Globalization and Governance

National governments, under the forces of globalization, are shifting political authority to higher, lower and corporate affiliates. The project addresses high-profile issues such as assuring that international and regional institutions are accountable to the publics affected by their actions; integrating demands for local self-determination and political devolution-whether ethnically based or not-with the benefits of wider markets, sources of technology, and investment flows; and tailoring government intervention and regulation to accomplish necessary public ends in the most efficient manner.

Summary

Many believe that governments are now being pressed by the forces of globalization to transfer policy functions and political authority "upwards" to supranational entities, "downwards" to provincial and local governments, and "sidewards" to private corporate and NGO actors.

This project will study the changing distribution of governance across levels of political institutions; the evolving division of governance between public and private sectors; and new requirements for accountability and democratic governance.

It will create an interdisciplinary study group and commission approximately 12 papers to investigate these issues.

The problem

The debate over globalization--narrowly defined as economic integration, more broadly as a process transforming information flows and cultural identities as well--often casts the political effects of these changes as both revolutionary and contradictory.

On the one hand, many functions that formerly resided in national governments are now believed to be moving inexorably toward regional and global institutions. The process of Economic and Monetary Union in the European Union is only one apparent confirmation of this tendency; expansion of the powers of the World Trade Organization and recent proposals for a world central bank are others. On the other hand, analysts have also posited countervailing tendency--based in part on democratization in the late twentieth century--that tugs toward greater accountability and political dis-integration: the growth of movements for local autonomy or separatism that challenge the unitary national state. And undermining the traditional view of government from another quarter, the bargaining power of private corporations, mobile and global, has grown, producing a retrenchment of government and an era of deregulation. Globalization in these popular views has meant a pulling apart of traditional roles of national governments in favor of international organizations on the one hand and more local forms of government on the other, and a rolling back of traditional government in favor of the private sector.

This popular view of the impact of globalization has been challenged on each point. National governments have jealously guarded many traditional roles, even in the highly integrated context of Europe: defense, police, immigration have not been part of this unraveling of government. If government by nation-states is a beleaguered and eroding form of government, then its popularity at the end of this century is baffling: groups demand not new forms of political organization but self-determination and their own nation-states. Finally, the supposed trend toward deregulation can also be seen as re-regulation: old forms of regulation may disappear, but government intervention in new areas (environment or consumer protection) and in new forms appear at the same time.

The project

Sorting through these contradictory claims requires

• Identification of the effects of globalization on governance traditionally defined: gaining a better grasp of what the trends in governance are, based on research that separates the effects of global economic integration from other effects
• Developing guides for policymakers on the best forms and sites of governance in the new circumstances, making clear the tradeoffs that are faced between competing goals, such as democratic accountability and economic efficiency

The project, which engages an interdisciplinary team of social scientists, will accomplish these goals through an investigation of three dimensions on which governance functions and governance forms may be distributed in the face of growing economic integration:

1) The distribution of governance functions across the levels of institutions from international and regional to national to sub-national (regional and local). The current era of growing international economic integration has witnessed a strengthening of some global institutions (the WTO) but relatively little new institution-building in other areas (monetary and financial collaboration). Regional institutions have proliferated as new free trade areas and customs unions have emerged. Yet few of these institutions display the elaborate institutions and the wide array of functions of those in the European Union. At the same time, sub-national units within federal and non-federal systems have enjoyed a widening of powers, in some cases related to ethnic assertion (the United Kingdom, Spain). The powers that are devolved (just like those delegated "upward" to regional and international institutions) vary greatly from case to case.

Existing research gives us few clues as to why certain functions arrive at one level or another. Nor does existing theory offer many clear guidelines for designing institutions that can assume different functions over time as economic integration changes in character.

2) The division of functions between private and public sectors cuts across the distribution of functions among international, regional, national, and sub-national levels. Although the international movement toward privatization and a retrenchment of certain government functions may be associated with global economic integration, it clearly has other sources as well. International investors and traders have demonstrated their ability to deal with a wide array of systems that have both large and small public sectors.

The project will explore whether new forms of private governance and government intervention are emerging from the process of integration. The Internet and other information networks have been presented as a new and alternative form of governance that is based on private actors acting in a non-hierarchical system. Regulation becomes self-regulation; government's role is decidedly different than in older models of state intervention. At the same time, governments may learn to intervene in order to accomplish their ends in novel and more efficient ways. Certainly the demands for regulation of the private sector have not declined, but the content of that regulation has shifted to the politically popular protection of the environment, labor rights, and consumer welfare.

3) Finally, a third dimension intersects with the preceding two and often produces conflict with them: the demand for accountability or democratic governance. Democratization has been accompanied by a parallel tendency to delegate key economic functions to institutions or rules-some international or regional, some national--that are insulated from short-term political pressures. The growing popularity of independent central banks and currency boards are a puzzling counterpoint in an era of democratic institutions.

Delegation of governance functions to international and regional organizations is attacked by its critics as a subversion of democratic accountability, the democratic deficit of the EU writ large. Whether the tradeoff between accountability and delegation to these institutions is so steep has not been confirmed, however. And those making these claims, particularly in the NGO movement, have their own difficulties with democratic legitimacy. Devolution of governance to sub-national levels is often pressed as more democratic and accountable, although that claim is highly dependent on the form of government at those levels.

Both public and private governance under conditions of growing integration are subject to scrutiny on grounds of accountability. Private governance is commonly assumed to be less accountable by its nature, but corporate governance issues are high on the international agenda. The relative role of shareholders and stakeholders, to cite only one example, reflects on this larger issue of accountability (and accountability to whom).

Once again, demands for a particular form of governance--in this case, more democratic--are more than a response to growing globalization. Globalization does influence those demands and shape their implementation, however.

