New Institutional Arrangements for the World Economy PDF
Preview New Institutional Arrangements for the World Economy
Studies in International Economics and Institutions Editor Hans-Jiirgen Vosgerau Advisory Board John S. Chipman Elhanan Helpman Ronald W Jones Murray C. Kemp Hans-Jii.rgen Vosgerau (Ed.) New Institutional fluTangennentsforthe World Econonny With 26 Figures Springer -Verlag Berlin Heidelberg New York London Paris Tokyo Professor Dr. Hans-Jiirgen Vosgerau Universitat Konstanz Sonderforschungsbereich 178 Postfach 55 60 D-7750 Konstanz, FRG ISBN-13 :978-3-642-83649-7 e-ISBN -13: 978-3-642-83647-3 DOl: 10.1007/978-3-642-83647-3 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broad casting, reproduction on microfilms or in other ways, and storage in data banks. Duplication ofthis publication or parts thereof is only permitted under the provisions of the German Copyright Law of September 9, 1965, in its version of June 24, 1985, and a copyright fee must always be paid. Violations fall under the prosecution act of the German Copyright Law. © Springer-Verlag Berlin Heidelberg 1989. Softcover reprint of the hardcover 1st edition 1989 The use of registered names, trademarks, etc. in this publication does not imply, even in the absence ofa specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. 214217130-543210 Introduction to the Series "Studies in International Economics and Institutions" Many international economic problems arise from inadequate relations between economic transactions across national borders and the institutional framework within which they take place. To analyse the dynamic interdependencies between international transactions of various kinds and different international institutions is the aim of the Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft" at the University of Konstanz, Germany, which has been supported by the Deut sche Forschungsgemeinschaft since 1986. The present series is planned to include publications devoted to the analysis of topics outlined above. It is not restricted to results of the Sonderforschungsbereich 178. It will include monographs, conference proceedings and other collections from the areas of international economics - theoretical, empirical and applied. In par ticular, contributions to international public choice and international new-institu tional economics are welcome. The series will also cover studies in international law, applying the emerging "law and economics" results to international economic problems. The series is edited by the "Sprecher des Sonderforschungsbereichs 178" in co operation with members of the Sonderforschungsbereich. An advisory board of consulting editors is being formed. At present it consists of John S. Chipman (Minneapolis, Minnesota, USA), Elhanan Helpman (Tel Aviv, Israel), Ronald W. Jones (Rochester, New York, USA) and Murray C. Kemp (Kensington, New South Wales, Australia). TABLE OF CONTENTS Page INTRODUCTION New Institutional Arrangements for Hans-Jilrgen Vosgerau 1 the World Economy I. EXCHANGE RATE STABILIZATION 7 1. A Public Choice Analysis of Strategies for Restoring International Economic Stability Thomas D. Willett 9 Comments John S. Chipman 31 2. Implications of Alternative International Exchange Rate Arrangements for the Developing Countries Sebastian Edwards 34 Comments Peter Bernholz 85 3. The European Monetary System: A Regional Bretton Woods or an Institutional Innovation? ~anfred Wegner 89 Comments Roland Vaubel 119 II. INTERNATIONAL FINANCIAL MARKETS 123 4. Domestic Bank Regulation in a World of International Bankinll Kenneth E. Scott 125 Comments Karl Kreuzer 150 s. The Internationalization of Financial Markets and the Regulatory Response David Folkerts-Landau 175 Comments Nikolaus K. A. LAufer 210 VIII Page 6. Economic Analysis of Debt-Equity Swaps GUnter Franke 213 Comments Silvio Borner 234 7. Competitive Performance, Regulation and Trade in Banking Services Anthony Saunders/ Ingo Walter 238 Comments Bernd Genser 251 III. PROTECTIONISM AND THE URUGUAY GATT ROUND 255 8. Does The World Need a GATT for Services? Herbert G. Grubel 257 Comments Helmut Hesse 276 9. Policy Motives and International Trade Restrictions Arye L. Hillman 284 Comments Thomas D. Willett 303 10. Protectionist Rules and Internationalist Discretion in the Making of National Trade Policy J. Michael Finger 310 Comments Gary C. Hufbauer 324 IV. INSTITUTIONAL ARRANGEMENTS FOR INTERNATIONAL PRODUCTION 331 11. Institutional Arrangements for Natural Resources Horst Siebert 333 Summary of the Discussion Jonathan P. Thomas 366 12. Property Rights in Information and the Multinational Firm: The Case of Technical Learning in a Multiplant System Eirik G. Furubotn 368 Comments Heinz Hauser 401 IX Page 13. New Institutional Arrangements in International Economic Law: The Working of Codes of Conduct Christian Kirchner 409 Comments William A. Niskanen 436 14. Competing Institutional Arrangements and Internationalization Carsten Th. Ebenroth 438 Participants 479 Introduction New Institutional Arrangements for the World Economy Hans-Jiirgen Vosgerau, Konstanz I. The Problem During the first days of July 1987 the newly established Sonderforschungs bereich 178 "Internationalisierung der Wirtschaft" held its first symposium in Konstanz/Bodensee. "New Institutional Arrangements for the World Economy" were discussed by a group of economists and lawyers working in the fields of interna tional trade, international