Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-25T06:29:41.311Z Has data issue: false hasContentIssue false

Embedded Liberalism in the Digital Era

Published online by Cambridge University Press:  16 February 2021

Get access

Abstract

In recent years, the volume and intensity of attacks on globalization have been steadily rising. It is frequently argued that the antiglobalization backlash stems from strains that have been placed on the compromise of embedded liberalism. We argue that existing research underemphasizes how technological change and the digital revolution have contributed to these strains. Global value chains facilitated by the digital revolution have linked technology in advanced industrial countries to low-cost labor in developing countries, precipitating distributional losses for low-skilled labor in the industrial world. Further, the digital revolution has led to regulatory challenges involving both capital and labor. We argue that, as a result, governments face both mounting opposition to globalization and heightened difficulty in supporting the programs and policies necessary to buffer the adverse domestic effects of globalization and maintain support for embedded liberalism.

Type
Internal Challenges to the Liberal International Order: Economic
Copyright
Copyright © The IO Foundation 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, Daron. 2002. Technical Change, Inequality, and the Labor Market. Journal of Economic Literature 40 (1):772.CrossRefGoogle Scholar
Acemoglu, Daron, and Autor, David H.. 2011. Skills, Tasks and Technologies: Implications for Employment and Earnings. In Handbook of Labor Economics, Vol. 4, edited by Card, David and Ashenfelter, Orley, 1043–171. Elsevier.Google Scholar
Antrás, Pol. 2003. Firms, Contracts, and Trade Structure. Quarterly Journal of Economics 118 (4):1374–418.CrossRefGoogle Scholar
Autor, David H., Dorn, David, and Hanson, Gordon H.. 2013. The China Syndrome: Local Labor Market Effects of Import Competition in the United States. American Economic Review 103 (6):2121–68.CrossRefGoogle Scholar
Baccini, Leonardo, Pinto, Pablo M., and Weymouth, Stephen. 2017. The Distributional Consequences of Preferential Trade Liberalization: Firm-Level Evidence. International Organization 71 (2):373–95.CrossRefGoogle Scholar
Baldwin, Richard E. 2016. The Great Convergence: Information Technology and the New Globalization. Harvard University Press.Google Scholar
Baldwin, Richard E. 2019. The Globotics Upheavel: Globalization, Robotics, and the Future of Work. Oxford University Press.Google Scholar
Baron, David P. 2014. Self Regulation in Private and Public Politics. Quarterly Journal of Political Science 9 (2):231–67.CrossRefGoogle Scholar
Barrientos, Stephanie, Gereffi, Gary, and Rossi, Arianna. 2012. Economic and Social Upgrading in Global Production Networks: A New Paradigm for a Changing World. International Labour Review 150 (3/4):319–40.CrossRefGoogle Scholar
Bastiaens, Ida, and Rudra, Nita. 2018. Democracies in Peril: Taxation and Redistribution in Globalizing Economies. Cambridge University Press.CrossRefGoogle Scholar
Beltramello, Andrea, De Backer, Koen, and Moussiegt, Laurent. 2012. The Export Performance of Countries within Global Value Chains (GVCs). OECD Science, Technology and Industry Working Papers, No. 2012/02. The Directorate for Science, Technology and Industry, OECD. Available at <https://doi.org/10.1787/5k9bh3gv6647-en>. Accessed 20 November 2019.CrossRef.+Accessed+20+November+2019.>Google Scholar
Bernard, Andrew B., Jensen, J. Bradford, Redding, Stephen J., and Schott, Peter K.. 2018. Global Firms. Journal of Economic Literature 56 (2):565619.CrossRefGoogle Scholar
