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Introduction Political Economy and International Political Economy 1 Question: What is Political Economy? Answer: The study of the interaction of politics and economics. Evolution From Adam Smith to John Stuart Mill, Economics=Political Economy(=political factors crucial in determining economic outc...

Introduction Political Economy and International Political Economy 1 Question: What is Political Economy? Answer: The study of the interaction of politics and economics. Evolution From Adam Smith to John Stuart Mill, Economics=Political Economy(=political factors crucial in determining economic outcomes) Late 19th century, Economics and Political Science divided into distinct disciplines Lately, renewal interest in Political Economy 2 Definitions Economics= studies human behavior as a relationship between ends and scarce means that have alternative uses Politics: studies power and authority, and the exercise of power and authority=> the struggle over authority. Power = the ability to achieve outcomes which reflect objectives =>Power and authority relevant only when there is heterogeneity of interest = conflict of interest between economic actors 3 Heterogeneity and conflict of interests: 1. is a necessary condition for the existence of political constraints. 2. the mechanisms by which these conflicts are resolve determine the effect of politics on economics. Ex-ante heterogeneity: individuals have different policy preferences because of different tastes over goods and relative factor endowments. Ex-post heterogeneity: self-interested individuals are in conflict over distribution of a good or the cost of providing it 4 ▪ The new political economy is defined more by its way of approaching the question of how politics affect economic outcomes Positive political economy: asks how political constraints may explain the choice of policies (economic outcomes) that differ from optimal policies. Normative political economy: seeks ways to overcome political constraints within existing institutional framework(s) and design political institutions to better achieve economic objectives. 5 Political Economy today employs the rational actor model to study government decisions in the context of political and economic institutions. Rational actor model: 1. Individuals (governments) are the actors 2. Actors order their alternatives (preferences) transitively. 3. Actors choose from available alternatives using the rationality process so as to maximize their satisfaction/self-interest. 6 Levels of Analysis Nation State: internal or domestic influences – originate within the boundaries of the nation-state. The micro approach allows us to use a decision-making approach and to investigate in far more detail the conditions and processes within states that affect foreign and economic policy choices. International System: external influences – arise outside the state’s boundaries. The macro- approach allows us to look at the overall global patterns of behavior among states and the level of interdependence among them. The most comprehensive level of analysis. 7 Six levels of analysis World system -number of major powers in the system, the existence of a hegemon. Relations –actions of states toward each other are affected by the relationship between them, which is determined by the characteristics of the two states. Society – population size (large vs small), economy (rich vs poor). Government –democratic system of government will pose a different set of opportunities and constraints for decision makers than will an authoritarian government. Role - decision maker acts in a particular way because of his/her role in the economic/political system. Individual - education, socialization, personality traits, physical 8 health of individual decision makers. Each level of analysis describes one of the environments within which the decision maker must operate. Each level affects the opportunities available to decision makers. Opportunity: refers to possibilities and constraints that face decision makers. Opportunity requires 3 related conditions: 1. an international environment that permits interaction between states. 2. states that possess adequate resources to be capable of certain kinds of action. 3. decision makers who are aware of both the range of interactions and extent of capabilities available to them. 9 Willingness: is concerned with the motivations that lead people to avail themselves of opportunities: - deals with the goals and motivations of decision makers and focuses on why decision makers choose one course over another. - derives from calculations of the costs and benefits of alternative courses of action, based not only on objective factors but also on perceptions (for instance, of threat) and emotions (for instance, fear, insecurity, or desire for revenge). Both opportunity and willingness are required for a given behavior to occur; they are jointly necessary conditions. 10 Contending perspectives on IPE ▪ Analysts of IPE must understand the interaction of many levels of analysis and in general they disagree with regard to 1. the relationship between the domestic and international political economies = i.e., disagreement has to do with the degree to which the causes of international political and economic trends are to be found at the domestic or international level. 