monetary economics, international finance, international public choice, and international economic law. Cooperation between these areas of research is an important condition for attaining the long-term aim of the Sonderforschungsbereich, viz. analysis of the complex interdependencies between international economic transactions of various kinds and international economy related institutions in a broad sense. The nature of these interdependencies seems to be crucial for the world economy's further development. A better understanding of their characteristics will be helpful for the solution of most imminent international economic problems. Four problem areas were especially addressed during the conference, each con sisting of three or four contributions. The revised papers are presented in this volume, each followed by a comment of the invited discussant, or by a summary of the discussion. The last contribution is meant as a summary conclusion and has no comment. The four problem areas discussed were: (1) Exchange rate stabilization and econ omic policy coordination, (2) International financial markets and their regulation, (3) Protectionism and the Uruguay GAIT-round, and (4) The institutional frame work for international production. Studies in International Econanics and Institutions Vosgerau (&I.) New Institutional Arrangements for the Ibrld Ec:oncmy © Springer-Verlag Berlin Heidelberg 1989 2 II. AD Overview of the Papers (1) Exchanae Rate Stabilization and Economic Policy Coordination In the introductory paper Thomas Willett pleads for national reforms with the aim of adapting macroeconomic policies better to the needs of international stabilization. Sebastian Edwards presents an empirically founded analysis of the effect of floating exchange rates on the economic development of third world countries which he classifies as essentially negative. Manfred Wegner finally investigates reasons for the success - not anticipated by many observers - of the European Monetary System, which under the dominant influence of the Deutsche Bundesbank brought about a high degree of currency stability in Europe. (2) International Financial Markets and their Reaulation National regulations still play an important rOle for financial markets. Kenneth Scott reports on the American system of bank regulations, a report which is ex tended to other countries by Karl Kreuzer in his comment. Recent financial inno vations, which are analyzed by David Folkerts-Landau, are largely reactions to such regulations; their effects in various countries therefore differ depending on the national framework. One example of those innovations are debt-equity swaps conceived as a vehicle to transform problematic bank credits into direct invest ments mainly in South-American countries: Giinter Franke presents a highly critical analysis of this subject. Finally, international financial services are related to bank regulations by Anthony Saunders and Ingo Walter. (3) Protectionism and the New GATT-Round International transactions of services play an important rOle in the Uruguay round. Herbert Grubel addresses the subject and denies the need for a new international institution, a GATT for services. His arguments are first, that services do not fundamentally differ from commodities and second, that the existing GAIT 3 mechanism is not suitable for efficient liberalization. Very critical comments on the real efficiency of present GAIT rules were also offered by Arye Hillman and Michael Finger. Following the initial success of several tariff reductions, GAIT since a decade or so increasingly suffers from the influence of pressure groups. Both authors demonstrate for the US how import-competing industries, by using legal possibilities, are able to avoid the need to adjust. (4) The Institutional Framework for International Production The organization of production involving several countries has undergone important changes during the last two decades in many sectors. Horst Siebert analyzes for the extraction of natural resources the transition from highly hierarchical organizations to complex systems of contracts binding together a variety of otherwise indepen dent actors. Multinational enterprises on the other hand can gainfully exploit learn ing effects associated with production in various plants, if they efficiently co ordinate those effects between their plant locations: this is demonstrated and ana lyzed by Eirik Furubotn. - International rules for the behaviour of international business are only timidly emerging and are still very weak. Nevertheless, Christian Kirchner argues that the "Restrictive Business Practices Code", an example of inter national soft law, has some effects on the behaviour of international actors in the field. - The volume is concluded by Carsten-Thomas Ebenroth's analysis of the tensions between competing national jurisdictions and the processes of internation alization. Differences between national laws can be exploited by internationally active agents, forcing legislators to react, to adapt or to contemplate "New Institu tional Arrangements for the World Economy". III. Some Highlights of the Discussion Every paper was followed by a lively discussion, which was introduced by an invited comment. Some arguments came up repeatedly, which suggests that they touched fundamental problems. Only these recurrent themes shall be briefly re ported.
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