Hot off the presses! Jan 01 Contrib Polit Econ

The Jan 01 issue of the Contrib Polit Econ is now up on Pubget (About Contrib Polit Econ): if you're at a subscribing institution, just click the link in the latest link at the home page. (Note you'll only be able to get all the PDFs in the issue if your institution subscribes to Pubget.)

Latest Articles Include:

• Global Finance and Systemic Instability
  - Contrib Polit Econ 27(1):1-11 (2008)
  
• Mainstream Methodology, Financial Markets and Global Political Economy
  - Contrib Polit Econ 27(1):13-29 (2008)
  The experience of financial markets in the global economy is open to a variety of interpretations, based on different framings, with important consequences for economic policy. Knowledge about financial markets, and the methodology employed to build it, can be understood in terms of framing. The underlying argument of the paper is in favour of considering the framing of financial markets within an open-system approach, allowing input from other disciplines, as well as taking account of the real, often performative, implications of (closed-system) mainstream framing by policy-makers. The methodological underpinnings of, and interdependencies between, different framings among theorists, policy-makers, market players and users is explored.
• Globalization and Contemporary Banking: On the Impact of New Technology
  - Contrib Polit Econ 27(1):31-56 (2008)
  Technological innovation has contributed to recent changes in the conduct and character of banking, but its impact has been contradictory. First, money-dealing transactions have become cheaper, but investment costs have increased and a broader range of services had to be provided. The cost efficiency of banks has not improved. Second, banks have developed computationally intensive, arms length' techniques to assess creditworthiness and manage risk. Thus, they have been able to generate new revenue streams from lending to individuals and from fees for money market mediation. This shift has signalled a decline of relational' banking. Third, new technology and related practices have facilitated the entry of foreign banks into developing countries, where they can exploit arms length', technologically demanding niches in domestic markets. This has not improved the efficiency of host banking systems, nor increased the availability of credit to the productive sector.
• Venture Capital Funds, Financial Foreign Direct Investment and the Generation of Local Comparative Advantage in the Technology Sector in Israel
  - Contrib Polit Econ 27(1):57-72 (2008)
  The rapid development of a new comparative advantage in the hi-tech sector in Israel in the period 1995-2005 provides an example of a new form of foreign direct investment (FDI). Unlike traditional FDI, this new form of international investment, that we dubbed financial foreign direct investment (FFDI), involves capital flows from developed countries to small countries and to the emerging markets. The providers of this capital, defined in our study as "sector-specific capital", are financial and risk intermediaries like venture capital funds and private equity funds. Like multinational enterprises they transfer factors of production across borders seeking to maximize their value. In doing so, they are a part of a process of generating new comparative advantages. We focus on the case of Israel and show that, due to the inherent asymmetry, it takes government action to trigger the process of importing sector-specific capital to Israel primarily from the US capital market! , but once the process has begun, it has led to economic growth via reducing tangible and intangible trade costs, creating trust and thus generating competitive advantage for innovative technology firms from Israel in the global markets.
• Financial Crisis Management in Europe and Beyond
  - Contrib Polit Econ 27(1):73-89 (2008)
  Financial and capital market integration in Europe is now well-advanced, but it confronts a serious challenge in the design of workable arrangements for crisis prevention, management and resolution. The expansion of large, complex financial intermediaries exposes the limits of a supervisory regime based strictly on the traditional principle of home-country control. Contemporary European debates on last-resort lending, home-host supervisory responsibilities, and fiscal transfers clarify the fundamental challenge globalizing finance poses more generally for world order. Ultimately, they suggest the necessity of reliable, legitimate and effective instruments for financial burden sharing among integrating polities.
• The Mystery of the Missing Sovereign Debt Restructuring Mechanism
  - Contrib Polit Econ 27(1):91-113 (2008)
  The absence of a formal international regulatory mechanism to facilitate sovereign debt restructuring has long been recognized as a most serious gap in the architecture of global finance. Why has it proven so difficult to create such a sovereign debt restructuring mechanism (SDRM) at the international level? Political economists have devoted relatively little scholarly attention to this question. This paper attempts to begin to fill this gap in the literature by examining four failed initiatives to create a SDRM over the past century. In place of a realist or structural Marxist account, the paper puts forward a more contingent explanation for these failures that highlights three distinct political problems that must be overcome in the construction of a SDRM: (1) collective action problems on both the side of sovereign debtors and that of private foreign creditors; (2) basic distributional conflicts embodied in any debt restructuring effort; and (3) the uncertain behavi! or of the private creditors' home states.
• Could the Crisis at Northern Rock have been Predicted?: An Evolutionary Approach
  - Contrib Polit Econ 27(1):115-124 (2008)
  Bankers have, from their beginning, made their money by taking risks and deciding how much risk they dare take, by expanding gradually, testing the water. Within this framework, the first risk is of illiquidity, but they must also ensure solvency. The steps taken by Northern Rock in developing their present business plan' are the same as those taken by most other banks, responding to the same incentives. It is the rapidity of its expansion that resulted in its downfall. The steps that have been taken also by other banks can be traced back to the beginning of banking and are predictable. Northern Rock's difficulties were predictable - and were predicted.
• Report from the February 2008 CIBAM Global Business Symposium "Global Finance", 21-22 February 2008, Emmanuel College and Judge Business School
  - Contrib Polit Econ 27(1):125-137 (2008)