Economic development and growth theory have long grappled with the consequences of cross-border flows of goods, services, ideas, and people. But the most significant growth in cross-border flows now comes in the form of data. Like other flows, data flows can demonstrate imbalances among exports and imports. Some of these flows represent ‘raw’ data while others represent high-value-added data products. Does any of this make a difference in national economic development trajectories? This paper argues that the answer is yes. After reviewing the core logic of ‘high development theories’ from the twentieth century, I analyze the sometimes implicit applications of these arguments to data as they are evolving in the existing literature. I then put forward a different argument which takes better account of unique characteristics of the political economy that emerges at the intersection of data, machine learning, and the platform firms that use them. I explore the implications of this new argument for some policy choices that governments face with regard to data localization, import substitution, and other decisions relevant to growth in both advanced and emerging economies.

This article introduces a special issue of Business and Politics on Property Rights, Financial Risk, and the Politics of a Networked Global Financial System. We introduce aspects of the articles in the issue and situate them within existing literatures in financial economics, public policy, political economy, regulation and governance, and network science. We do this through examining four key contributions in the special issue. First, we show that common conceptualizations of property rights in financial markets ignore the multidimensional nature of financial goods; examples of all goods types can be found in modern finance, and this fact has important implications for the politics and regulation of these markets. Second, we argue that models of financial actors as independent, atomistic agents neglect the relational nature of financial markets, and argue that theory and methodology from network science, financial economics and political economy provide useful ways to analyze these interdependent systems. Third, we discuss how the relational nature of risk leads to hierarchical patterns of financial interdependence, which bequeaths substantial amounts of power—within both market and political systems—to those actors that occupy core positions within the structure of interdependence. Fourth, we integrate ideas from papers in this special issue and related literature with concepts from the Ostrom School of political economy to consider how monitoring, self-governance, and polycentric applications might improve financial market governance. This issue's papers thus constitute one of the first combined attempts to bring the Ostrom School into substantive conversation with financial market governance and risk analysis through comparative and international political economy disciplines.

Recent research in international political economy has begun to explore the implications of producer heterogeneity for trade politics. Variations in productivity and size lead to systematic variations in market behaviors, especially with respect to firms’ abilities to engage foreign markets. This heterogeneity similarly leads to systematic variations in policy stances: Highly productive firms are more likely to favor trade liberalization than their less productive counterparts. I test the role of firm heterogeneity on trade-policy stances using original and representative survey data of Japanese manufacturers. I find that highly productive firms are more likely to favor liberalization than others, while a large portion of producers is indifferent to trade-policy reform. Other producers do not know how they would be impacted by liberalization; these tend to be smaller than their counterparts. The relationship between productivity and pro-trade attitudes is robust, even when controlling for a wide range of internationalization modes.

This special issue focuses on the difficulties of negotiating the Transatlantic Trade and Investment Partnership (TTIP), with contributions by scholars from different perspectives. This introductory article briefly examines the trend to mega-FTAs of which TTIP is a leading example. It then reviews the contributions to this special issue, drawing on an analytical approach that reflects extant work on transnational and transgovernmental relations. This approach, we contend, helps to understand the stark mismatch between the desire of some parties to negotiate binding trade rules on behind-the-border regulatory policies in certain key sectors of national economies and the progress made in TTIP talks. We then highlight the significance of some key actors in a case study of failed E.U. attempts to include financial sector reforms and associated regulatory processes in TTIP.

Are club goods becoming more widespread in developed economies, and, if so, what is the broader significance of this trend? Club goods are as salient for the profitability of non-financial firms as for finance. First, corporate strategy today largely revolves around the generation or acquisition of intellectual property rights and other club/franchise goods. Second, financialization is not just about the credit relationship between financial firms on the one side and non-financial corporate and household borrowers on the other, but also about Main Street's ability to use financial power to suppress competition in its own markets. Third, firms’ strategic reliance on IPRs and club goods more generally has magnified both profit and wage inequality in the broader economy. This inequality combines with changes in corporate structure to produce a significant part of the household level income inequality we currently observe in the United States. Fourth, all these processes are ineluctably political, because the state necessarily constitutes club or franchise goods, just like any property right. But the quantity and quality of those property rights is an indeterminate outcome of struggles among firms over the size of and shares of the pool of profits in a given national and global economy.

