Literature on financial market liberalization focuses heavily on state activity in allocating preferential credit. I consider state activity in promoting nascent equity markets by asking why a state would create and promote a market in which the transaction costs are high, the potential rate of return is low, and firms are reluctant to list shares. I examine the case of the West African regional stock exchange and propose that the central bank for the West African Monetary Union created it to mediate the relationship between this region and the world economy. I propose that states and domestic markets act as complements rather than as rivals in some instances of bourse creation. Moreover, bourses in developing economies present a different set of relationships among states, public and private lending authorities, and market participants than their counterparts in more developed financial environments. This illuminates a need for further research in this area.

Japan's level of defense expenditure relative to the size of its economy has long been uniquely low among the major industrialized countries. As of 1995, Japan's expenditures stood at 0.96 percent of gross domestic product (GDP). Even adding to this the approximately 0.3 percent of GDP devoted to pensions for retired personnel, the level of spending is considerably less than that of major Western states such as the United States, United Kingdom, France, and Germany, as well as industrialized Asian states such as South Korea, Taiwan, Malaysia, and Singapore. Furthermore, these relative magnitudes have remained reasonably stable over the past few decades.

Referendum votes on adoption of the euro in Denmark (2000) and Sweden (2003) provide unprecedented natural experiments through which to study the political economy of money. Using exit polling data and multinomial logit statistical models that allow us to separate preferences for the euro from preferences for the European Union (EU), we test economic “calculation” and political “community” as determinants of individual-level preferences over adoption of the euro. We find that “calculation” operates most clearly where, as in Sweden, the choice of a fixed versus a floating exchange rate regime is at stake, while “community” exerts strong effects across the two cases.We would like to thank Krister Andersson, Jerry Cohen, Robert Fishman, Jennifer Fitzgerald, Jeff Frieden, Eric Helleiner, Jacques Hymans, Lars Jonung, Kate McNamara, Jennifer Wolak, and the anonymous reviewers for helpful comments, and Helga Sverrisdottir for outstanding research assistance. We are grateful to Jens Wagner of the Danish Data Archive and Torbjörn Berglund of the Swedish Social Science Dataservice for providing the data used in this note. Neither these individuals nor their respective agencies are responsible for the interpretations contained herein.

The term “middle power” is a convenient one that has come into general use as a means of avoiding the unreality of a simple division of states into “great” and “small”. While attempts to find a yardstick for the measurement of states have been fruitless, there can be some agreement on the categories. For practical purposes the great powers at the present time are those which hold permanent seats on the Security Council, just as during the war they were those which participated in the meetings of heads of government on high policial and military policy. There are clearly also a number of smaller states which, because of limited resources or small population, or both, are commonly ranked as small powers. In between lie a number of countries which make no claim to the title of great power, but have been shown to be capable of exerting a degree of strength and influence not found in the small powers. These are the middle powers. There is no agreed list because, while there is a fixed, if arbitrary, boundary between them and the great powers, there are, as it were, marginal powers which might be classified as “middle” or “small”. Probably, however, the following members of the United Nations would generally be recognized as middle powers: in Europe — Belgium, the Netherlands, and Poland; in the Americas — Argentina, Brazil, Canada, and Mexico; in the Pacific — Australia, and India.

Especially since the end of the Cold War, the Council of Europe (CE) and the Organization of American States (OAS) have acted to protect democracy in their member states from erosion or reversals, with CE policies more robust than those in the Americas. What explains this variation? I develop an argument focusing on institutional permeability, or the extent to which those organizations are accessible to nonstate actors. Permeability consists of three dimensions: range of third parties allowed access, level of decision making at which access is granted, and transparency of IO information to those third parties. Higher levels of permeability are likely to produce higher levels of constraint on state behavior through increasing levels of precision and obligation in international rules and practices. Alternative explanations, summarized as regional democracy norms, domestic democratic lock-in interests, and the power of stable democracies cannot explain the variation in multilateral democracy protection. More broadly, this article suggests that “democratizing” IOs by allowing ever-greater access to nonstate actors is likely to result in stronger, more constraining international rules, even in areas where states most jealously guard their sovereignty, such as the nature of their domestic political institutions.

