Publication Type: Conference Paper/Unpublished Manuscript
Abstract: The paper tackles the essential question of who or what shapes and drives the policy and operational behavior of the World Bank? The central argument is that we need to examine both the external (political) and internal (bureaucratic culture) environments of the Bank. The paper begins by examining the theoretical and analytical tools employed by principal-agent models and sociological organizational culture to analyze organizational behavior. I then turn to the main focus of the paper, which is a detailed historical description and empirical analysis of the Bank’s dual environments. I start with the world’s Bank, focusing primarily on the Bank’s relationship with its principal member states and NGOs. I take special note of the Bank’s relationship with the U.S.. In the second half, I focus on the “Bank’s world”, investigating the internal bureaucratic politics and culture of the Bank. Specifically, I examine the sources and evolution of the Bank’s “intellectual culture” (characterized by its economistic, apolitical and technical rationality) and its ‘operational culture’ (portrayed as driven by approval and disbursement imperatives).

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: The proposed paper attempts to move beyond the existing literature on the politics of economic development by focusing on the political economy of private infrastructure investment programs at the subnational level in Asia and Latin America. International financial institutions like the Asian Development Bank, the Inter-American Development Bank, and the World Bank have increasingly focused technical and financial support at the level of provincial, state, and local governments. While there is an ever-expanding list of subnational governments receiving assistance from International Financial Institutions (IFIs), we do not have adequate answers to the question of why some subnational governments receive support and others do not. This paper will seek to explain, based upon a time-series analysis of IFI program assistance choices, what international, national, and local factors contribute to the pattern of backing certain subnational governments. Because of the nature of the research question, trading patterns, electoral dynamics, institutions, and interest groups comprise the primary explanatory thrust of the paper. With the expectation that similar sets of independent variables influence institutional activity throughout the developing world, this paper will focus on all cases in Asia and Latin America for the 1993-2003 time period. Hypotheses tested in the analysis stem from the IPE, CPE, and US politics literatures. The proposed research has significant implications for the study of the political economy of development, as well as crucial policy implications. First, this paper is designed to recast existing thinking about the political economy of development in less industrialized and emerging market nations. By analyzing the web of relationships between local governments and international actors from different regions of the world, we will gain a better sense as to what factors are driving the technical assistance selection process throughout the developing world. Second, by focusing on both the subnational and international levels of analysis, the research will fill a sizable empirical gap in the literature on the politics of economic development, as well as provide a more complete picture of the relationship between politics at different levels of government and corresponding policymaking patterns. Third, this research will make significant contributions to the Asian and Latin American political economy literatures. In both cases the focus on the federal level has neglected the growing importance of subnational and international actors in the development process and resulting international diversity in economic policy and performance. Finally, the research has significant policy implications. While decentralization has continued to move forward in many parts of the developing world, little research has attempted to gauge the relative importance of political economic factors on local-international interaction. The opportunities and difficulties that local leaders have to increase economic competitiveness in an increasingly globalized world need be better understood, especially as more and more The proposed research has significant implications for the study of the political economy of development, as well as crucial policy implications. First, this paper is designed to recast existing thinking about the political economy of development in less industrialized and emerging market nations. By analyzing the web of relationships between local governments and international actors from different regions of the world, we will gain a better sense as to what factors are driving the technical assistance selection process throughout the developing world. Second, by focusing on both the subnational and international levels of analysis, the research will fill a sizable empirical gap in the literature on the politics of economic development, as well as provide a more complete picture of the relationship between politics at different levels of government and corresponding policymaking patterns. Third, this research will make significant contributions to the Asian and Latin American political economy literatures. In both cases the focus on the federal level has neglected the growing importance of subnational and international actors in the development process and resulting international diversity in economic policy and performance. Finally, the research has significant policy implications. While decentralization has continued to move forward in many parts of the developing world, little research has attempted to gauge the relative importance of political economic factors on local-international interaction. The opportunities and difficulties that local leaders have to increase economic competitiveness in an increasingly globalized world need be better understood, especially as more and more countries in the world move towards the decentralization of policy formation.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: What explains variation in the development of central bank independence (CBI) and inflation? I argue CBI should only be effective in the presence an anti-inflationary constituency, or a developed banking sector.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Recent bank collapses as a result of the sub-prime mortgage crisis have highlighted the need to keep international bank supervision practices up to date with technological and product innovations in the sector. In the 1980s, coordination in international financial regulation resulted from multilateral negotiations in which states played a central role. Since then, the international financial system has undergone significant transformation. This article tests three hypotheses regarding the explanatory power of multi-level governance in the case of banking sector regulation and highlights the following findings: First, rather than states alone, a constellation of public, private, and supranational actors governs the banking sector. Second, networks of international experts, rather than national civil servants, are instrumental in formulating and developing banking regulations. Third, independent regulatory agencies, rather than government ministries, monitor implementation and ensure compliance with banking regulations. The analysis is based on evidence from two new EU member states, Bulgaria and Hungary, that represent the two types of bank supervision organizational structure in the EU.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: In 1922, Lenin called for the Soviet Union to control “the commanding heights” of the economy —those critical industries which project tremendous political and economic power within and across borders. Lenin was talking about heavy industry, not high finance. But, in our generation, high finance has become the commanding heights. The importance of strong steel and chemical industries has declined and the power derived from moving capital nationally and across borders has grown in importance.