2. the relationship between the state and social forces = i.e., disagreement has to do with the relevant importance of politicians and political institutions versus private social actors (interest groups) 11 4 perspectives in IPE Relationships State Domestic Institutional Role of institutions of the state in the domestic level Domestic => policy makers are autonomous from societies and implement policies to satisfy national goals which of course are tied to their survival in power/office International Political Constraints imposed on national states by global geostrategic and International diplomatic environments => conflict more likely than cooperation, but hegemony could be a solution Social forces Domestic Societal Economic and sociopolitical pressures as major determinants of national policies => liberalization and protectionism are preferred by different socioeconomic groups) International Economic Constraints imposed by global socioeconomic factors => international developments in technology, telecommunications and production constrain or enhance state actions 12 Note One set of factors matter more or less in some issue areas rather than others, in some times rather than others, and in some countries rather than others. Examples: International geopolitical concerns have more impact on a small, weak country surrounded by enemies than a large, powerful state far from any threat. Domestic concerns (institutional or societal) may have more effect on policy in times of great societal and political conflict than in less turbulent times 13 IPE Paradigms/Theories Realism: politics over economics; states use economy to pursue power, international system is anarchic, changes in distribution of international power determines the form and type of international economy (hegemony) Liberalism: economics and politics are separate spheres; superiority of markets, limited governments, harmony of interest among states Marxism: economics over politic; classes where capital exploits labor, relationship between capitalists and labor are antagonistic Constructivism: has roots on critical theory and sociology; actors and their interests are constructed through social interactions, norms play an important role (logic of appropriateness) 14 NOTE: Each of these paradigms features different assumptions and assertions (different actors= states vs individuals; different types of relations=conflictual vs cooperative; different emphasis regarding the relationship between politics and economics= economics and politics as autonomous spheres, economics determine politics, economics is subordinate to politics) 15 Global Climate Change Regime Phases of the global climate change regime Foundational period ( USA emphasized need for further scientific research and the development of national rather than international strategies and programs. 17 Reasons for these differences a. Disparities regarding the perceived costs of abatement b. The USA played tough in order to obtain a better deal in later negotiations (Interest based explanation) c. Domestic politics played an important role: in Canada and Germany the climate change issue was in the hands of environmental and foreign ministries, whereas in the USA it was handled by the Dept of Energy, the OMB and the Council of Economic Advisors, which were concerned with mitigation costs 18 2nd fault line among developing countries (although they agreed on the need for financial assistance and technology transfer) Small developing states supported targets and timetables for developed countries and organized themselves into the Alliance of Small Island States (AOSIS) Oil-producing states questioned the scientific evidence on climate change and argued for a “go slow” approach Big industrializing countries (China, Brazil, India) insisted that measures to combat climate change not infringe on their sovereignty and their right to economic development=> the created the problem and thus it was the North’s responsibility to solve it. 19 Formal intergovernmental negotiations phase (1990-1992): leads to the adoption of the FCCC The new convention was modeled on the Vienna Ozone Convention (a step by step approach) The FCCC (Framework Convention on Climate Change) was adopted on May 9, 992 and entered into force on March 21,1994 as a result of its ratification by 50 states The Convention established a. very general obligations to cooperate in scientific research and exchange information, and b. a legal and institution framework for future work through regular meetings of the parties and the possible adoption of more substantive protocols 20 Principle issues 1. Targets and timetables to limit emissions EU and AOSIS advocated them for developed countries The USA and oil-producing countries opposed them Developing states supported them as long as they only applied to developed states 2. Financial assistance and technology transfer Developing states advocated the establishment of a new fund and “new and additional financial resources” from developed countries to help them implement the Convention Developed states wanted to use the Global Environmental Facility (GEF) 21 Post-agreement phase (1992-1997): focuses on the elaboration and implementation of the FCCC and the initiation of negotiations on additional commitments leading to the Kyoto Protocol. Negotiations mainly on two issues a. The emissions-limitations targets for developed countries => at the end different emission targets for each party, ranging from an 8% reduction from 1990 levels for the European Union, to a 10% increase in Iceland. b. The Flexibility Mechanisms to allow developed countries to meet their targets in a flexible manner => Kyoto mechanisms include emissions trading and joint implementation among industrialized countries, as well as a “Clean Development Mechanism” (CDM) for emission reduction projects in developing countries Post Kyoto era (1997-2009): focuses on the elaboration and implementation of the Kyoto and the initiation of negotiations on additional commitments leading to the Copenhagen meeting. Copenhagen Summit, 2009 (COP15): until the final day of the conference, the climate talks were "in disarray”; The Copenhagen Accord (drafted by the US, China, India, Brazil and South Africa) recognized that climate change is one of the greatest challenges of the present day and that actions should be taken to keep any temperature increases to below 2 °C. The document is not legally binding and does not contain any legally binding commitments for reducing CO2 emissions. 