Regional integration theory emphasizes elite social learning and attitude change as concomitant processes of integration. Participation by national elites in EEC decision making may bring about these changes. To test these hypotheses, French and German delegates to the European Parliament were interviewed, and their attitudes compared with those of a control group sampled among their national colleagues. The general finding was that the delegates’ attitudes appear to undergo cognitive, but not affective, changes. Delegates develop more complex perceptions and become better informed and more interested in European matters, yet they become neither more favorable nor less hostile to these issues because of the self–recruitment of many legislators who were avowed Europeans before their nomination. Strong ties to national parties apparently diminish the attitudinal effects of this learning experience. Only when the parliament has full time legislators who exercise potent policy–making tasks will its role in European integration increase.

The rise of capitalism in Western Europe was based on rising mass incomes and a political power relationship favorable to the lower classes, which created opportunities for profitable investment. Nowhere in today's underdeveloped world did such conditions exist before the European expansion; nowhere were they created by the mere fact of integration into the capitalist world system. Thus the periphery has been ever more disadvantaged by its connection with the capitalist center. But the center could and can dispense withthe contribution of the periphery and, indeed, on occasion has done so. A planned restructuring of the productive apparatus and social reform in the Third World are both complex and contradictory processes. The working class in the North has to realize its interest in defending the masses of the Third World. It can do so by linking economic concessions in the North-South dialogue (raw material prices or access to markets) to social reform and the creation of a productive apparatus that permits the rise of mass incomes in the Third World.

An inventory of the objectives and instruments which characterize the differing political strategies of six advanced industrial states in the international economy yields three groups of states: the two Anglo-Saxon countries, mercantilist Japan, and the states of the European continent. Corresponding differences exist in the distinctive elements of domestic structure: the coalition between business and the state and the policy networks linking public and private sectors. An historical explanation of these differences is most appropriate. In the future, stresses in the relations between business and the state and contradictions between ruling coalitions and organized labor may lead to changes in political strategies.

Conditions on aid agreements aim to increase aid effectiveness, and are, therefore, an important component of aid agreements. Yet little is known about why aid-recipient governments comply with these conditions. Some scholars have suggested a strategic-importance hypothesis: recipients comply when donors enforce conditions—and donors enforce conditions when recipients are not strategically important. However, there are many cases where strategically important countries comply with conditions and strategically unimportant countries fail to do so. We argue that to explain compliance, we must also understand how the desire to maximize revenue from major income sources, such as FDI and natural resource rents, changes the recipient's incentive to comply. Using data on World Bank records of compliance from 1964 to 2010, we find strong support for our hypotheses even after accounting for different model specifications and potential endogeneity. Paradoxically, donors can secure compliance from recipients for reasons unrelated to the promise of additional aid.

Existing scholarship attributes various political and economic advantages to democratic governance. These advantages may make more democratic countries prone to financial crises. Democracy is characterized by constraints on executive authority, accountability through free and fair elections, protections for civil liberties, and large winning coalitions. These characteristics bring important benefits, but they can also have unintended consequences that increase the likelihood of financial instability and crises. Using data covering the past two centuries, I demonstrate a strong relationship between democracy and financial crisis onset: on average, democracies are about twice as likely to experience a crisis as autocracies. This is an empirical regularity that is robust across a wide range of model specifications and time periods.

