Jeffry Frieden

The post-war international economic order was based on American leadership tempered by multilateralism. History and theory suggest that regimes change when major actors are no longer willing to fulfil the expectations others have of their behaviour. Over the past decade and more, socio-economic and political trends have eroded American domestic support for international economic engagement. The second Trump Administration has used its 2024 electoral victory to take the country far down the path of changing the nature of American leadership and revising or rejecting American commitments to multilateralism. Regime change is underway.

How could the regulation of such things as pharmaceuticals and pesticides be a bad thing? How could banning products on safety grounds be evil? How could international cooperation on regulating potentially dangerous products go wrong? In Regulating Risk, Rebecca Perlman suggests one very important way in which regulation can serve nefarious purposes—in particular, the purposes of major corporations. Imagine that a pharmaceutical company has a profitable drug whose patent protection is about to expire, after which cheaper generics will replace the branded version. What is a poor corporation to do? Hmm…perhaps it can come out with a brand-new variant of the drug, with brand-new patent protection. And, for good measure, it can convince regulators that the old drug, now about to go generic, is not up to current regulatory standards and should be banned. Clever! And, Perlman shows, a common strategy of companies that find themselves in this position. Perlman argues that the principal tool corporations have in their arsenal to pursue these goals is information. Products are extremely complicated, and regulators cannot possibly be testing all products all the time. The innovating company can itself carry out, and provide the regulator with, a retroactive precautionary review, making available information that suggests that the long-available drug is no longer suitable and should be withdrawn. This takes advantage of the fact that such retroactive precaution may well be justifiable in many circumstances (e.g., products approved decades ago may no longer pass muster) and that the company is likely to have an informational advantage over the regulator.

Why do some societies embrace innovative technologies, policies, and ideas, while others are slow to adopt, and some even resist, them? Incumbent producers are most likely to be affected by certain kinds of innovations; they also wield a disproportionate influence in the design of institutions and policies that encourage or limit their adoption. We show formally that the elite has four cardinal policy options: to appropriate the innovation for itself; to encourage its adoption; to tax, regulate, or limit the innovation; or to block it. We show that six features of an innovation determine how it is received: (i) whether it is easy to replicate; (ii) whether it complements or competes with the elite's sources of income; (iii) whether its impact is broad or narrow; (iv) whether it is location‐dependent, and (v) concealable; (vi) whether it requires large fixed costs. While other works have occasionally considered one of these factors, we show where each feature comes from, and we assess them systematically and together. We provide illustrative evidence of the relevance and generality of the model to understand the fate of a variety of innovations.

Few propositions in economics are as widely accepted as the theory of comparative advantage: If two countries have a comparative advantage in the production of different goods and services, trade can be welfare-enhancing for both. But trade policy has always been controversial in Latin America, as it is not made by academic economists but by politicians who need to gather and maintain the support of constituents who in some cases have much to lose or gain from different trade policies. This book walks the reader through a complex thicket of contending interests and disparate political institutions to analyze why Latin American governments make the trade policies they do. Its chapters show how an array of different governments have attempted to navigate frequently conflicting interests and ideas, and how different institutional arrangements impinge on trade policy design and outcomes. It is to be hoped that the experiences analyzed here can inform the making of future policy and, perhaps, help improve it.

A populist backlash to globalization has ushered in nationalist governments and challenged core features of the Liberal International Order. Although startling in scope and urgency, the populist wave has been developing in declining regions of wealthy countries for some time. Trade, offshoring, and automation have steadily reduced the number of available jobs and the wages of industrial workers since at least the 1970s. The decline in manufacturing employment initiated the deterioration of social and economic conditions in affected communities, exacerbating inequalities between depressed rural areas and small cities and towns, on the one hand, and thriving cities, on the other. The global financial crisis of 2008 catalyzed these divisions, as communities already in decline suffered deeper and longer economic downturns than metropolitan areas, where superstar knowledge, technology, and service-oriented firms agglomerate. We document many of these trends across the United States and Europe, and demonstrate that populist support is strongest in communities that experienced long-term economic and social decline. Institutional differences in labor markets and electoral rules across developed democracies may explain some of the variation in populists’ electoral success. Renewed support for the Liberal International Order may require a rejuvenation of distressed communities and a reduction of stark regional inequalities.

This is a reader that applies the newest debates in political economy to the analysis of Latin America in a way that is thematically and theoretically cohesive.. Modern Political Economy and Latin America consists of carefully selected, edited readings in Latin American political economy. The editors, Jeffry Frieden and Manuel Pastor, Jr., include an introductory chapter, and a concluding article as well as brief introductions to all sections. These inclusions will make explicit the theoretical underpinnings of each article, and will highlight their respective contributions to the ongoing debates in Latin America. } Modern Political Economy and Latin America consists of carefully selected, edited readings in Latin American political economy. The editors, Jeffry Frieden and Manuel Pastor, Jr., include an introductory chapter, and a concluding article as well as brief introductions to all sections. These inclusions will make explicit the theoretical underpinnings of each article, and will highlight their respective contributions to the ongoing debates in Latin America.Latin American economies are undergoing profound transformations. And, in the wake of a decade-long debt crisis, the statist models of the past are giving way to a reliance on the market even as authoritarian rule seems to have ebbed in favor of new or reborn democratic institutions. As a result, the policy framework guiding economic and political development is likely to be fundamentally different. The analysis of Latin America needs a strong dose of modern political economy--one that can bring the area studies field up to date with the recent developments on the theoretical end of the economics and political science professions. This book helps fill that need. }

The Eurozone crisis constitutes a grave challenge to European integration. This article presents an overview of the causes of the crisis and analyzes why it has been so difficult to resolve. We focus on how responses to the crisis were shaped by distributive conflicts both among and within countries. On the international level, debtor and creditor countries have fought over the distribution of responsibility for the accumulated debt; countries with current account surpluses and deficits have fought over who should implement the policies necessary to reduce the current account imbalances. Within countries, interest groups have fought to shift the costs of crisis resolution away from themselves. The article emphasizes that the Eurozone crisis shares many features of previous debt and balance-of-payments crises. However, the Eurozone's predicament is unique because it is set within a monetary union that strongly constrains the policy options available to policy makers and vastly increases the interdependence of the euro crisis countries. The outcome of the crisis has also been highly unusual because the costs of crisis resolution have been borne almost exclusively by the debtor countries and taxpayers in the Eurozone.

The principal challenge facing the world economy is the risk of recurrent financial crises. Global macroeconomic imbalances create the conditions for boom‐and‐bust cycles that are extremely costly for the countries that experience them, and that can affect other nations and the entire world economy as well. The G20 recognizes the importance of these trends, and has committed itself to cooperative measures to reduce imbalances. However, progress has been limited and halting. There are major political obstacles to global macroeconomic policy cooperation, both within countries and among countries. China's attempts to rebalance its economy are crucial to broader international financial stability. Its G20 presidency gives China the opportunity to demonstrate that it is willing and able to advance its cooperation with economic partners, and to help lead the rest of the world in this direction.