Industry has organized increasingly effective self-governance initiatives since the 1980s. Almost all of these are based on the economic leverage of large retailers and manufacturers over their worldwide supply chains. This article documents commonalities in six of the best-studied examples—coffee, dolphin-safe tuna, fisheries, lumber, food processing, and artificial DNA—and offers straightforward economic and political theories to explain them. The theories teach that oligopoly competition can strongly constrain private power so that firms are answerable to a shadow electorate of consumers. Furthermore, rational firms often benefit from ceding significant power to suppliers and NGOs. These results extend traditional arguments that free markets constrain private power and suggest an explicit framework for deciding when private politics are legitimate.1

Recent surveys revealed few producers in an export sector participate in trade. Economists explained this result by relaxing their assumption about firms’ operations, to produce a novel observation: Trade liberalization disproportionately benefits the most efficient producers in the sector, while potentially harming the least efficient. Political scientists have begun exploring the consequences of this variation, especially in lobbying. This article explores whether the impact of this finer-grained description of interests can be observed in the later stages of our demand-driven models of the politics of trade. I focus on one case with characteristics favorable to observing intra-industry differences: the American steel industry in Taft's presidency. A trade-based cleavage inside the sector determined firms’ interests. Demands shaped policy, as observed in three pieces of legislation: the Payne-Aldrich Act, reciprocity with Canada, and the 1912 tariff. The first liberalized trade in steel, intensifying competition in the industry. The second promised to do the same, with a similar impact. The third had no effect, however, because Taft vetoed the bill. This case illustrates intra-industry firm heterogeneity can provide additional accuracy, revealing a previously undiscovered cleavage. Nonetheless, preferences alone did not determine policy.

In this paper, we place the Trans-Atlantic Trade and Investment Partnership (TTIP) into broader geo-political and economic context given the current Trump Administration's withdrawal from the Trans Pacific Partnership (TPP) and the loss of momentum for TTIP. Both TPP and TTIP sought to provide key tactical solutions to the particular trade/investment problems participating states faced. For the U.S. government, these free trade agreements also represented a geo-political undertaking, an attempt to once again set trade rules in light of deadlock in the WTO. Ultimately, the inability of the Obama Administration to successfully complete negotiations for and ratification of these two deals does not alter the underlying motivations that led to them in the first place. The stagnation of these deals, however, has intensified geo-economic and geo-strategic concerns: opening the door to rival articulations of trade governance and undermining U.S. credibility with its partners.

Despite initial intentions to better align transatlantic regulation and associated practices in the negotiation of the Transatlantic Trade and Investment Partnership (TTIP), this was not possible for rules concerning genetically modified organisms and data privacy. By 2016 both matters effectively fell off the TTIP negotiating agenda. This paper identifies the factors responsible, specifically the critical role played by independent regulatory agencies and associated bureaucratic politics, transnational coalitions of private sector organizations, and non-government organizations and contingency. These factors are not exclusive to the two salient regulations considered here, with the implication that the identification of cross-border spillovers is at best a necessary condition for the successful negotiation of binding trade rules on behind-the-border government policies.

Many scholars have studied the use of negative advertising in campaigns and what motivates candidates and groups to run negative ads. Recent elections, however, have seen a dramatic increase in advertising by outside groups, particularly by so-called “dark-money” organizations, which do not disclose their donor information. This study questions whether dark-money groups are more likely to engage in negative advertising. By examining the more than 13,000 outside-group expenditures from the 2010 through the 2014 congressional elections, it finds that outside groups are, indeed, more likely to use negative ads when they conceal their donor information. Additionally, while liberal and conservative groups are roughly equally likely to use negative ads, conservative groups are most likely to use anonymously funded negative advertisements. This could be, at least in part, due to the support conservative groups receive from organized businesses, which generally seek to conceal their political activities from public scrutiny.

