Globalization and National Reform

Source: New York Daily News

The article by Jeffry Frieden and Ronald Rogowski, entitled “The Impact of the International Economy on National Policies: An Analytical Overview,” seeks to flesh out the relationship between globalization and domestic reform across the globe. The key factors which impact these reforms are defined by the International Monetary Fund as trade, capital movements, movements of people, and spread of knowledge and technology.[1]

These facets of the international economy contribute to the three dependent variables Frieden and Rogowski identify: changes in institutions, changes in policy, and changes in the relationship between the political institutions and the policies.[2]

Changing Institutions

Within the context of promoting policy changes, Duane Swank argues that “political institutions determine the forms and quality of representation of domestic interests that are affected by the internationalization of markets.”[3] Integration in the international economy forces countries to compete and succeed economically by reforming their political institutions. Boris Yeltsin masterminded an important shift in Russia, creating market reform, but failed to push the required political institution reforms. Putin has ridden the momentum of these reforms, but cannot maintain the inefficient and corrupt institutions.[4] Anders Aslund, a Swedish economist and former economic advisor to Russia and other eastern bloc states, argues that Russia’s institutions are teetering on the brink of fundamental changes, because in a market of international economic integration, “no modern state can function with kickbacks of rates of 20 to 50 percent.”[5]

Changing Policies

The second dependent variable between international economic integration and political reform is changing policies. Roger Dale explains that “while it is widely acknowledged that globalization does affect national policies in a range of areas, precisely how is rarely questioned, let alone analyzed.”[6] One simple example of the policy impacts of economic integration is its coercive ability to make states adapt their policies to meet international norms. The World Trade Organization has been especially effective in this respect, forcing member countries to break down trade barriers and allow fellow members Most Favored Nation (MFN) status, as well as providing a dispute resolution architecture to attack non-conforming national policies.[7]

The international economy incentivizes the reform of both national policies and the institutions which make them, often in the direction of democratization, liberalization and transparency through organizations like the World Trade Organization.

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[1] “Globalization: Threat or Opportunity?” The International Monetary Fund, April 12, 2000 (Accessed online 06 March 2015, http://www.imf.org/external/np/exr/ib/2000/041200to.htm#II)

[2] Frieden, Jeffry A., and Ronald Rogowski. "The impact of the international economy on national policies: An analytical overview." Internationalization and domestic politics (1996): 28

[3] Swank, Duane. Global capital, political institutions, and policy change in developed welfare states. Cambridge University Press, 2002.

[4] F. Joseph Dresen, “Russia's Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed,” The Kennan Institute at the Wilson Center, April 2008

[5] Ibid.

[6] Dale, Roger. "Specifying globalization effects on national policy: a focus on the mechanisms." Journal of Education Policy 14, no. 1 (1999): 1-17, p. 2

[7] “Principles of the trading system,” World Trade Organization https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm