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Global Power Shifts and The Changing Dynamics Of Export Finance

Principal Investigator:

Dr Kristen Hopewell

Website:


Overview

State-backed export credit (the use of loans and other forms of financing by states to boost exports) has recently burst onto the public stage, becoming a highly contentious area of both national policymaking and international negotiations. States have used export credit as a tool to encourage exports and stimulate their economies since the Great Depression of the 1930s (and in some cases, even earlier), although, since the 1970s, competition among states has been suppressed by a set of international rules established at the Organization for Economic Cooperation and Development (OECD) that restricted the use of export credit as a form of state subsidy. However, the rise of the BRICs - who are not party to the OECD (a club of rich countries) or bound by its rules - has profoundly altered the landscape of export credit and destabilized its existing governance arrangements. Growing competition among states in the context of global power shifts is clearly manifest in the arena of export credit, where a dramatic increase in the use of export credit by the BRICs to give their exports a competitive edge in global markets is prompting nearly all OECD countries to respond in kind and leading to an erosion in the efficacy of existing disciplines. The one exception among the major economies is the American hegemon, who, due to the rise of the powerful Tea Party movement, is moving in the opposite direction of eliminating or severely circumscribing its use of state-backed export credit; in effect, amidst signs of what could be a brewing global trade war, the US is unilaterally disarming.
This study will be the first to analyse major changes taking place in the global dynamics of export credit - including both national policies and international governance - as a result of contemporary power shifts. Taking a multi-pronged approach, the project will draw on the case of export credit to address several important and interrelated theoretical questions: What are the implications of multipolarity for multilateral cooperation and global economic governance? How does the emergence of multiple centres of global political and economic power impact the nature of global policy competition and diffusion? And, how are domestic political forces affecting American competitiveness and its global hegemony?


The project will involve multi-sited field research focused on key states engaged in the provision of export credit and involved in the international negotiations. It will draw on three sources of data: documentary analysis (of government policy and negotiating documents, stakeholder advocacy materials, media reporting), quantitative data on the provision of export credit by individual states, and approximately 80 interviews with policymakers, negotiators and stakeholders such as business actors and NGOs. My previous professional experience as a trade negotiator, as well as my prior research on the BRICs at the WTO (which involved over 150 interviews with policy elites from over 30 countries), have provided me with an extensive network of contacts with trade officials and stakeholders in many of the countries and institutions under study in EXFIN and prepared me well to undertake this project.


In addition to responding to a compelling set of theoretical and empirical questions related to power and international cooperation, policy competition and hegemony, these finding will also be a resource for policymakers and stakeholders involved in contemporary debates over export credit policy and its governance at the international level.

Edinburgh