Avoidance of risk and increasing returns are the two main motivators in finance. Returns are better understood and perhaps more easily regulated than financial risk, which is a complex and slippery concept. Financial risk may be best conceived of as a complementary good, but the nature of this good varies as the size of the investment position scales up. That is, the effects of financial risk may be conceived of as a private good for a small financial actor, but becomes a club good, then a common pool, and occasionally a public good as the impact of the investment position's financial risk spreads to affect more of society. Examining banking history shows us that banks and bankers have offset risk while retaining returns through structuring financial products and investment vehicles as club goods, thereby enabling financial actors to jointly benefit from ownership while harming those outside the club walls. Not surprisingly, this capacity to push risk outside club walls has grown commensurate with the political influence of banks and bankers. Laying out governance strategies and concepts, I suggest that in some circumstances pervasive club good structures in finance may be employed to gather regulation-enhancing information, to better understand the networked nature of financial risk and to craft self-governance structures.

This article develops an explanation for patterns of industrial specialization in emerging high-technology industries through a comparative analysis of wind and solar sectors in China, Germany, and the United States. Although governments have held similar industrial policy goals in the support of renewable energy industries, firms in all three economies have established distinct innovative capabilities in response to the policies of the state. This article shows that firms utilize both legacy institutions and engage in relational learning in global networks to carve out distinct niches in emerging industries. Based on an original dataset of more than 200 firm-level interviews, the article suggests that the rise of global value chains has widened the space for national diversity in industrial specialization. Firms no longer have to establish the full range of skills required to bring an idea from lab to market, but can specialize and collaborate with others. In this context, firms respond to industrial policy by incrementally building on existing industrial capabilities and by relying on familiar public resources and institutions, even in emerging industries. These findings point to the role of industrial legacies in shaping firms' positions in global value chains and show that firms are active agents in maintaining distinct industrial specializations and domestic institutions under conditions of globalization.

The United States and the European Union include several environmental clauses in their respective preferential trade agreements (PTAs). Building on an exhaustive and fine-grained dataset of PTAs’ environmental clauses, this article makes two contributions. First, it shows that the United States and the European Union have initially favored different approaches to environmental protection in their PTAs. The United States’ concerns over regulatory sovereignty and level playing field have led to a legalistic and adversarial approach, while the European Union's concerns for policy coherence have led to a more procedural and cooperative approach. Second, this article provides evidence that European and American trade negotiators have gradually converged on a shared set of environmental norms. Although the United States and the European Union initially pursued different objectives, they learned from each other and drew similar lessons. As a result, recent American agreements have become more European-like, and European agreements have become more Americanized. This article concludes that U.S. and E.U. approaches, far from being incompatible, can usefully be combined and reinforce each other.

The promotion of additive manufacturing (AM) as a set of enabling technologies has been a prominent feature of new policies seeking to revitalize manufacturing in developed economies. Because of its differences from traditional manufacturing technologies, small businesses, in particular, face high costs in adopting AM methods. How can governments assist small firms and their innovation ecosystems to make significant leaps in enabling technologies? This paper conceptualizes the challenges faced by groups of small enterprises adopting new technologies and a decentralized policy effort to systematically increase the use of advanced manufacturing technologies. In Canada, funding used by community colleges to create applied research centers has been intended to establish anchors for local “industrial commons” around advanced manufacturing methods. By providing both information and working capital to private sector partners, these community college programs should ideally mitigate challenges to the adoption of AM technologies—the so-called “valley of death”—in local ecosystems. There are many successful individual cases of partnership (i.e., private goods); however, this bottom-up approach seems to fail both as a means of promoting vibrant industrial commons (i.e., public goods) and as a coherent national strategy. We trace the challenges of this approach to principal-agent problems associated with layering new programs upon existing organizations, the density of program participants, and the presence of appropriate technologies.

The international financial crisis was followed by waves of domestic regulatory reforms, first and foremost, in the United States and the European Union. Post-crisis financial regulation was sometimes different across jurisdictions. Moreover, the United States and the European Union sought in various ways to (re)assert their regulatory power not only vis-à-vis the market, but also with regard to other jurisdictions, which often resisted the projection of regulatory power beyond national borders. Consequently, a handful of important post-crisis transatlantic regulatory disputes emerged concerning E.U. rules on hedge funds, U.S. rules on bank structure and E.U. and U.S. rules on over-the-counter (OTC) derivatives. These disputes mainly involved the terms of access to each other's markets, the equivalence between domestic rules, and the extraterritorial effects of those rules. Some of these disputes were also intra-E.U. disagreements, whenever the preferences of the United Kingdom were different from those of Continental countries and similar to those of the United States. The network structure of the financial industry and the patterns of financial interdependence across the Atlantic amplified the extra territorial effects of domestic reforms, but at the same time triggered an active involvement of the transnational financial industry in the management and, eventually, the settlement of these disputes.