Bertschek, Irene, Hogrefe, Jan, and Rasel, Fabienne. 2015. Trade and Technology: New Evidence on the Productivity Sorting of Firms. Review of World Economics 151 (1):5372.CrossRefGoogle Scholar
Blyth, Mark. 2002. Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century. Cambridge University Press.CrossRefGoogle Scholar
Borck, Rainald, and Pflüger, Michael. 2006. Agglomeration and Tax Competition. European Economic Review 50 (3):647–68.CrossRefGoogle Scholar
Broz, J. Lawrence, Frieden, Jeffry, and Weymouth, Stephen. 2021. Populism in Place: The Economic Geography of the Globalization Backlash. International Organization 75 (2). <https://doi.org/10.1017/S0020818320000314>.CrossRefGoogle Scholar
Bustos, Paula. 2011. Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms. American Economic Review 101 (1):304–40.CrossRefGoogle Scholar
Büthe, Tim, and Mattli, Walter. 2011. The New Global Rulers: The Privatization of Regulation in the World Economy. Princeton University Press.Google Scholar
Cameron, David. 1978. The Expansion of the Public Economy: A Comparative Analysis. American Political Science Review 72 (4):1243–61.CrossRefGoogle Scholar
Cardona, Melisande, Kretschmer, Tobias, and Strobel, Thomas. 2013. ICT and Productivity: Conclusions from the Empirical Literature. Information Economics and Policy 25 (3):109–25.CrossRefGoogle Scholar
Casella, Bruno, Bolwijn, Richard, Moran, Daniel, and Kanemoto, Keiichiro. 2019. Improving the Analysis of Global Value Chains: the UNCTAD-Eora Database. Transnational Corporations 26 (3):115–42.CrossRefGoogle Scholar
Cavin, Ralph K. III, Lugli, Paolo, and Zhirnov, Victor V.. 2012. Science and Engineering Beyond Moore's Law. Proceedings of the Institute of Electrical and Electronics Engineers 100 (Special Centennial Issue):1720–49.CrossRefGoogle Scholar
Chen, Wenjie, and Kamal, Fariha. 2016. The Impact of Information and Communication Technology Adoption on Multinational Firm Boundary Decisions. Journal of International Business Studies 47 (5):563–76.CrossRefGoogle Scholar
Chin, Aimee, Juhn, Chihui, and Thompson, Peter. 2006. Technical Change and the Demand for Skills during the Second Industrial Revolution: Evidence from the Merchant Marine, 1891–1912. Review of Economics and Statistics 88 (3):572–78.CrossRefGoogle Scholar
Crivelli, Ernesto, de Mooij, Ruud A., and Keen, Michael. 2016. Base Erosion, Profit Shifting and Developing Countries. FinanzArchiv: Public Finance Analysis 72 (3):268301.CrossRefGoogle Scholar
Dobell, Jon. 2019. One Key to Tax Function Success Is “Connected Tax.” Ernst and Young, 27 May. Available at <https://www.ey.com/en_us/tax/one-key-to-tax-function-success-is-connected-tax>. Accessed 2 December 2019..+Accessed+2+December+2019.>Google Scholar
Dollar, David, and Kidder, Matthew. 2017. Institutional Quality and Participation in Global Value Chains. In Measuring and Analyzing the Impact of GVCs on Economic Development, edited by Antràs, Paul and Spence, Michael, 161–73. World Bank.Google Scholar
Donovan, Sarah A., and Bradley, David H.. 2019. Real Wage Trends, 1979 to 2018. United States Congressional Research Service. Available at <https://fas.org/sgp/crs/misc/R45090.pdf>. Accessed 30 March 2020..+Accessed+30+March+2020.>Google Scholar
Unit, Economist Intelligence. 2018. The Automation Readiness Index: Who Is Ready for the Coming Wave of Automation? London: Economist Intelligence Unit. Available at <https://www.automationreadiness.eiu.com/static/download/PDF.pdf>. Accessed 21 September 2019..+Accessed+21+September+2019.>Google Scholar
Executive Office of the President, National Science and Technology Council Committee on Technology. 2016. Preparing for the Future of Artifical Intelligence: National Science and Technology Council, Committee on Technology. Available at <https://obamawhitehouse.archives.gov/sites/default/files/whitehouse_files/microsites/ostp/NSTC/preparing_for_the_future_of_ai.pdf>. Accessed 13 May 2019..+Accessed+13+May+2019.>Google Scholar
Farrell, Henry, and Newman, Abraham. 2015. The New Politics of Interdependence: Cross-national Layering in Transatlantic Regulatory Disputes. Comparative Political Studies 48 (4):497526.CrossRefGoogle Scholar
Fetzer, Thiemo. 2019. Did Austerity Cause Brexit? American Economic Review 109 (11):3849–86.CrossRefGoogle Scholar
Flaherty, Thomas M., and Rogowski, Ronald. 2021. Rising Inequality As a Threat to the Liberal International Order. International Organization 75 (2). <https://doi.org/10.1017/S0020818321000163>.CrossRefGoogle Scholar
Freund, Caroline, and Pierola, Martha Denisse. 2015. Export Superstars. Review of Economics and Statistics 97 (5):1023–32.CrossRefGoogle Scholar
Frieden, Jeffry. 2018. The Politics of the Globalization Backlash: Sources and Implications. Paper presented at the annual meeting of the American Economic Association, Philadelphia, PA, 6 January. Available at <https://scholar.harvard.edu/files/jfrieden/files/the_politics_of_the_globalization_backlash.pdf>. Accessed 10 April 2019..+Accessed+10+April+2019.>Google Scholar
Gabbitas, Kim. 2017. Trade Union Trade-Offs: Unions, Voters, and the Rise of Right-Wing Populism. Claremont-UC Undergraduate Research Conference on the European Union, Vol. 2017, Article 8. Available at <https://doi.org/10.5642/urceu.201701.08>. Accessed 15 March 2019.CrossRefGoogle Scholar
Gereffi, Gary, and Sturgeon, Timothy. 2013. Global Value Chains and Industrial Policy: The Role of Emerging Economies. In Global Value Chains in a Changing World, edited by Elms, Deborah K. and Low, Patrick, 329–60. World Trade Organization.Google Scholar
Gidron, Noam, and Hall, Peter A.. 2017. The Politics of Social Status: Economic and Cultural Roots of the Populist Right. British Journal of Sociology 68 (S1):S57S84.Google ScholarPubMed
Gilpin, Robert. 1975. US Power and the Multinational Corporation: The Political Economy of Foreign Direct Investment. Basic Books.CrossRefGoogle Scholar
Goger, Annelies, Hull, Andy, Barrientos, Stephanie, Gereffi, Gary, and Godfrey, Shane. 2014. Capturing the Gains in Africa: Making the Most of Global Value Chain Participation. Duke University Center on Globalization, Governance and Competitiveness. Available at <http://www.capturingthegains.org/pdf/Capturing-the-gains-in-Africa-2014.pdf>. Accessed 14 August 2019..+Accessed+14+August+2019.>Google Scholar
Goodman, Sara Wallace, and Pepinsky, Thomas B.. 2021. The Exclusionary Foundations of Embedded Liberalism. International Organization 75 (2). <https://doi.org/10.1017/S0020818320000478>.CrossRefGoogle Scholar
Gordon, Robert J. 2016. The Rise and Fall of American Growth. Princeton University Press.CrossRefGoogle Scholar
Ha, Albert Y., and Tong, Shilu. 2008. Contracting and Information Sharing under Supply Chain Competition. Management Science 54 (4):701–15.CrossRefGoogle Scholar
Hays, Jude, Ehrlich, Sean, and Peinhardt, Clint. 2005. Government Spending and Public Support for Trade in the OECD: An Empirical Test of the Embedded Liberalism Thesis. International Organization 59 (2):473–94.CrossRefGoogle Scholar
Helpman, Elhanan, Itskhoki, Oleg, and Redding, Stephen. 2010. Inequality and Unemployment in a Global Economy. Econometrica 78 (4):1239–83.Google Scholar
