The Regional Comprehensive Economic Partnership (RCEP) is one of the most important mega-regional trade agreements signed to date. Yet, it failed to include an Investor-State Dispute Settlement (ISDS) mechanism in its investment chapter. What explains this omission? To unpack this, we examine international negotiations as a two-step process. In the first stage, we theorize that initial preferences towards ISDS are based on countries’ orientation toward foreign direct investment (FDI), experience with ISDS, and past treaty practice. Second, we theorize that during protracted negotiations, adverse regime developments and domestic politics can have a profound impact on treaty design. To test our framework, we examine the RCEP negotiations. Our analysis shows that mounting cases as well as the eroding norm of ISDS in other treaties lowered support for ISDS as the negotiations progressed. Then, a change of government in Malaysia shifted that country’s position dramatically, which tipped the balance against ISDS in the final round of negotiations. Our findings have important implications for the international investment regime. They highlight the factors that determine countries’ initial preferences while also demonstrating the importance of developments during the negotiations, which can lead to the abandonment of the institutional status quo.

This essay tests the hypotheses and claims of models of internationalization that draw on neo-classical trade theory. Using the influential Frieden-Rogowski model, it examines the responses of Iraq and Algeria to the oil price shocks of the 1980s and 1990s. The cases demonstrate that even the most basic assumptions and predictions of this economistic model are flawed. The Frieden-Rogowski model misrepresents the mechanisms through which price shocks are translated into policy, makes inaccurate predictions about how terms of trade affect policy or sectoral performance, fails to explain the duration of lags between price changes and policy changes, and neglects important differences in a variety of major outcomes. I argue that even in the very similar cases of Algeria and Iraq, policy changed not in response to domestic pressures generated from changes in relative prices, but as a result of a severe fiscal crisis that stripped both governments of their ability to protect domestic constituents from world prices.

Decisions over state assistance to firms can hinge on whether politicians choose a strategy that favors particular interest groups, targets aggregate economic performance, or both. Which types of firms are more likely to receive financial help from the government? While standard interest group based explanations tend to see special interests dominating the political process, extraordinary economic challenges, such as financial crises, may make general economic concerns a greater priority for politicians. We argue that during financial crisis, politicians – who are always concerned with the economy – are even more likely to prioritize broad economic growth over helping particular groups. Politicians should favor general economic strategies over helping specific groups of firms because they have limited resources and wish to avoid sending a bad signal to other firms about helping those that fail. Using 2010 World Bank firm-level surveys done in Bulgaria, Hungary, Latvia, Lithuania, Romania, and Turkey, we find that politicians favored small dynamic firms with a proven ability to use resources well rather than the largest employers, those firms with the greatest lobbying capacity, or firms in particular sectors. We optimistically conclude that interest groups with disproportionate resources will not always get special treatment at the expense of others.

Individual firms have become the dominant lobby actors in the European Union, while associational business interest representation has declined. This is alarming because individual firms tend to overlook the long-term interests of society by focusing on what is important in the short term for their own survival. How can we explain this trend? This article argues that globalization is a key driver of firm-level lobbying and that it fractures business interest representation. The study employs an original dataset of almost 14,000 lobby contacts between senior staff of the European Commission, business interests, and NGOs. It finds support for the argument that globalization spurs individual firm lobbying in the European Union. This complicates the already challenging task of business associations aggregating and channeling the interests of their members.

Political instability is commonly thought to discourage investment and reduce economic growth. We challenge this consensus by showing that instability does not systematically depress investment. Using an event study approach, we examine daily returns of national financial indices in every country that experienced an irregular regime change subject to data availability. Returns following resignations are large and positive (+4 percent), while those following assassinations are negative and smaller in magnitude (−2 percent). The impact of coups tends to be negative (−2 percent), but we show that a pro-business coup results in large positive returns (+10 percent). We also find evidence that authoritarian or anti-business regime changes are more likely to lead to capital flight than democratic or pro-business changes. The immediate impact of political instability on investment is therefore dependent on the type of regime change and its expected impact on future growth.

This study identifies the core of Korea’s economic statecraft as (1) diversification of the supply chain of high-tech industries to proactively mitigate vulnerability to economic coercion, (2) the pursuit of technological sovereignty to increase self-sufficiency in advanced technologies, (3) governance reforms to strengthen supply chain resilience, and (4) industrial policies to enhance the competitiveness of advanced industries. The four strategies mentioned above all have in common that they are predicated on the strategic utilization of high technology. Based on these traits, I define Korea’s new economic security strategy as techno-economic statecraft. Korea’s techno-economic statecraft has two features. First, Korea utilizes high technology as a nexus between economy and security. Second, Korea uses high technology as a nexus to link domestic and foreign policies.

