International Business and Political Economy
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International Business and Political Economy Dipak Basu Nagasaki University, Japan and Victoria Miroshnik Associate Professor, Graduate School of Business Sciences, Tsukuba University, Tokyo
Dipak Basu and Victoria Miroshnik 2015 Softcover reprint of the hardcover 1st edition 2015 978-1-137-47485-8 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN 978-1-349-50167-0 ISBN 978-1-137-47486-5 (ebook) DOI 10.1057/9781137474865 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Miroshnik, Victoria, 1969 International business and political economy / Victoria Miroshnik, Dipak Basu. pages cm 1. International trade Political aspects. 2. Free trade Political aspects. 3. International finance Political aspects. 4. International economic relations. 5. Economic policy. 6. Monetary policy. I. Basu, Dipak R. II. Title. HF1379.M567 2015 330 dc23 2014049592
To Levan Bzheshkyan and Meghamaller Basu
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Contents List of Figures List of Tables Preface viii ix x Introduction 1 1 World Trade Organization and World Economic Architecture 5 2 Patent Laws and the Developing Countries 10 3 Free Trade or Trade Management 15 4 A New Reserve Currency 34 5 Doha Climate Talk of the UN: Science vs Market 43 6 Economic Policy in the Developed Word before 2008 63 7 The Economic Crisis of 2008: Causes and Solutions 81 8 Financial Stability and the International Monetary Fund 94 9 The Greek Tragedy and Its Lessons 99 10 Russian Reforms and Its Consequences 107 11 Economic Reforms in India 128 12 Privatization 135 13 Privatized Pension 141 14 Inflation in India 144 15 Labor-Market Reforms in India 155 16 Privatization of Electricity 165 17 Economic Reforms in China 174 18 Industrialization and Land Question 192 19 Evaluation of the Millennium Goals of the UN for Africa 197 20 Economic Roots of the Middle-East Crisis 213 References 220 Index 225 vii
List of Figures 5.1 Temperature relative to years 46 5.2 Temperature anomalies 46 5.3 Temperature change for the past 150,000 years at the VOSTOK site in Antarctica, based on the deuterium proxy found in ice cores. Zero means the year 2008 47 5.4 Average historical deficits, USA 55 5.5 Inequality in the USA 57 10.1 International dynamic efficiency 111 10.2 Growth rates of Soviet net material product 112 10.3 Growth rates of Soviet gross industrial output 113 14.1 Indices of world commodity prices 145 14.2 International oil prices 146 14.3 Russia: growth, output and investment 146 17.1 China s GDP, annual average percent change 176 20.1 Oil and gas fields of Syria 215 20.2 Syrian known oil reserves 216 20.3 Syrian estimated natural gas reserve 216 viii
List of Tables A.1 Subsidies provided by the US government, 2013 13 3.1 Number of export items facing higher tariffs 21 3.2 Tariffs on selected export items of the poor countries 21 6.1 Eastern European countries: comparison of 1989 and 2000 80 9.1 Greek debts 100 10.1 Analysis of economic growth rates 108 10.2 Average growth rate in the EEC and CMEA 108 10.3 Investment ratio and investment efficiency 109 10.4 A dynamic comparison of the Soviet and US economies 109 11.1 Comparative economic growth under planned and reformed regimes in India 129 11.2 Employment in the organized sector 131 17.1 Export growth rates in East Asian economies 188 17.2 Trade destruction caused by China 189 ix
Preface This book is the result of many years of fierce debates and discussions both between ourselves and with friends including Alexis Lazarisis, Shigeru Uchida, and Buddhadev Ghosh, and participants of seminars at Bond University, Queensland and at the Indian Statistical Institute, Calcutta. Liz Barlow of Palgrave Macmillan contributed the most by supporting our effort to publish this book. Gerry Mason read and corrected the typescript. We are very grateful to them. In this book, we are going against the tide by challenging the privatization process and the new international economic order. We have analyzed some prominent countries of the world to examine this issue. The question we are asking is very basic: whether it was necessary to dismantle the old system and privatize the economy to destroy whatever was achieved in most developing countries. Our purpose is to re-examine the relative merits of alternative economic and international business policy regimes. We hope this book will re-ignite the debate about the efficiency of this new international business system. x