James, John, and Skinner, Jonathan. 1985. The Resolution of the Labor-Scarcity Paradox. The Journal of Economic History 45 (3):513–40.CrossRefGoogle Scholar
Janksy, Petr, and Palansky, Miroslav. 2019. Estimating the Scale of Profit Shifting and Tax Revenue Losses Related to Foreign Direct Investment. International Tax and Public Finance 26 (5):1048–103.Google Scholar
Jayaram, Jayanth, Vickery, Shawnee K., and Droge, Cornelia. 2000. The Effects of Information System Infrastructure and Process Improvements on Supply-Chain Time Performance. International Journal of Physical Distribution and Logistics Management 30 (3/4):314–30.CrossRefGoogle Scholar
Jovanovic, Boyan, and Rousseau, Peter. 2005. General Purpose Technologies. In Handbook of Economic Growth, Vol. 1, Part B, edited by Aghion, Philippe and Durlauf, Steven N., 1181–224. Elsevier.Google Scholar
Kaufman, Robert, and Segura-Ubiergo, Alex. 2001. Globalization, Domestic Politics, and Social Spending in Latin America: A Time-Series Cross-Section Analysis, 1973–1997. World Politics 53 (4):553–87.CrossRefGoogle Scholar
Kindleberger, Charles P. 1973. The World in Depression, 1929–1939. University of California Press.Google Scholar
Kirshner, Jonathan. 1999. Keynes, Capital Mobility and the Crisis of Embedded Liberalism. Review of International Political Economy 6 (3):313–37.CrossRefGoogle Scholar
Krasner, Stephen D. 1976. State Power and the Structure of International Trade. World Politics 28 (3):317–47.CrossRefGoogle Scholar
Kurtz, Marcus, and Brooks, Sarah M.. 2008. Embedding Neoliberal Reform in Latin America. World Politics 60 (2):231–80.CrossRefGoogle Scholar
Lake, David A., Martin, Lisa L., and Risse, Thomas. 2021. Challenges to the Liberal Order: Reflections on International Organization. International Organization 75 (2):<https://doi.org/10.1017/S0020818320000636>.CrossRefGoogle Scholar
Lee, Neil, and Clarke, Stephen. 2019. Do Low-Skilled Workers Gain from High-Tech Employment Growth? High-Technology Multipliers, Employment and Wages in Britain. Research Policy 48 (9):111.CrossRefGoogle Scholar
Li, Cuihong, and Wan, Zhixi. 2017. Supplier Competition and Cost Improvement. Management Science 63 (8):2460–77.CrossRefGoogle Scholar
Liu, Lizhi, and Quinn, Dennis P.. 2020. A China Shock or a Multinational Shock? The Role of MNC Value Chains in the Trade Shock. Working Paper. Georgetown University.Google Scholar
Malhotra, Neil, Monin, Benoît, and Tomz, Michael. 2019. Does Private Regulation Preempt Public Regulation? American Political Science Review 113 (1):1937.CrossRefGoogle Scholar
Mansfield, Edward D., and Mutz, Diana C.. 2009. Support for Free Trade: Self-Interest, Sociotropic Politics, and Out-Group Anxiety. International Organization 63 (3):425–57.CrossRefGoogle Scholar
Mansfield, Edward D., and Mutz, Diana C.. 2013. US versus Them: Mass Attitudes Toward Offshore Outsourcing. World Politics 65 (4):571608.CrossRefGoogle Scholar
McNamara, Kathleen R. 1998. The Currency of Ideas: Monetary Politics in the European Union. Cornell University Press.Google Scholar
Mearsheimer, John J. 2019. Bound to Fail: The Rise and Fall of the Liberal International Order. International Security 43 (4):750.CrossRefGoogle Scholar
Melitz, Marc. 2003. The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity. Econometrica 71 (6):1695–725.CrossRefGoogle Scholar
Michaels, Guy, Natraj, Ashwini, and Reenen, John Van. 2014. Has ICT Polarized Skill Demand? Evidence from Eleven Countries Over Twenty-Five Years. Review of Economics and Statistics 96 (1):6077.CrossRefGoogle Scholar
