With the rise of strategic rivalry and geopolitical competition, governments turned to economic policy to gain influence, power, and resources. The defining feature became the pursuit of national interest, which was invoked to introduce investment screening policies, increase tariffs, prevent cross-border M&A deals, expropriate assets, restrict technology transfer, provide preferential subsidies, and create national champions. To respond effectively, global companies must recognize the systemic changes underway and develop capabilities to address them. Companies need to acknowledge that they will come to be defined by their nationality and innovation is an important battlefield. Government policies to contain the influence of foreign firms from adversarial countries cluster around four levers: market access, level playing field, investment security, and institutional alignment. To actively manage geopolitical tensions, companies need to assess how geopolitics will share their resources, competitive advantage, and firm organization. They need to develop skills to scan the global landscape, personalize the information, plan the response, and pivot if there are headwinds. Impact on employees, who works, how work is performed, and where it takes place need to be evaluated. Managing policymakers becomes a crucial part of managing a global business.

This chapter assesses the accuracy of procedural and bargaining models in predicting the outcomes of the reforms of the economic governance of the European Union that took place between 1997 and 2013. These negotiations addressed thirty-five controversial issues and were characterized by high costs of failure. How best should we understand the outcomes of these negotiations? Which factors best explain bargaining success? The chapter confirms the accuracy and robustness of the compromise model, based on country raw influence and the significance of preference centrality for bargaining success. However, a procedural model with a costly reference point performs well, indicating that misestimation of the no-agreement cost may be a reason for its commonly reported poorer accuracy. Procedural models are, however, more sensitive to measurement errors. The chapter also shows how both models contribute to understanding bargaining success and how the conditional influence of the European Parliament should not be ignored.

The concluding chapter begins by summarizing the main findings of how politicians balance pressures arising from the economy, national politics, and supranational politics when they design and implement the economic policy of the European Union. With different emphasis, these pressures resurface across time and cut across the entire policy cycle, from the formation of preferences to the negotiations over legislative and executive measures, the timing and direction of reforms, and the patterns of compliance. The chapter then draws some tentative, yet interesting, insights about the effectiveness, fairness, and responsiveness of the policy. The record of effectiveness is mixed. Long-term trends appear reasonably reassuring, but these dynamics hide large cross-country differences, which, rather worryingly, characterize mainly the euro area. There are, however, no glaring indications of unfairness. Concerns about negative externalities have trumped the influence of raw economic power in implementation. Moreover, the policy is not insensitive to changes in public opinion and governmental positions. The chapter concludes by highlighting the usefulness of this theoretical framework.

The introductory chapter lays out the theoretical framework, the puzzles, and the research questions motivating this book. Which economic ideas explain the design of the European Union’s economic policy? What explains the main cleavages underpinning its reforms? What explains the outcome, timing, and direction of these reforms? What explains the adoption of its implementation instruments, the so-called country-specific recommendations? Why does compliance vary? What explains the use of the corrective procedure and is it effective? The chapter provides an overview of how the economy, national politics, and supranational politics shape the entire policy cycle, from the definition of the policy problem to the design of the policy and its implementation. To help readers familiarize themselves with policy technicalities, the chapter concludes by briefly summarizing the primary and secondary laws regulating the policy.

China, as one of the world’s largest creditors, has recently faced numerous defaults on its loans by recipient states, bringing the issue of Chinese debt restructuring to the forefront. This case study unpacks this process, with a particular focus on Zambia, a country emblematic of the broader dynamics at play. The primary aim is to elucidate the mechanisms and negotiations employed by China, a major global creditor, in debt restructuring agreements with low-income countries, with an emphasis on its engagements in Africa. The case study starts with an analysis of the Zambia case, highlighting the negotiation tactics and terms of agreements between Zambia and China. This serves not only as a snapshot of China’s dealings with a specific country but also as a springboard for broader discussions. Subsequently, the case study broadens its scope to encompass China’s lending dynamics in the African continent. Furthermore, the case study establishes a global context by acknowledging China as the world’s largest official creditor. It critically questions China’s choice to remain outside the Paris Club and considers China’s inclination or aversion toward coordinated debt restructuring.

This chapter provides a motivation for this book, outlining the interests of economists in artificial intelligence, describing who this book is aimed at, and laying out the structure of the book.

In pursuit of its economic interests as a growing high income country, Australia continued to play an active part in world economic affairs during the ’sixties. Hitherto largely dependent on the West – particularly the United Kingdom – for much of its development capital and trade, it has increasingly felt negative pressures from Europe fortunately offset by positive opportunities in Asia and the Pacific. There has been a diversion of an increasing proportion of its trade to these latter areas, and a ready acceptance of a growing amount of capital from North America as well as from the United Kingdom.

Before 1939, Australia invariably looked to Britain for economic leadership. Britain held a key role in the world economy, and traditionally had been Australia’s chief customer, vendor, shipper, creditor and banker and the principal reservoir of Australian immigration. Insofar as Australia had an international economic policy, therefore, it was that of strengthening and adapting existing economic ties with Britain and the British Commonwealth, to Australia’s advantage; and, when the choice was required, of maintaining British relationships at the expense of those with the rest of the world. There was very little use of economic policy as an adjunct of foreign policy, possibly because Britain was regarded also as Australia’s mainstay of defence.

The baseline model in this chapter combines destabilizing Keynesian-Harrodian mechanisms with feedback effects from the labor market to firms’ output and investment decisions. The aggregation of micro-level output and investment decisions is analyzed explicitly and, following a Keynes-Marshall tradition, prices and profit shares adjust to clear the goods market. The flex-price assumption is empirically motivated: evidence shows that goods prices are much more flexible than commonly believed. The model produces limit cycles around a locally unstable steady growth path. A variant of the model that may fit parts of the service sector takes output as perfectly flexible, while the real wage is fixed. The reduced-form relations and dynamic patterns of this variant are virtually identical to those of the flex-price model, suggesting that these reduced-form equations may be a good starting point for analyzing business cycles in the aggregate economy. Reinforcing this conclusion, simulations of an extended version that uses empirically plausible parameters and includes fiscal and monetary policy shows a remarkable correspondence to cyclical patterns for the US.

Chapter 6 traces the meaning of ‘modernisation’ in Labour’s economic policies. ‘Modernising the economy’ to achieve sustainable growth was a consistently crucial idea for Labour from Wilson to Blair. Notwithstanding the abandonment of nationalisation, the endurance of state-led ‘modernisation’ in Labour’s economic imaginary reveals a continuing strategic role for the state, even for New Labour. After establishing this continuity, the chapter highlights a crucial change. In the 1970s and 1980s, Labour policymakers assumed that manufacturing was the key sector to ‘modernise’. Yet, under the influence of deindustrialisation, ideas of ‘post-Fordism’, and New Keynesianism, by the early 2000s manufacturing had been usurped by ‘human capital’. For New Labour, education and training became the new ‘commanding heights’ and the foremost economic priority for the active state. These developments show the ongoing influence of technocratic, social-democratic thought worlds, and thus expose the inappropriateness of shoehorning New Labour into ‘Thatcherism’ and ‘neoliberalism’. But they also speak to important, and ambivalent, shifts in British political economy by the twenty-first century.