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The politicization of international economic institutions in US public debates

Abstract

Recent research has noted a trend of increased “politicization” of international politics, i.e., decisions of international institutions are increasingly debated and contested within civil society. What is lacking so far are explanations for this trend. In this paper we derive four potential explanations and empirically test them. The first two, society-centered, hypotheses focus on the process of socio-economic modernization on the one hand and civil society structures on the other. The second pair of polity-centered hypotheses focuses on the decision-making power of international institutions and on their legitimacy. We measure politicization on the basis of a quantitative content analysis of US quality newspaper articles about four decisions of different international institutions in the issue area of international taxation. Our finding is that politicization is driven by the increasing decision making authority of international institutions rather than by the lack of legitimacy of their procedures or the factors emphasized by society-centered approaches.

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Fig. 1

Notes

  1. Notice that politicization is different from democratization. While the concept of democratization implies institutional reforms that grant civil society a formal say in collective decision making, the concept of politicization does not require this. We can have politicization without democratization, while we can also have democracy without politicization: take the public protests against the current regime in Iran as an illustration of the former and the bulk of decisions made in Western democratic countries as an example for the latter.

  2. Institutions are defined as persistent and connected sets of rules that prescribe behavioral roles, constrain activity, and shape expectations (Keohane 1988: 386). The most important international institutions are international organizations and international regimes.

  3. A third approach is policy-centered and maintains that the level of politicization largely depends on the issue area (Lowi 1972). While we plan to test policy-centered hypotheses in future work, we bracket them here by controlling in our four-case-comparison for issue area characteristics.

  4. One may also argue that domestic governments provoke citizens’ criticism of international institutions by shifting the blame for unpopular decisions to international or supranational organizations.

  5. We acknowledge that there are other top-down paths to politicization than just the reaction to decisions of international institutions. Most important is the politicization of non-decisions or ineffectual decisions (Rixen 2008b). For instance, with regard to climate change or the global financial crisis, politicization does not occur because international decisions are seen as too intrusive; rather, politicization results from a lack of international decision making that would effectively solve these problems. We do not investigate the politicization of non-decisions in this paper.

  6. Indeed, the consensus in the social movement literature is that the relation between democracy and politicization is curvilinear. Politicization is highest in states with a mix of authoritarian and democratic characteristics and decreases towards both ends of the democracy–autocracy spectrum (see Tarrow 1998: 77).

  7. To the extent that US newspapers report about transnational movements and other international reactions to the decisions, this will be picked up by our indicator.

  8. In addition, OECD governments were asked to commit themselves to abolishing so-called preferential tax regimes, i.e., those regimes trying to attract foreign capital by offering better tax treatment than was available to domestic investors.

  9. While such policies do almost always have distributional implications too, the high level of politicization associated with them is due to the fact that they involve issues of “life-and-death” (be it in terms of physical or economic survival).

  10. Our distinction among these three categories of policies and the expectations with respect to the level of politicization resonates with Lowi’s (1972) categorization of policies. “Regulatory policies with distributive consequences” belong to the category of what Lowi calls regulatory policies. As he discusses, the level of conflict in that category will vary depending on the degree of “redistributive” implication (Lowi uses the term redistributive for what we call distributive). Our category of “existential” policies is very similar to his “constituent” policies. Finally, what we call “technical” policies would in Lowi’s terminology be uncontroversial regulatory issues without distributive consequences. It is quite common in the literature to distinguish among merely technical and expertise driven policies and more conflict-prone distributive issues (Majone 1997).

  11. This also shows in the data. Most interest groups commenting on the policies in the media are business actors.

  12. The Financial Times is from the UK, rather than the US. Yet, we used the US edition, which can be assumed to be reflective of US public debates.

  13. An evaluative statement ends, when a new speaker starts to speak.

  14. Alternatively, one could argue that contestation is highest the more equal the shares of positive to negative statements are. We contend, however, that contestation is highest if there is more criticism.

  15. We only code polity statements when they are clearly part of a statement on the policy we are looking at. Hence, a general criticism about the WTO is not coded even if it is made in an article that is also mentioning the FSC case.

  16. This also means that it may be the case that we only coded one speaker (indicator 1) with two or more statements. In consequence the overall number of evaluative statements is higher than the number of identified speakers.

  17. Nota bene: As we use shares, ratios and percentages the mere number of articles on the respective decision (and thus the duration of a case) does not impact on any of our four indicators. They are all geared towards measuring the intensity of public contestation and not towards assessing the availability of public information.

