3 The Tax Base of the European Government 191

5. Institutions of Direct Democracy in a Future European Constitution 192

6. Summary and Conclusions 194

Comment: Peter Bernholz 203

X Economic Globalization, International Organizations and Crisis Management

II. Theory of Policy Coordination and

Impact of International Organizations

G. Globalization and the Changing Character of the International

Monetary Fund 211

Harold James

I. The International Order and the Liberalizationof Capital Movements

1.1 The IMP as Lender of Last Resort1.2 The IMP and the Supervision of Capital Markets

2. The Question of Governance, or Politics andthe International Monetary Fund

211

215221

226

H. The Many Lives of the International Labour Organization (ILO) 237

John Gillingham

I. Introduction

2. The Politics of Labor at the ILO

3. Economics, Education and Politics at the ILO

Comment: Irmgard Nuhler

I. Specific Institutional Aspects of International Cooperation

A GAME Theoretic Account

Werner Guth

237

241

244

251

255

264

265

269

1. Introduction 255

2. Problems When Cooperating Across Borders 256

3. Cooperation Without Contract Enforcement 258

4. Prospects ofInternational Cooperation in Case ofCostly TypeDetection 262

5. Policy Measures Improving the Prospects ofInternational Cooperation

6. Conclusions

Comment: Rudiger Sehils

Table a/Contents XI

273

J. Globalization and the Environment: Trade, FDI and

International Co-operation Issues

Tom Jones and Joaquim Oliveira Martins

1. Introduction 273

2. Globalization and Environment: A Framework for Analysis 274

3. Trade Issues 278

4. Foreign Investment Issues 280

5. International Co-operation Issues 283

6. Conclusions 289

Comment: Hans-Georg Petersen 293

K. Strategic Aspects of IIASA's Food and Agriculture Model

Werner GUth and Reinhard Selten

1. Introduction

2. A Special Linkage Model

3. Analysis of the Special Linkage Model

4. A More General Linkage Model

5. Analysis ofthe More General Linkage Model

6. Endogenous Detennination ofTrade Balances

7. An Alternative Approach to Demand

8. Conclusions

297

297

299

303

307

311

314

316

318

L. Trade Liberalization and Prudential Regulation: The International

Framework for Financial Services 321

SydneyJ Key

1. Introduction

2. Liberalization in the GATS and the WTO

2.1 'Binding' Liberalizing Measures in the GATS2.2 Discriminatory and Nondiscriminatory Barriers2.3 The Prudential 'Carve-out'

3. International Efforts to Ensure Adequate PrudentialRegulation and Supervision

4. Conclusion

Comment: Paul JJ Welfens

321

322

323324325

327

330

339

XII Economic Globalization, International Organizations and Crisis Management

III. Panel Discussions

Panel M: The Role of the HIS

The Role of the Bank of International Settlementsin the 1930s and 1990s

Gunter D. Baer

345

347

Reflections on the Early History of the Bank for InternationalSettlements 357

Richard Tilly

Panel N: Integrating Eastern Europe into the World Economy

Association with, Hopes for Joining the European Union

Andras Blaha

Integrating Eastern Europe into the World Economy

Heinrich Engelke

Integrating Eastern Europe into the World Economy:

The Relations between the EU and Russia

Christian Meier

Integrating Eastern Europe into the World Economy

Werner Varga

List of Tables

List of Figures

List of Participants

Index

365

367

373

377

385

389

391

393

395