Laura Hastings, Graduate School of Public and International Affairs,  University of Pittsburgh, USA

Resource Persons: 

Andrea Goldstein, OECD Development Centre, France

Juliet Johnson, Loyola University, Chicago, USA

Sylvia Maxfield, Harvard University,USA

Pamela Starr, Instituto Tecnologico Autonomo de Mexico, Mexico

Maria Tsenzharik, St. Petersburg State University, Russia

Lecturers:  

Laszlo Bruszt, Central European University, Hungary

Lorand Ambrus, Central European University, Hungary

 

This course seeks to engage faculty in the field of international political economy (IPE) to develop courses on the politics of finance, an important pillar of IPE. The course explores the domestic sources of finance in emerging market countries, using the disciplines of both economics and political science to analyze at the practices and institutions of lending and borrowing in different regions. Throughout, it explores who or what may be responsible for financial crises, using the paradigms of liberalism, Marxism, realism and institutionalism to compare and contrast these explanations. The course uses a lecture format, augmented by participant working groups and presentations.

Course level

This course is not an economics course, although it assumes some prior knowledge of basic macroeconomic principles. It will be geared towards faculty and advanced graduate students in the political science fields of international political economy and public policy. The course seeks to bring together participants from a range of teaching and research experience in the IPE field; prior work in finance is not a requirement.

Over the past 15 years, global financial flows have become one of the most important determinants of a country’s economic performance. The type of international capital has also changed: Commercial bank credit and foreign direct investment are being overshadowed by portfolio investment in the form of stocks and bonds. This course looks at local and national levels of financial activity; it explores how governments in emerging market countries are handling the increase in private international capital flows. Are rising levels of portfolio capital leading economies to converge towards the same institutions? What effects do different models of financing have on political development? What are the needs for accountability in a democratic political order? What are the policy choices for these emerging economies?

The first module of the course reviews the history of international capital flows and the emergence of capital markets in developing countries. It then briefly explores different models for explaining country success and failure in attracting and using these funds.

The second module explores the role of the financial-industrial groups (FIGS). It looks at the characteristics of FIGS and asks how, and, why they emerge.

The third module studies the role of institutions in development: the Central Bank and multilateral financial institutions (MFIs). It asks whether an independent central bank is the appropriate institution for managing capital flows, or whether currency boards or dollarization are better options. It further explores how these three options meet with the need for accountability in a democratic political order. It explores how MFI policies affect country-level decisions in finance, and whether they accelerate global financial integration or reinforce the existing global financial hierarchy.

The fourth module focuses on the regulation of financial markets, asking what a state can do to regulate financial markets, and exploring why states impose different regulatory models. It returns to the actors in financial-industrial groups, exploring the differences among FIGs, both cross-sectionally and cross-nationally. It introduces the area of informal markets, assessing the role they play in financial policy.

The fifth module steps back, reviewing the different explanations for financial crises. It analyzes the different ways that scholars have explained outcomes, and assesses the public policy consequences. It then returns to case studies in Eastern Europe.

Throughout, the course takes a regional case study approach, studying the contemporary Latin American, Asian, and Eastern European and Russian experiences with financial liberalization and crisis.

Teaching Methods

For each module in the course, at least two resource persons will introduce the topic with a lecture of 1-2 hours. Following this lecture, the participants will break out into smaller working groups. For three or four topics, these groups will prepare oral presentations on the topic, either on a regional case study, or on a functional issue. Groups will then present their findings to the whole class in a 15-minute oral presentation, followed by discussion.

For the other topics, participants will prepare written arguments on topics chosen by the faculty resource persons. The membership of the working groups will change daily.

Over the period of the course, participants are invited to submit written reaction essays on any two sets of readings. As fellow colleagues, we expect that the participants will complete both the verbal and written assignments, as well as engage in group discussions.