Mitch, David. 2018. The Role of Education and Skill in the British Industrial Revolution. In The British Industrial Revolution: An Economic Perspective, edited by Mokyr, Joel, 241–79. Routledge.CrossRefGoogle Scholar
Newman, Abraham L. 2010. What You Want Depends On What You Know: Firm Preferences in an Information Age. Comparative Political Studies 43 (10):1286–312.CrossRefGoogle Scholar
Nooruddin, Irfan, and Rudra, Nita. 2014. Are Deveoping Countries Really Defying the Embedded Liberalism Compact? World Politics 66 (4):603–40.CrossRefGoogle Scholar
Norris, Pippa, and Inglehart, Ronald. 2019. Cultural Backlash: Trump, Brexit, and Authoritarian Populism. Cambridge University Press.CrossRefGoogle Scholar
Organisation for Economic Cooperation and Development. N.d. Public Expenditure and Participant Stocks on LMP: Training (2004–2017). Available at <https://stats.oecd.org/Index.aspx?DataSetCode=LMPEXP>. Accessed 5 May 2020..+Accessed+5+May+2020.>Google Scholar
Otto, Adeline, and van Oorschot, Wim. 2018. Welfare Reform by Stealth? Cash Benefit Recipiency Data and Its Additional Value to the Understanding of Welfare State Change in Europe. Journal of European Social Policy 29 (3):118.Google Scholar
Owen, Erica, and Johnston, Noel P.. 2017. Occupation and the Political Economy of Trade: Job Routineness, Offshorability, and Protectionist Sentiment. International Organization 71 (4):665–99.CrossRefGoogle Scholar
Palugod, Nora, and Palugod, Paul A.. 2011. Global Trends in Offshoring and Outsourcing. International Journal of Business and Social Science 2 (16):1319.Google Scholar
Pierce, Justin R., and Schott, Peter K.. 2016. The Surprisingly Swift Decline of US Manufacturing Employment. American Economic Review 106 (7):1632–662.CrossRefGoogle Scholar
Plümper, Thomas, Troeger, Vera E., and Winner, Hannes. 2009. Why Is There No Race to the Bottom in Capital Taxation? International Studies Quarterly 53 (3):761–86.CrossRefGoogle Scholar
Polanyi, Karl. 1944. The Great Transformation: The Political and Economic Origins of Our Time. Farrar and Reinhart.Google Scholar
Popp, Andrew. 2000. Swamped in Information but Starved of Data: Information and Intermediaries in Clothing Supply Chains. Supply Chain Management 5 (3):151–61.CrossRefGoogle Scholar
Purvis, Laura, Gosling, Jonathan, and Naim, Mohamed M.. 2014. The Development of a Lean, Agile and Leagile Supply Network Taxonomy Based on Differing Types of Flexibility. International Journal of Production Economics 151:100111.CrossRefGoogle Scholar
Raess, Damian, and Burgoon, Brian. 2006. The Dogs that Sometimes Bark: Globalization and Works Council Bargaining in Germany. European Journal of Industrial Relations 12 (3):287309.CrossRefGoogle Scholar
Rai, Arun, Patnayakuni, Ravi, and Seth, Nainika. 2006. Firm Performance Impacts of Digitally Enabled Supply Chain Integration Capabilities. MIS Quarterly 30 (2):225–46.CrossRefGoogle Scholar
Rickard, Stephanie. 2015. Compensating the Losers: An Examination of Congressional Votes on Trade Adjustment Assistance. International Interactions 41 (1):4660.CrossRefGoogle Scholar
Rodrik, Dani. 1997. Has Globalization Gone Too Far? Institute for International Economics.CrossRefGoogle Scholar
Rodrik, Dani. 2018. Populism and the Economics of Globalization. Journal of International Business Policy 1 (1):1233.CrossRefGoogle Scholar
Rudra, Nita. 2008. Globalization and the Race to the Bottom in Developing Countries. Cambridge University Press.CrossRefGoogle Scholar
Ruggie, John Gerard. 1982. International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order. International Organization 36 (2):379415.CrossRefGoogle Scholar