This article examines bank lobbying in the Basel Committee on Banking Supervision (BCBS). While excessive bank lobbying is routinely linked to weakened banking regulations, we still know little about bank mobilization patterns. In particular, when and why do some banks lobby the BCBS while others do not? I argue that the decision to lobby is a function of two factors: banks’ organizational characteristics and domestic banking regulations. I test my argument using a unique dataset of over 33,000 banks worldwide during the period in which Basel III was negotiated. My findings confirm a pronounced bias in bank mobilization patterns toward wealthy, internationally active banks. I also find that banks facing more stringent banking regulations at home tend to lobby the BCBS in an effort to level the playing field with international competitors. This effect is particularly salient for stringent regulations on banking activities as well as higher capital adequacy requirements.1

This paper discusses the internal dynamics of American trade policy making in the context of the Transatlantic Trade and Investment Partnership (TTIP) negotiations. The author describes the active role interest groups, the U.S. business community, and representatives on both sides of the political spectrum have played in the passing of Transatlantic Partnership Agreement (TPA), the TPP negotiations, and currently the TTIP debate. Lastly, the author lays out the challenges TTIP will continue to face in light of opposition to specific TPP provisions, trans-atlantic disagreement over ISDS and data flows, and the recent presidential elections.

The intellectual engagement with multinational enterprises in International Relations has found a new home within the narratives of global governance and corporate social responsibility. Both narratives seem to agree that the role of business has changed as state capacities to provide governance assumingly have diminished and, based on broader social and political responsibilities, enterprises began to participate more actively in the provision of collective goods. Increased participation alone, however, does not reveal how corporate actors define and make sense of their responsibilities and their roles within global governance. In fact, focusing on corporate responsibilities and corporate governance contributions does not consider enterprises as actors in their own right who actively interpret and respond to changes in their normative environments. To fill this gap, the article proposes a framework that conceptualizes corporate agency as inherently social and creative. This framework, which can be applied to different contexts, is illustrated by reconstructing interpretative frames and self-understandings advanced by Shell in response to its crisis in Nigeria during the 1990s. Based on this reconstruction, Shell failed to develop and communicate a clear understanding of its social responsibilities, and its overall integration into global governance is likely to remain an ambiguous process in which uncertainty and indeterminacy prevail.

Predominant models of financial regulation based on representative agents—in both the public interest and public choice traditions—assume that competitive pressures in financial markets undermine prudential behavior by firms in the absence of regulation. One empirical expectation of these models is behavioral: firms should adjust their risk-taking behaviors in response to the regulatory environment they face but should not over-comply with regulations. That is, the central tendency of bank behaviors should hew closely to regulatory minima and the variance should be small. I first demonstrate that this expectation is not borne out by the empirical record and then advance a theoretical argument that does not rely on a representative agent model. I argue that firms face a range of incentives from markets and governments that condition their risk-taking behaviors, and firms choose a “preferred habitat” within a market structure. Some of these incentives are towards greater risk-taking, while others are in the direction of greater prudence. This framework provides opportunities for examining financial market actors in a realistic context, and offers ways to unify micro-level and structural analyses of the political economy of global finance.

The rise of public policies in the field of Corporate Social Responsibility (CSR) suggests a reassertion of state power over a phenomenon initially designed to weaken public authorities. But depending on policy objectives and underlying state-business relationships, CSR public policies seem to oscillate between the steering of corporate conduct towards political goals and the provision of political support to business interests. The present paper offers new perspectives on this ambiguity. Using social systems theory to guide a comparative study of two major Indian CSR policies, the analysis distinguishes two levels. At a functional level, the introduction of CSR in Indian regulatory politics produced more or less constraining expectations that open up opportunities for companies to participate in the performance of political functions. At an operational level, however, even a “mandatory” policy designed primarily according to political calculations let companies decide how they perform these functions. This persistence of voluntarism, which is supported by the semantic properties of “CSR,” consolidates the role of profit-driven calculations in the regulation of corporate conduct and, in the Indian case, in the redistribution of resources for social welfare. Research perspectives on the implications of CSR public policies for democracy are outlined in concluding remarks.