Research has examined the impact of the “entrepreneurial university” on regional socioeconomic development by focusing on the entrepreneurial intentions and performance of alumni, staff, and students. The study of impact, to date, has focused on direct and short-term mechanisms, such as alumni's entrepreneurial activities, faculty spin-outs, and active public engagement with policy agendas. Our point of departure is in conceptualizing and empirically testing a longer-term and more systemic mechanism. We theorize and empirically test how the entrepreneurial university imprints on its graduates, some of whom take on leadership positions in innovation policymaking years later. We test this relationship by employing a text-as-data approach to examine the extent to which innovation policy leaders speak about startup-centric innovation, comparing the media coverage of entrepreneurial university alumni relative to their peers. Our original dataset comprises the 485 individuals who held senior innovation policy positions in East Asia's eleven largest economies from 1998 to 2019, detailing their educational background and media coverage (10,816 documents). We conceptualize the “alumni policymaker” mechanism, which constitutes entrepreneurial university alumni shaping the future of national innovation policy by referring to startup-centric innovation three times more than their peers. Those who completed MBAs at entrepreneurial universities express an even greater preference for startup-centric innovation policy.

The Transatlantic Trade and Investment Partnership (TTIP) has the potential to be a landmark treaty on many grounds. According to European and American officials, one of the main features that should differentiate the TTIP from other bilateral free trade agreements is, beyond its unprecedented scale, the ambition of its regulatory dimension. On both sides of the Atlantic there is a strong incentive to mitigate the impacts of “behind-the-border” obstacles that mostly stem from existing divergences between laws and regulations applied in Europe and in the United States. To do this, trade negotiators, together with policymakers and regulators, attempt, when possible and desirable, to facilitate the convergence of the policies that frame the European and the American markets. This paper analyzes how convergence may be reached with regards to the regulation of the digital economy, a relatively new area of interest in the field of trade law and policy studies, that seems to deserve a specific attention considering the growing importance it has taken at the domestic level and in the context of trade negotiations.

Partisanship and institutionalization are more important to group formation and dynamics than is often recognized in the literature on interest groups. This study examines the contrasting cases of small business group formation and dynamics in Japan and the United States to demonstrate how opposition to the party or parties in power was crucial to the timing and nature of the largest small business organizations formed in both countries. Parties are also important to subsequent developments in the organization and institutional interactions of the sector. It is these processes which explain the divergent outcome whereby the US small business sector is identified with the political right and the small business in Japan with the political left.

We adopt a novel use for an old type of data – interest group scorecards – to explore the impact business organizations have on the political process. By aggregating congressional scorecards, we can develop a sense of how satisfied groups are with the US Congress as a whole. To do this, we generate interest group-level ratings of the US Senate derived from individual-level ratings of each senator. We find business groups tend to give higher aggregated scores relative to other types of groups, suggesting business organizations more often get what they want form Congress, which in turn, illuminates the importance of these groups in the political process. We also find that well-funded “niche” organizations tend to show higher levels of satisfaction with senators than larger groups with broad public missions.

The Center for Responsive Politics reports that U.S. lobbying expenditures substantially exceed interest group campaign contributions, without including the lobbying that is not required to be reported to the government. Although it has grown in Europe, particularly with respect to the European Union, lobbying is less important than in the United States. Bennedsen and Feldmann (BF) provide an important and insightful explanation for the difference in terms of the institutional structure of governments. They present a model of informational lobbying in client politics where an interest group provides information to a majority-rule (three-member) legislature. The legislature chooses the scale of a program whose benefits can be distributed among legislative districts. The legislative agenda setter has a vote buying problem and allocates benefits to one other legislator to obtain her vote. BF compare legislatures operating with and without a confidence procedure that allows the agenda setter to tie passage of its proposal the continuation of the government. This commentary considers the method for comparing these two institutions, assesses the implications of the theory, and considers future research related to the theory.

The articles in this special issue of Business and Politics weigh in on the domestic political dynamics that continue to shape the international political economy, with a focus on the United States case. In this issue, Richard Carney discusses the role of New Deal–era farmers in shaping modern global financial standards, Daniel Kono analyzes the relationship between social policy and support for freer trade, and Kathleen Rehbein and Douglas Schuler examine the characteristics of business firms that are most likely to gain legislative and executive branch access in the area of trade policy. The two final articles provide insights into critical issues in ongoing policy debates. Irja Vormedal discusses the role of business strategies and “tipping points” in determining the support and failure of federal environmental regulation from 1990 through 2010, while Emily Yixuan Cao, Yong Cao, Rashmi Prasad, and Zhengping Shen argue that domestic politics continues (and will continue) to influence the character of U.S.-China exchange rate negotiations. This introduction to the special issue summarizes the contributions of these five articles and also situates them in relation to other contemporary political science debates.

Recent years have seen a recognition of the importance of government action to business and a rapidly developing path of research on business and politics, but this research has focused overwhelmingly on the legislative and executive branches and too often ignored the judiciary.1 A failure to consider a role for the courts is a substantial lacuna in the research. The judicial branch plays a substantial role in politics and governance. In most cases, the passage of a statute or even the promulgation of a regulation has legal effect only through the courts. A business's success (or failure) in lobbying the legislative or executive branches for a particular policy program may be entirely counteracted in the courts. At the extreme, such an action might be declared unconstitutional, making it legally null and ineffective, and perhaps eliminating the possibility of any future attempt to revive the action.