Ruggie, John Gerard. 2003. Taking Embedded Liberalism Global: The Corporate Connection. In Taming Globalization: Frontiers of Governance, edited by Held, David and Koenig-Archibugi, Mathias, 93129. Polity Press.Google Scholar
Russ, Hamilton, and Stekelberg, James. 2017. The Effect of High-Quality Information Technology on Corporate Tax Avoidance and Tax Risk. Journal of Information Systems 31 (2):83106.Google Scholar
Salomon, Ilan, Cohen, Galit, and Nijkamp, Peter. 1999. ICT and Urban Public Policy: Does Knowledge Meet Policy. Research Memorandum 47: Amsterdam: FEWEB. Available at <https://research.vu.nl/ws/portalfiles/portal/857022/19990047.pdf>. Accessed 2 April 2019..+Accessed+2+April+2019.>Google Scholar
Sánchez, Angel M., and Pérez, Manuela P.. 2005. Supply Chain Flexibility and Firm Performance. International Journal of Operations and Production Management 25 (7):681700.CrossRefGoogle Scholar
Slemrod, Joel, and Wilson, John D.. 2009. Tax Competition with Parasitic Tax Havens. Journal of Public Economics 93 (11/12):1261–70.CrossRefGoogle Scholar
Snyder, Jack. 2019. The Broken Bargain: How Nationalism Came Back. Foreign Affairs 98 (2):5460.Google Scholar
Solt, Frederick. 2009. Standardizing the World Income Inequality Database. Social Science Quarterly 90 (2):231–42.CrossRefGoogle Scholar
Topalova, Petia, and Khandelwal, Amit. 2011. Trade Liberalization and Firm Productivity: The Case of India. Review of Economics and Statistics 93 (3):9951009.CrossRefGoogle Scholar
United Nations Conference on Trade and Development. 2013. World Investment Report: Global Value Chains: Investment and Trade for Development. United Nations.Google Scholar
Vogel, David. 1995. Trading Up: Consumer and Environmental Regulation in a Global Economy. Harvard University Press.Google Scholar
Wallace, Michael, Gauchat, Gordon, and Fullerton, Andrew S.. 2011. Globalization, Market Transformation, and Metropolitan Earnings Inequality. Social Science Research 40 (1):1536.CrossRefGoogle Scholar
Walter, Stefanie. 2010. Globalization and the Welfare State: Testing the Microfoundations of the Compensation Hypothesis. International Studies Quarterly 54 (2):403–26.CrossRefGoogle Scholar
Webber, Stuart. 2011. The Tax-Efficient Supply Chain: Considerations for Multinationals. Tax Notes International 61 (2):149–68.Google Scholar
Woodward, Richard. 2018. UK Governance: From Overloading to Freeloading. The Political Quarterly 89 (1):5664.CrossRefGoogle Scholar
World Bank. N.d. World Development Indicators. World Bank.Google Scholar
World Trade Organization. 2019. Global Value Chains Development Report 2019: Technological Innovation, Supply Chain Trade, and Workers in a Globalized World. World Trade Organization.Google Scholar
World Trade Organization. N.d. Trade in Value-Added and Global Value Chains: Statistical Profiles. World Trade Organization. Available at <https://www.wto.org/english/res_e/statis_e/miwi_e/countryprofiles_e.htm>. Accessed 20 March 2020..+Accessed+20+March+2020.>Google Scholar
Yücesan, Enver. 2007. Competitive Supply Chains: A Value-Based Management Perspective. Palgrave Macmillan.CrossRefGoogle Scholar
Zhang, Xuan, van Donk, Dirk P., and van der Vaart, Taco. 2011. Does ICT Influence Supply Chain Management and Performance? International Journal of Operations and Production Management 31 (11):1215–47.CrossRefGoogle Scholar
Zysman, John, and Newman, Abraham, eds. 2006. How Revolutionary Was the Digital Revolution?: National Responses, Market Transitions, and Global Technology. Stanford University Press.Google Scholar
Supplementary material: Link

Mansfield and Rudra Dataset

Link