What causes the increase in terrorism that reportedly often follows government concessions? Given this pattern, why do governments ever conciliate terrorists? I propose a model in which terrorist organizations become more militant following concessions because only moderate terrorists accept them, leaving extremists in control. Governments nonetheless are willing to make concessions because their counterterror capabilities improve because of the collusion of former terrorists. Former terrorists undertake this collusion to insure the credibility of government promises. The model also yields hypotheses regarding the level of government investment in counterterror, when moderates accept concessions, the terms of negotiated settlements, the duration of terrorist conflicts, incentives for moderate terrorists to radicalize their followers, and incentives for governments to encourage extremist challenges to moderate terrorist leaders. The model is illustrated with an application to the Israeli/Palestinian conflict.Professor Ehud Sprinzak, who died an untimely death on November 8, 2002, first introduced me to the study of terrorism. He is greatly missed. I received valuable comments from Scott Ashworth, Bob Bates, Mia Bloom, Bruce Bueno de Mesquita, Charles Cohen, Eric Dickson, Amanda Friedenberg, Orit Kedar, David Lake, Macartan Humphreys, Matthew Price, Todd Sandler, Ken Shepsle, David Andrew Singer, Alastair Smith, and Matthew Stephenson.

This article is a critique of Kelemen and Sibbitt's “The Globalization of American Law” (International Organization, Winter 2004). I first deal with the inconsistency of their treatment of their dependent variable, suggesting that they should have examined the interaction of three different diffusion processes. I then suggest that the explanations that they provide for the globalization of the American style are inadequate, and that the explanations that they reject require a second look. Consequently, their article conveys at best a partial picture of the process of change, its sources, and its outcomes. I highlight their inadequate treatment of the World Society Approach (WSA), the notion of regulatory competition, and the reduction of the role of ideas and agency, particularly the role of neoliberal ideas and big American and European business, to mere reflections of economic processes of globalization and liberalization. I also suggest that Kelemen and Sibbitt's did not lift their gaze beyond the boundaries of the political science discipline. In particular I argue that they do not examine the interaction of juridification, legalization, and judicialization on the one hand and adversarial legalism and responsive regulation on the other. I conclude with some suggestions for an interdisciplinary perspective on the study of global legal and regulatory change.I am grateful for intriguing comments from and discussions with John Braithwaite, Peter Cane, Peter Drahos, Peter Grabosky, and Frans van Waarden. All responsibility is, of course, mine.

Transnational relations and other multional process seriously threaten democratic control of foreign policy, particularly in advanced industrial societies. The intermeshing of decisionmaking across national frontiers and the growing multinationalization of formerly domestic issues are inherently incompatible with the traditional framework of democratic control. The threat is all the more serious because it is sustained not by enemies of democracy but unknowingly by people who consider themselves to be acting within Western democratic traditions and because it results in part from the very forces of internationalism, interdependence, and economic advancement that have come to be regarded as indispensable. The consequences of these developments and the ongoing erosion of control over military and foreign policy, dramatically demonstrated by the debate on the Vietnam War, amount to a fundamental challenge to the democratic structure of Western societies. This essay analyzes the threat of transnational relations by reexamining the arguments for limited democratic control of foreign policy in light of recent structural changes in world politics and the consequences of transnational relations for the democratic process and its institutions. It concludes by indicating some approaches that could strengthen the democratic dimension which is being eroded.

There are many ways in which one could study what is frequently called the Atlantic Community. First, one could trace the history of proposals made in order to strengthen the bond between the United States and nations situated on the other side of the Atlantic. Such suggestions, whether they aimed at federal union or at a close alliance, came either from Britain or from the United States, were always centered on the “British-American connection,” and aimed at making the two great English-speaking peoples the magnet that would attract lesser breeds, the force whose strength and virtues would preserve law, order, and peace in the world. Although such blue-prints rarely left visible traces on official policy in the United States, they are significant, both because British policy since the war often appeared inspired by the hope, or the nostalgia, for a world of this hue, and because overtones of these earlier appeals may have crept into recent American tactics in support of Britain's application to the Common Market.

Conventional wisdom holds that the creation of international, court-like institutions helps countries to peacefully settle trade conflicts, thereby enhancing overall welfare. Many have argued, however, that these institutions remain ultimately ineffective because they merely reflect the distribution of power in the anarchic international system. We argue that international litigation provides economic spillovers that create opportunities for judicial free-riding and explore empirically how litigation in the World Trade Organization affects bilateral trade between countries involved in a trade dispute. We use a matching approach to compare the dynamics of trade flows between countries that experienced a panel ruling with trade relations of observably similar country pairs that did not experience a ruling. Based on this comparison we find that sectoral exports from complainant countries to the defendant increase by about $7.7 billion in the three years after a panel ruling. However, countries that have proactively filed a complaint and carried the main costs of litigation do not systematically gain more than less-active third parties that merely joined an existing trade dispute. This suggests that international judicial institutions can provide positive economic externalities and may thereby lead to a less power-based distribution of the gains from trade.