This paper develops a model for a particular type of grand corruption often encountered in developing countries, namely, the sale of government positions by autocratic rulers. A two-stage game is considered, where the autocrat moves first to maximize his revenue from the sale of positions in the cabinet by choosing a price that must be paid by interested politicians. The latter become bureaucrats who maximize their utility from bribe revenues for the given price set by the president. Backward induction yields subgame-perfect equilibrium levels of corruption of the president and bureaucrats. A key insight from this analysis is that conventional tools of fighting corruption become ineffective when corruption at the very top is ignored. The model is distinctive in its treatment of individual moral costs of being corrupt and in its consideration of a revolutionary constraint on the autocrat's choices.

While many scholars have studied “urban bias” in public policy, the potential for bias in the private provision of public goods has received little attention. Private certification is a mechanism encouraging private provision of environmental public goods. We show that within countries, there are often wide disparities in certification rates between firms located in urban and non-urban areas. However, these disparities can be mitigated if there is a countervailing force: scrutiny of firms' practices by key stakeholders. We suggest that the presence of strong civil society, independent media, a functioning state regulatory apparatus, and multinational owners can ameliorate the urban bias in certification uptakes. We test this argument with global, firm-level data covering over 40,000 firms in ninety-three countries. Our analyses suggest that an urban bias is mitigated when stakeholders—both public and private—have the freedom and capacity to scrutinize firms' activities.

The Japan–Korea whitelist dispute (2019–2023) embodies key features of interstate disputes related to economic statecraft ideas. Against the backdrop of the legal dispute over Japan’s “essential security interests” claim based on GATT Article 21 (Security Exceptions), this study analyzes South Korea’s response to the whitelist dispute, with a focus on its materials–parts–equipment localization policy. The findings indicate that the policy process and outcomes align with very few of the criteria suggested by the new industrial policy literature. Notably, the policy’s goals and tools were driven by ideology rather than by science, and the implementing agency—The Ministry of Trade, Industry, and Energy—while competent, was politically captured. In conclusion, this study suggests that policymakers should purposefully and consciously connect security with trade or implement industrial policies within a well-defined strategic framework.

This article examines the controversial investor-state dispute settlement (ISDS) mechanisms in recent mega-free trade agreement. Below, I examine the origins of the ISDS concept and outline the controversy surrounding its use in the context of the Transatlantic Trade and Investment Partnership (TTIP). Then, I provide a theoretical discussion that outlines both the exogenous and endogenous factors that contribute to the inclusion of ISDS provisions in international trade agreements. Focusing on the latter endogenous factors, I then argue that not all international trade agreements are the same and that, as such, it is possible to develop a typology of international trade agreement across two variables (the number of parties and relative power) that impact the appropriateness of including an ISDS provision. I test this typology against the empirical record. Finally, I discuss potential innovations to the ISDS provisions and market-based mechanisms that address the dual challenges of discrimination and expropriation that ISDS is designed to address.1

The article discusses the political preferences of diversified business groups—or economic groups (EGs)—based on a case study of business political behavior in Colombia. EGs are groups of firms held together through ‘interlocking directorates, holding companies, crossfinancing, and often continued family ownership’, which dominate significant portions of the Latin American economies. The Colombian EGs supported president Ernesto Samper (1994–1998) amidst accusations that his campaign had been funded by drug traffickers, despite the prospect of U.S. sanctions and economic recession. The article suggests that a crucial factor shaping EG political preferences was their relationship of mutual dependence with the Colombian state, which is based on contracts, credit, and regulation. In contrast to expectations that privatization policies associated with the 1990s' economic reforms would weaken the business-state relationship, this case shows that these ties have been strengthened, making EGs stand out as winners of the reform process.

This paper discusses the pros and cons of a Transatlantic Free Trade Area (TAFTA) in comparison with an informal trade-facilitating marketplace between Europe and the US. It finds considerably more cons, especially since TAFTA would be expected to produce larger, more detrimental discriminatory effects on dynamic non-member economies, mainly in Asia but also in food-exporting regions as well. Efficiency-enhancing effects are argued to be achievable under a marketplace concept which does not separate insiders from outsiders. It is also shown that in foreign direct investment (FDI) and FDI-related service trade, TAFTA seems redundant as in recent years bilateral capital and trade flows have proven to be buoyant without preferential treatment.

Bringing democracy to the workplace has gained researchers’ attention during the last few years. In addition to its proorganizational outcomes, democratization at the workplace also helps to eradicate organizational negativities. The present study investigates these claims by empirically examining the relationship between organizational democracy, perception of politics, and workplace incivility. A sample of 300 full-time employees working in fifteen different banks in the district of Gujrat Pakistan was obtained. The structural equation modeling technique was used to test the proposed hypotheses. The results indicated that workplace democracy is negatively associated with the perception of organizational politics and workplace incivility. Nevertheless, when there is organizational democracy with a supportive environment, it further reduces its incivility and politics. The study provides empirical evidence to managers and organizational decision makers in developing democratic workplaces to promote participative culture and eradicate organizational negativities. More studies on democratic practices with different contexts and factors are discussed and proposed for future studies.