  18. By simply using the rank orders of politicization, we disregard the differences between the absolute values of the indicators. This may not be entirely unproblematic, but given the difficulties in defining a plausible metric across the indicators, this seems to be a reasonable simplification.

  19. That they lead to very similar rank orders is prima facie evidence for the reliability of our indicators. The OECD or the WTO case almost always occupy the first or second rank, whereas the GFT and GATT cases almost always end up in third or fourth place. Only indicator 2 which relies on the average number of evaluative statements is an exception to this rule.

  20. Remarkably, all of the non-state actor statements that we found were made by business actors, while civil society actors were entirely absent from the debate.

  21. In the FSC case, not only business actors but also civil-society actors participated in public debates. Fifteen evaluative statements stem from business actors, while 19 were made by civil society actors.

  22. This is a good indicator for interdependence in our cases, because they are all about the taxation of income from international investment. This is the case if tax havens do not tax the income from foreign affiliates (FDI) or accounts (portfolio investment), or if the USA decide to not tax the income of FSCs or DISCS (FDI). In both cases, export-competing industries with international affiliates are advantaged by these tax breaks, whereas import-competing industries with no international affiliates are denied this advantage. Thus, this indicator is very close to the substance of interdependence that is at stake in our cases. In addition, if we were to use a broader indicator of interdependence such as the KOF Index of Globalization (Dreher 2006), the rank order of interdependence would be the same.

  23. We would have arrived at the same rank order if we had focussed on all NGOs rather than just those NGOs that were mentioned in our population of tax-related newspaper articles. According to the Yearbook of International Organizations (Union of International Associations (UIA) 2010) the total number of NGOs was 9521 in 1978, right after the GATT case emerged; it was 42100 at the beginning of the WTO and OECD cases in 1998, and 49471 in 2002, just after the GFT case emerged. Had we based the analysis on the overall funding available to NGOs, this would have also produced the same rank order (Reimann 2006).

  24. The rank distances are calculated as follows: If a hypothesis predicts that the WTO lands on the first rank, whereas it is actually on the third, then this corresponds to a rank distance of 2. Going through each of the four ranks we determine this distance and then add them up. If a hypothesis predicts an equal level of politicization for two cases, then they are both ranked equally, e.g., on rank two. In this event, the subsequent case is lowered by one rank, e.g., placed on rank four.

  25. Note also that, contrary to the OECD case, there was no credible threat of sanctions in the GFT case. Although OECD governments did not officially withdraw the threat of sanctions after policy had been redirected towards information exchange, it was nevertheless agreed that no sanctions would be imposed unless all OECD countries — including the tax havens, Luxembourg and Switzerland — removed the harmful features from their own tax systems. This made the threat of sanctions ineffectual.

  26. In addition, our data indicates that the politicization of the four decisions is not only the result of civil-society activism, but was largely driven by business actors. A comparison of civil society driven and business actor driven processes of politicization appears to be a promising avenue for future politicization research.

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Acknowledgments

We presented earlier drafts of the paper at the 2009 General Conference of the German Political Science Association (DVPW) in Kiel, the “Transnational Conflicts and International Institutions” Colloquium at the Social Science Research Center Berlin (WZB), the International Relations Colloquium at the Geschwister-Scholl-Institute (GSI) at LMU Munich, the 2010 Conference on “Politics beyond the Nation State” in Bremen and the 2010 SGIR Pan-European International Relations Conference in Stockholm. We received helpful comments from participants at these events and from Martin Binder, Klaus Dingwerth, Matthias Ecker-Erhardt, Monika Heupel, Tine Hanrieder, Martin Höpner, Andreas Kruck, Peter Mayer, Fritz Scharpf, Duncan Snidal, Lora Viola and Michael Zürn. In addition, three anonymous reviewers provided exceptionally helpful comments. Manuel Domes, Johannes Jüde, Simon Primus, Anne Siemons and Mary Kelley-Bibra provided research and technical assistance. We thank all of them.

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Rixen, T., Zangl, B. The politicization of international economic institutions in US public debates. Rev Int Organ 8, 363–387 (2013). https://doi.org/10.1007/s11558-012-9158-5

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Keywords

  • Politicization
  • International institutions
  • Authority
  • Legitimacy
  • Mobilization
  • International trade
  • International taxation

JEL classification

  • F13
  • F21
  • F55
  • F68
  • H87