Recent empirical evidence suggests that Chinese development finance may be particularly prone to elite capture and patronage spending. If aid ends up in the pockets of political elites and their ethno-regional networks, this may exacerbate ethnic grievances and contribute to ethnic mobilization. In this research note I examine whether Chinese development projects make local ethnic identities more salient in African partner countries. A new geo-referenced data set on the subnational allocation of Chinese development finance projects to Africa is geographically matched with survey data for 50,520 respondents from eleven African countries. The identification strategy compares sites where a Chinese project was under implementation at the time of the interview to sites where a Chinese project will appear subsequently. The empirical results suggest that living near an ongoing Chinese project makes ethnic identities more salient. There is no indication of an equivalent pattern when considering other donors’ development projects.

On April 18, 1946, the League Assembly adjourned after taking the necessary steps to terminate the existence of the League of Nations and transfer its properties and assets to the United Nations. On August 1, this transfer took place at a simple ceremony in Geneva. Thus, an important and, at one time, promising experiment in international cooperation came formally to an end. Outside of Geneva, no important notice was taken of this fact. Within the counsels of the United Nations, there was an apparent readiness to write the old League off as a failure, and to regard the new organization as something unique, representing a fresh approach to the world problems of peace and security. Quite clearly there was a hesitancy in many quarters to call attention to the essential continuity of the old League and the new United Nations for fear of arousing latent hostilities or creating doubts which might seriously jeopardize the birth and early success of the new organization.

Most civil wars are preceded by nonviolent forms of conflict. While it is often assumed that violent and nonviolent conflicts are qualitatively different and have different causes, that assumption is rarely tested empirically. We use a two-step approach to explore whether political exclusion and lost autonomy—two common causes of civil war according to extant literature—are associated with the emergence of nonviolent separatist claims, with the escalation of nonviolent separatist claims to war, or both. Our analysis suggests that different types of grievances matter more at different stages of conflict escalation. We find that political exclusion is a significant correlate of the escalation of nonviolent claims for self-determination to violence, while its association with the emergence of nonviolent separatist claims is weaker. By contrast, lost autonomy is correlated with both the emergence of nonviolent separatist claims and, if autonomy revocations are recent, their escalation to violence. We argue that these results are consistent with both grievance- and opportunity-based theories of conflict.

This article provides foundations to Polanyi's famed argument that monopoly power in the global capital market served as an instrument of peace during the Pax Britannica (1815–1914). Our perspective is novel—we focus on the role of intermediaries and certification. We show that when information and enforcement are imperfect, there is scope for the endogenous emergence of “prestigious” intermediaries who enjoy a monopoly position and as a result, control government actions. They can implement conditional lending: they subject the distribution of credit to the adoption of peaceful policies. Prestigious intermediaries act that way because of their concern with maintaining an unblemished track record when wars increased risks of default. Our analysis, which brings together insights from different disciplines, provides a significant extension to, and departure from, recent research on how countries accumulate reputational capital.

The “democratic peace”—the regularity that democracies rarely (if ever) fight with other democracies but do fight with nondemocracies—is one of the most famous findings in international relations scholarship. There is little agreement, however, about the mechanism that underpins the democratic peace. Recently, scholars have shown that mass publics in liberal democracies are less supportive of using military force against other democracies. This finding has been taken to support the idea that the content of public opinion may provide one mechanism that underpins the democratic peace. Using a large-scale survey experiment, we show that mass publics in an authoritarian regime—China—show the same reluctance to use force against democracies as is found in western democracies. Our findings expand the empirical scope of the claim that mass publics are reluctant to use force against democracies, but force us to rethink how public opinion operates as a causal mechanism underpinning the democratic peace.