Some suggest these commanding heights have come under attack in many countries. Banks have been targets since the mid-1990s, when the world witnessed a huge, seemingly coordinated worldwide wave of local bank acquisitions by foreigners. These acquisitions occurred after a series of financial crises in Mexico, Asia, Russia and Brazil culminated in the sales of many local banks in some countries, while other countries saw fewer sales. In all, over thirty countries were affected through this process of “financial liberalization.”
Latin America provided, perhaps, the most active gameboard on which this was played out in terms of both value and volume of acquisitions. Latin America had also provided the template for the sale of banks to foreigners in the 1990’s, as Chile’s experience in the late 1980’s made it the poster child for both privatization and financial liberalization. But before their programs to sell banks to the highest bidder, though, Chile and Mexico had privatized banks in earlier, disastrous programs which had excluded foreign buying.
Analyzing these waves of bank privatization and acquisition solely by using financial economics misses the most important aspect of this phenomenon: the processes were fundamentally political, and should be analyzed as such. Banks rely on governmental support and guidance. Banks are monitored and governed by national and international organizations established for that purpose and they lobby these organizations. Banks are also “privately monitored” by investors and other interested parties. In short, banks and financial systems operate in a complex web of politics.
The power which banks derive from their informational asymmetry has long been recognized and appreciated by political leaders. The information derived from relationship banking is sought after by political leaders and other interested parties, who observe banks’ actions. But this informational advantage comes to banks with a price--banks are subject to severe financial fragility. Barth, Caprio and Levine note, “banking crises are the train wrecks of finance,” but these impacts are significantly deeper and wider than just in the world of finance.
For these reasons, governmental actors are pulled and pushed toward banks and banks’ power. They are pulled by banks’ ability to deploy liquidity in productive ways, and pushed by the perceived need to regulate and monitor banking activity. These government officials experience an additional tug of war in that they face a conflict between acting for the public good and pursuing their private gain in their dealings with banks and banking regulation.
The large variation in “cross-border” bank acquisitions is not adequately explained through regional expansion strategies of the acquiring banks, cultural affiliation between acquirer and target bank, size of country or type of government or international-level interactions. One can come much closer to an all-encompassing explanation of the pattern of cross-border bank acquisition by employing a different, more agnostic approach by considering the strategic interaction of the players in a cross-border acquisition game. Through examination of the actors’ strategies, we find strategy, culture and, especially, politics all contribute to outcome. This paper applies such a game model to explain the varied outcomes in Chilean, Mexican and Brazilian privatization programs from the 1970’s to the 1990’s.
Inherent to my thesis are concepts of varied institutional capacity and of governments with varying degrees of unified sense of purpose among their respective officials. A fundamental part of my cross-border bank acquisition model reflects the idea that government officials are conflicted between private gain and public benefit and, due to this conflict, sometimes make decisions which are sub-Pareto-optimal to the society and nation they serve. Insisting on more effective governance cannot change these rent-seeking tendencies nor will it create a more autonomous government.