The product

This project will produce two types of product:

• A series of scholarly research products in book and article form that deal with both the empirical and normative assessments described above
• A set of policy reports that will use project-generated research to address a series of high-profile issues, among them:

How best to square increasing delegation to international and regional institutions with insurance that those institutions are accountable to the publics who are affected by their actions.

How to accommodate demands for local self-determination and political devolution-whether ethnically based or not--with the benefits of wider markets, sources of technology, and investment flows.

How to tailor government intervention and regulation to accomplish necessary public ends in the most efficient manner.

The process

With the support of IGCC, IR/PS, and UCSD’s Political Science dept., one organizational meeting in April 1999 that discussed the themes of the project has already been held. Paper proposals from a broad, interdisciplinary group of scholars during the summer and fall of 1999 have been solicited. With funding from IGCC, a series of "mini- conferences" in the winter and spring of 2000 will take place to discuss first drafts of the papers. A full conference will be held in late 2000, with the project to be completed by summer 2001.

Adapted from original project proposal by Kahler and Lake.

Globalization and Governance

The Sea Lodge

La Jolla, California

June 22-25, 2000

Hosted and Sponsored by
The Institute on Global Conflict and Cooperation, University of California

List of Participants

Globalization and Governance

Revised Conference Agenda

22 June – 25 June 2000

University of California, San Diego

THURSDAY, JUNE 22

Morning                                   Arrival of participants

12:00PM-1:00PM                    Lunch

1:00PM–2:30PM                     Introduction

Globalization and Governance
Miles Kahler and David A. Lake (UCSD)

2:30PM-5:30PM                      The Shifting Public-Private Divide

                                                The Politics of International Institutional Standardization
                                                Walter Mattli (Columbia)

            Risk, Reputation and Rule-Making:  Industry Self-Regulation and Global Governance
                                                Virginia Haufler (University of Maryland)

            Globalization and Governance: Corporate Governance and Global Governance
                                                Peter Gourevitch (UCSD)

Discussants:      Judith Goldstein (Stanford)
                                                                        Beth Simons (UC Berkeley)

5:30PM-6:30 PM                     Break

6:30PM                                    Dinner:  Ristorante Piatti

FRIDAY, JUNE 23

8:30AM-10:30AM                   Toward a Positive Theory of Subsidiarity (I)

Supranationalism and Decentralization in the Global Economy
                                                Michael Hiscox and Arthur Lupia (UCSD)

Globalization and Decentralization
                                                Geoffrey Garrett (Yale) and Jonathan Rodden (MIT)

                                                Discussant:  Robert Powell (UC Berkeley)

10:30AM –10:45AM               Break

10:45AM-12:30PM                 Toward a Positive Theory of Subsidiarity (II)

            A Federalist Dilemma: Subnational Governments and the World Economy
                                                Stephan Haggard (UCSD)

                                                Globalization and Federalism in Developing Countries
Lawrence Saez (UC Berkeley)

Discussant:  Ronald Rogowski (UCLA)

12:30PM -1:30PM                   Lunch

1:30PM-3:30PM                      Convergence in National Governance Structures (I)

                                                Policy Setting and Factor Mobility
                                                Ronald Rogowski (UCLA)

            Globalization, Fiscal Adjustment and EMU: Race to the Bottom or Room for Maneuver?
                                                Kathleen R. McNamara (Princeton)

                                                Discussant:  Stephen D. Krasner (Stanford)

3:30PM-5:30PM                      Convergence in National Governance Structures (II)

            Globalization and Policy Diffusion: Explaining Three Decades of Liberalization
                                                Beth Simmons and Zachery Elkins (UC Berkeley)

            Governing Global Financial Markets:  Insights from the Hedge-Fund Debate
                                                Barry Eichengreen (UC Berkeley)

                                                Discussant:  Benjamin J. Cohen (UCSB)

5:30PM                                    Break

8:00PM                                    Dinner:  Sea Lodge

SATURDAY, JUNE 24

8:30AM-10:30AM                   Toward a Positive Theory of Subsidiarity (III)

            Regional Assertiveness in Western Europe – Political Constraints and the Role of Party Competition
Pieter van Houten (University of Chicago)

            Social and Economic Pressures at Odds: Governance in Tourism and Foreign Direct Investment
Lisa L. Martin (Harvard)

                                                Discussant:  Peter Gourevitch (UCSD)

10:30AM-12:30PM                 Toward a Positive Theory of Subsidiarity (IV)

                                                Monetary Governance in a World of Regional Currencies
Benjamin J. Cohen (UCSB)

            Discretion, the Ally; Commitment, the Enemy- Global Governance and Labor Markets
Daniel P. Gitterman (University of North Carolina, Chapel Hill)

Discussant:  Barbara Koremenos (UCLA)

12:30PM-1:30PM                    Lunch

1:30PM-2:30PM                      Discussion of “subsidiarity” issues and linkages

2:30PM-6:30PM                      FREE TIME

6:30PM                                    Assemble for vans to David Lake’s home

7:00PM                                    Dinner at David Lake’s home

SUNDAY, JUNE 25

9:30AM–11:30AM                  Democratic Deficits and the Problem of Accountability

                                                Governance in a Globalizing World
                                                Robert O. Keohane (Duke) and Joseph S. Nye, Jr. (Harvard)

            Transnational Markets, Second-Order Institutionalization, and the Uncertain Extension of Rights in the European Union
                                                James Caporaso (Washington)

                                                Discussant:  Lisa Martin (Harvard)

11:30AM-12:30PM                 Conclusion
Miles Kahler and David A. Lake

12:30PM-1:30PM                    Lunch

Afternoon                                 Departure of participants

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