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Business and Politics

Volume 13, Issue 3 2011 Article 1

THE DOMESTIC FOUNDATIONS OF IPE: THE U.S. CASE IN CURRENT AND HISTORICAL PERSPECTIVE

U.S. Domestic Politics and International Political Economy: An Introduction to the Special Issue
Chloe Thurston, University of California, Berkeley Kathryn Bowen, University of California, Berkeley

Recommended Citation: Thurston, Chloe and Bowen, Kathryn (2011) "U.S. Domestic Politics and International Political Economy: An Introduction to the Special Issue," Business and Politics: Vol. 13: Iss. 3, Article 1. DOI: 10.2202/1469-3569.1413 Available at: http://www.bepress.com/bap/vol13/iss3/art1 2011 Berkeley Electronic Press. All rights reserved.

U.S. Domestic Politics and International Political Economy: An Introduction to the Special Issue
Chloe Thurston and Kathryn Bowen

Abstract
The articles in this special issue of Business and Politics weigh in on the domestic political dynamics that continue to shape the international political economy, with a focus on the United States case. In this issue, Richard Carney discusses the role of New Dealera farmers in shaping modern global financial standards, Daniel Kono analyzes the relationship between social policy and support for freer trade, and Kathleen Rehbein and Douglas Schuler examine the characteristics of business firms that are most likely to gain legislative and executive branch access in the area of trade policy. The two final articles provide insights into critical issues in ongoing policy debates. Irja Vormedal discusses the role of business strategies and tipping points in determining the support and failure of federal environmental regulation from 1990 through 2010, while Emily Yixuan Cao, Yong Cao, Rashmi Prasad, and Zhengping Shen argue that domestic politics continues (and will continue) to influence the character of U.S.-China exchange rate negotiations. This introduction to the special issue summarizes the contributions of these five articles and also situates them in relation to other contemporary political science debates. KEYWORDS: international political economy, corporate political activity, trade policy, financial regulation, climate politics Author Notes: We would like to thank Vinod Aggarwal for helpful feedback. We also wish to thank Daniel Chen, Do-Hee Jeong, Alexander Newhall, Andrew Boyce at UC Berkeley, and Kia Wang at bepress for their support in preparing this special issue.

Thurston and Bowen: Introduction to the Special Issue

The five articles in this special issue offer a variety of perspectives on the role of domestic actors in the development of policies and institutions that affect the international political economy. The articles focus on the United States for two reasons in particular. The first is that limiting the analysis to a single national context allows us to showcase a variety of methodological approaches to understanding how actors at the domestic level actually influence broader policy outcomes. The second reason is that it allows us to highlight the broad range of substantive policy areas that these scholarly debates can provide insight into. Indeed, their conclusions are particularly timely following the recent financial crisis, which drew attention and renewed public scrutiny to the role of domestic political interests in economic policymaking. Together these articles contribute to an ongoing discussion of firm and interest group behavior in American politics, with empirical and theoretical explanations of why and how domestic interests shape internationally-focused policies. In doing so, they weigh in on issues as diverse as financial regulation, international trade policy, climate change and exchange rate negotiations. Despite engaging seemingly disparate policy areas, what links many contemporary political economy challenges is their international character: climate change, international trade, and financial regulation have effects that transcend national borders. Policy struggles in these areas revolve around competing claims of how to structure and govern the three Cs: competition, cooperation and compensation. While the solutions to these challenges often hinge on international negotiation and coordination, understanding the preferences and strategies of domestic actors is imperative for understanding broader policy outcomes. The special issue articles highlight both the extent to which the preferences of domestic actors shape international policy and that, despite globalization and the proliferation of transboundary threats, domestic political dynamics continue to shape individual and institutional behavior at the international level. The articles in this issue also contribute to three broader themes that have generated extensive discussion among scholars of American politics and political economy. The first theme pertains to the historical conditions that helped shape contemporary political economy arrangements in the United States. A number of scholars from diverse fields including American political development, economic history and economic sociology have weighed in on the historical conditions that gave rise to the American political economy, welfare and regulatory state.1 Richard Carney contributes to this area of scholarship in his article, The Domestic Political Origins of Global Financial Standards: The Agrarian Roots of American Securities Regulations. Carney applies theories of the regulatory state
1

See Carpenter 2001; Kolodny and Suarez 2011; Krippner 2011; Sanders 1999.
1

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Business and Politics, Vol. 13 [2011], Iss. 3, Art. 1

to the creation of financial instruments at an international level, arguing that the modern international securities architecture was heavily influenced by the preferences of farmers during the New Deal era. His work underscores the contribution of agricultural lobbies in shaping the regulatory framework governing large financial institutions and urban industry through the application of extensive pressure on state legislatures. By examining roll call votes in the House and Senate, Carney highlights the importance of legislators from agricultural states in approving the Securities Exchange Act of 1934, the Revenue Act of 1935, and the Public Utilities Holding Company Act of 1935. A second theme that has shaped current scholarly debates revolves around actor preferences and political influence. Of particular importance are two issues. The first is how to specify, identify and measure the policy preferences of domestic actors. The second is how to identify the channels actors use to enact their policy demands, and how to measure their ability to do so.2 Daniel Kono, Kathleen Rehbein and Douglas Schuler contribute to existing scholarship on these unresolved debates. In Insuring Free Trade: Unemployment Insurance and Trade Policy, Kono examines the role of social policies in helping to generate support for freer trade. Kono finds that legislators representing states with generous unemployment insurance demonstrate higher levels of support for liberal trade policies. Shifting the target of focus to business firms, Rehbein and Schuler analyze the conditions under which firms enjoy greater access to legislative and executive branch officials. In their piece Determinants of Access to Legislative and Executive Branch Officials: Business Firms and Trade Policymaking in the U.S., Rehbein and Schuler argue that foreign market expertise and the nature of the firms political relationships are important determinants of firm access. The authors analysis, which looks across branches of government to discrete executive and legislative organs dealing with trade policies, provides additional support for the political markets framework in understanding how various domestic actors influence public policy. The final two pieces touch upon a third question: how best to apply broader political economy approaches to generate insight into specific contemporary policy and political challenges.3 The theme relates to the process by which domestic political considerations shape specific international policy negotiations and economic developments of current importance, but also highlights the practical impediments to changes in public policy and business practices. The articles by Irja Vormedal, and by Emily Yixuan Cao,Yong Cao, Rashmi Prasad and Zhengping Shen, thus contribute to empirical work linking
See Hacker and Pierson 2002; Hays, Erlich and Peinhardt 2005; Hojnacki and Kimball 2004; Swenson 2004. 3 For a contemporary example of how political science can shape specific public debates see Noel 2010.
http://www.bepress.com/bap/vol13/iss3/art1 DOI: 10.2202/1469-3569.1413 2
2