23 Cancun, Mexico, 2010 (COP16): an agreement was adopted by the parties that called for a large Green Climate Fund, and a Climate Technology Centre and network. Durban, South Africa, 2011 (COP17): aimed at establishing a new treaty to limit carbon emissions; a treaty was not established, but the conference agreed to establish a legally binding deal comprising all countries by 2015, which was to take effect in 2020, the so-call Durban Platform for Enhanced Action. There was also progress regarding the creation of a Green Climate Fund for which a management framework was adopted. The fund is to distribute US$100 billion per year to help poor countries adapt to climate impacts. 24 Doha, Qatar, 2012 (COP18): an agreement was reached to extend the life of the Kyoto Protocol until 2020, and to rectify the 2011 Durban Platform for Enhanced Action Wording adopted by the conference incorporated for the first time the concept of "loss and damage", an agreement in principle that richer nations could be financially responsible to other nations for their failure to reduce carbon emissions Warsaw, Poland, 2013 (COP19): Key decisions adopted include decisions on further advancing: − the Durban Platform − the Green Climate Fund and Long-Term Finance − the Warsaw Framework for REDD Plus − the Warsaw International Mechanism for Loss and Damage and other decisions Lima, Peru, 2014 (COP20): No real progress was made. 25 Paris, France 2015 (COP21): 95 countries signed up to the Paris Agreement. a. signatory countries committed to keep global temperatures "well below" 2 degrees Celsius above pre-industrial times and "endeavor to limit" them even more, to 1.5 degrees Celsius. b. industrialized countries agreed to pay US$100 billion a year by 2020 to help developing countries to decarbonize their economies. Note: The threshold for entry into force – formal acceptance by 55 countries accounting for at least 55 percent of global emissions – was reached October 4 and the agreement took effect on 4 November 2016. (132 of 197 Parties to the Convention have ratified the Agreement). 26 Marrakech, Morocco, 2016 (COP22): established a new framework combining “nationally determined contributions” (NDCs) with new multilateral mechanisms aimed at ensuring transparency and accountability and promoting greater ambition over time. Countries to scale up their financial contributions towards the pre-agreed “$100bn a year by 2020” goal, and to achieve a greater balance between adaptation and mitigation. to discuss the Adaptation Fund and hand in their views by 31 March 2017. approved a five-year work plan on “loss and damage” starting in 2017 to formally address topics such as slow-onset impacts of climate change, non-economic losses (for example, culture and identity) and migration. Bonn, Germany, 2017 (COP23): Presided by the Fiji Government; The purpose of the conference was to discuss and implement plans 27 about combating climate change, especially the Paris Agreement. Katowice, Poland, 2018 (COP24): the Paris Agreement Rulebook was finalized: The rulebook includes guidelines that relate to: i. how to establish and monitor national emissions reduction plans ii. the process for establishing new financial targets to help developing countries reduce their emissions after 2025 iii. how to assess effectiveness of global climate action in 2023 iv. how to assess progress on the development and transfer of lowcarbon technology Nations also agreed to update their national carbon reduction targets (Nationally Determined Contributions or NDCs) by 2020; there is now some flexibility on how poorer countries report their progress due to their inability to track and monitor emissions 28 Madrid, Spain, 2019 (COP 25): Presided by the Chilean government; aimed to ▪ finalize the “rulebook” of the Paris Agreement by settling on rules for carbon markets and other forms of international cooperation under “Article 6” of the deal. ▪ send a message of intent, signaling to the wider world that the UN climate process remains relevant – and that it recognizes the yawning gap between current progress and global goals to limit warming. The talks were unable to reach consensus in many areas, pushing decisions into next year under “Rule 16” of the UN climate process. ▪ Matters including Article 6, reporting requirements for transparency and “common timeframes” for climate pledges were all punted into 2020, when countries are also due to raise the ambition of their efforts. 29 Glasgow, UK (COP26) ▪ a step forward in global efforts to address climate change, including a material increase in ambitions to reduce emissions across the world, finalization of rules on reporting emissions and international carbon trading, and the launch of a range of new initiatives and sector deals. ▪ How far this can be considered a success will depend on follow-up actions over the coming year and beyond. Sharm El Sheikh, Egypt (COP27) ▪ countries reached a historic decision to establish and operationalize a loss and damage fund, particularly for nations most vulnerable to the climate crisis. 30 Dubai, United Arab Emirates (COP 28) ▪ signals the “beginning of the end” of the fossil full era by laying the ground for a swift, just and equitable transition, underpinned by deep emissions cuts and scaled-up finance. agreement on the operationalization of funding arrangements for addressing loss and damage, including a new dedicated fund under the UNFCCC agreement on targets for the Global Goal on Adaptation (GGA) and its framework recognition and momentum for linking efforts to address the climate and biodiversity crises 31