By Leonardo Baccini
Why do leaders of nations prefer to sign up to foreign associations that constrain their freedom to enact household coverage? during this publication, Leonardo Baccini and Johannes Urpelainen handle this enduring query of diplomacy by way of liberal financial reforms.
During the prior 20 years, governments around the constructing international have carried out many liberal monetary reforms that decrease direct nation intervention in numerous industries, for instance with reference to highbrow estate rights and privatization. whereas failure to enforce them could have disastrous monetary and political results, liberal fiscal reforms have additionally provoked extreme political controversy regionally. Baccini and Urpelainen argue that overseas associations aid to chop this Gordian knot by way of permitting leaders to credibly decide to liberal guidelines whereas additionally developing household political help for reform. The e-book takes a comparative examine constructing nations that experience engaged in treaties with the USA and ecu Union to boost an entire conception of while and the way leaders input into overseas associations to impression financial reform.
Cutting the Gordian Knot of monetary Reform is the 1st paintings to supply a conception at the layout of foreign associations, the situations that reason leaders to shape overseas associations, and the results of foreign associations on fiscal reform.
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Extra info for Cutting the Gordian Knot of Economic Reform: When and How International Institutions Help
Legislatures, special interest groups, the judiciary, and bureaucratic agencies cannot engage directly in international negotiations on economic reform commitments (Vreeland, 2003). The leader, however, can engage in such negotiations. In our argument for why international institutions I n t e r n at i o n a l I n s t i t u t i o n s P r o m o t e E c o n o m i c R e f or m [ 29 ] can help leaders implement economic reform, this institutional difference is the first building block. In general, international negotiations allow the leader more initiative than domestic policy formation.
The argument is based on the idea that international institutions allow leaders to combine economic reform with other issues that change domestic constituencies’ calculus. If economic reform is prescribed by an international institution, then rejecting that international institution due to the economic reform also results in rejecting all other elements of the international institution, for cooperation fails to materialize. To the extent that these other elements promise additional benefits for the initial domestic supporters of economic reform, the international institution can help them mobilize.
A left-wing government could, for example, negotiate increased wages for labor unions in exchange for privatization. Such strategies are an integral component of the political processes that ultimately result in economic reform, except in the most totalitarian of dictatorships. Alternatively, leaders can try to mobilize the potential supporters of reform. Schamis (1999) offers an excellent comparative analysis of such strategies in different Latin American countries. He finds that from Argentina to Mexico, much of the economic reform that leaders implemented was carefully crafted to increase rents for potential winners of liberalization.