Thurston and Bowen: Introduction to the Special Issue

domestic considerations and international political economy outcomes, and more specifically, those dealing with contemporary transboundary challenges. In From Foe to Friend? Business, the Tipping Point and U.S. Climate Politics, Vormedal approaches the issue of climate change negotiations through an analysis of firm reaction to the onset of environmental regulation. Vormedal explains that corporate opposition to environmental regulation is likely to fragment and shift towards regulatory support given, for example, the emergence of uneven playing fields, the increase of regulatory threats and uncertainties, and the proliferation of new market opportunities. To describe this shift in firm behavior, she applies the concept of a tipping point to existing scholarship on environmental regulation. Vormedals piece thus offers a new analytical tool to produce a more comprehensive understanding of firm behavior in the broad arena of environmental politics. Finally, Cao et al examine U.S.-China exchange range negotiations, arguing that domestic political dynamics often determine the propensity for success or failure of bilateral talks. In their piece, U.S.-China Exchange Rate Negotiation: Stakeholders' Participation and Strategy Deployment, the authors argue that the level of pressure applied by firms, as well as civil society groups, on Congress greatly influences whether the United States pursues a strategy of cooperation or of confrontation towards China on currency revaluation, an issue with implications for U.S.-China cooperation more broadly. The articles have been selected to provide scope in empirical methods and focus, rather than to weigh in on one particular policy area; what binds them together is a consensus that an understanding of domestic political dynamics is integral to comprehending international policy and economic outcomes. As we have emphasized in this introduction, the special issue articles weigh in on several broader questions in the literature. In particular, we hope that the final two articles will underscore the applicability of scholarly research on domestic interests to a practical understanding of pressing environmental, economic, and ultimately political challenges. While this special issue in no way resolves these debates, the pieces selected should help clarify both theoretical and practical discussions of the role of domestic actors in shaping economic policies that ultimately have international implications. By publishing this special issue, we hope both to justify the continued importance of pushing this agenda forward, and to identify new empirical strategies by which to do so.

Published by Berkeley Electronic Press, 2011

Business and Politics, Vol. 13 [2011], Iss. 3, Art. 1

References Cao, Emily Yixuan, Yong Cao, Rashmi Prasad and Zhengping Shen. 2011. U.S.-China Exchange Rate Negotiation: Stakeholders Participation and Strategy Deployment. Business and Politics 13 (3): Article 6. Carney, Richard. 2011. The Domestic Political Origins of Global Financial Standards: The Agrarian Roots of American Securities Regulations. Business and Politics 13 (3): Article 2. Carpenter, Daniel. 2001. The Forging of Bureaucratic Autonomy: Reputations, Networks, and Policy Innovation in Executive Agencies, 1862-1928. Princeton: Princeton University Press. Hacker, Jacob and Paul Pierson. 2002. Business Power and Social Policy: Employers and the Formation of the American Welfare State. Politics & Society 30 (2): 277-325. Hays, Jude C. Sean D. Erlich and Clint Peinhardt. 2005. Government Spending and Public Support for Trade in the OECD. International Organization 59 (2): 473-494. Hojnacki, Marie and David C. Kimball. 2001. PAC Contributions and Lobbying Access in Congressional Committees. Political Research Quarterly 54: 161-180. Kolodny, Robin and Sanrda L. Surez. 2011. Paving the Road to Too Big To Fail: Business Interests and the Politics of Financial Deregulation in the U.S., Politics & Society 39: 74-102. Kono, Daniel. 2011. Insuring Free Trade: Unemployment Insurance and Trade Policy. Business and Politics 13 (3): Article 3. Krippner, Greta. 2011. Capitalizing on Crisis: The Political Origins of the Rise of Finance. Cambridge, MA: Harvard University Press. Noel, Hans. 2010. Ten Things Political Scientists Know that You Dont. The Forum 8 (3): Article 12. Sanders, Elizabeth. 1999. Roots of Reform: Farmers, Workers and the State, 1877-1917. Chicago: University of Chicago Press. Schuler, Douglas and Kathleen Rehbein. 2011. Determinants of Access to Legislative and Executive Branch Officials: Business Firms and Trade Policymaking in the U.S. Business and Politics 13 (3): Article 4. Swenson, Peter. 2004. Varieties of Capitalist Interests: Power, Institutions, and the Regulatory Welfare State in the United States and Sweden. Studies in American Political Development 18: 1-29. Vormedal, Irja. 2011. From Foe to Friend? Business, the Tipping Point, and U.S. Climate Politics. Business and Politics 13 (3): Article 5.

http://www.bepress.com/bap/vol13/iss3/art1 DOI: 10.2202/1469-3569.1413

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