"The political economy of vaccine distribution and China's Belt and Road Initiative." with Krishna Chaitanya Vadlamannati. 2023. Business and Politics. 1-22. doi:
Abstract: To what extent do national strategic interests influence countries’ distribution of health assistance during a global health crisis? We examine China's global COVID-19 vaccine allocation, focusing on the relationship between its vaccine prioritization and its geopolitical expansion through the Belt and Road Initiative (BRI). We claim China uses its vaccine diplomacy as a comprehensive tool to promote its grand strategy and expand its global leadership and influence. Employing a newly available dataset on Chinese COVID-19 vaccine deliveries for a cross-section of 108 BRI member countries, our study shows that countries with foreign direct investment flows into BRI projects have received more vaccines from China. Our findings confirm that donor strategic concerns affect bilateral foreign assistance. Our results remain robust to several robustness checks, including endogeneity concerns.
Abstract: Do investment disputes reduce foreign direct investment (FDI)? Investors may perceive host governments involved in arbitration as riskier. Yet a dispute may also signal new economic opportunities for firms hoping to enter the same industry as the disputant firm. These competing pressures mean the impact of disputes on FDI is ex ante unclear. However, the balance of risk and opportunity varies across industry fixed asset intensity (FAI). FAI is associated with both the irreversibility of investment, which influences risk, as well as the structure of the market, which shapes competitive opportunities arising from a dispute. We expect the rewards from investment to exceed risk as industry FAI increases. Using new data on industry-level greenfield FDI between countries from 2003 to 2015, we find that a co-industrial dispute reduces investment in industries with low FAI but increases FDI in those with high FAI. These results highlight the importance of heterogeneous investors.
"A command to estimate and interpret models of dynamic compositional dependent variables: New features for dynsimpie." with Flavio Souza, Andrew Q. Philips, Amanda Rutherford, and Guy D. Whitten. 2020. The Stata Journal. 20 (3). 584-603.
Abstract: Philips, Rutherford, and Whitten (2016, Stata Journal 16: 662–677) introduced dynsimpie, a command to examine dynamic compositional dependent variables. In this article, we present an update to dynsimpie and three new adofiles: cfbplot, effectsplot, and dynsimpiecoef. These updates greatly enhance the range of models that can be estimated and the ways in which model results can now be presented. The command dynsimpie has been updated so that users can obtain both prediction plots and change-from-baseline plots using postestimation commands. With the new command dynsimpiecoef, various types of coefficient plots can also be obtained. We illustrate these improvements using monthly data on support for political parties in the United Kingdom.
"Distinguishing territorial structure from electoral adventurism: The distinct sources of static and dynamic nationalization." with Thomas Mustillo. 2016. Electoral Studies 44. 341-350.
Abstract: Estimates of static nationalization do not always reflect stark qualitative differences between parties. We use a research design oriented around a comparison of sharply different parties - the unstable Democratic Left in Ecuador and the stable Broad Front in Uruguay - to develop the distinctiveness of static and dynamic nationalization. Snapshot measures that only consider a single election suggest that both parties are poorly statically nationalized; but we show that the former case is highly statically nationalized, and that the observed territorial differences arise because it is poorly dynamically nationalized. We adopt the linear mixed modeling approach to reduce the bias in extant estimators. The approach is also informative about the sources of variance in a party's territorial support: relatively stable district attributes account for static nationalization, while features unique to the electoral cycle account for dynamic nationalization. Substantively, our study alters conclusions about parties operating in highly unstable electoral contexts.
"Legalization of International Institutions and Its Discontents: GATT vs. WTO Adjudication, 1989-2015."
Abstract: Many international organizations and multilateral negotiations are criticized as being driven by power politics, which disadvantages less powerful members. Does legalization of international institutions help mitigate power asymmetries and the unequal distribution of the benefits of international cooperation? I answer this question in the context of the transition from the GATT to the WTO dispute settlement mechanism (DSM). Drawing on both game theory and empirical analysis, this paper explores whether the WTO helps weak and poor countries when it comes to disputes with their more powerful counterparts. I argue that the legal features of the WTO DSM strengthen the bargaining power of weaker complainants. As a result, they have fared better under the WTO than they do under the GATT. In addition to that, I argue that the WTO helps smaller and poorer complainants disproportionally. The WTO provides poorer and smaller complainants with more gains in trade flows relative to richer and larger complainant countries. I test the argument using an original data set on post-dispute trade flows of the disputed products directly listed in each GATT and WTO dispute filed between 1989 and 2015. I show that small and poor complainants are more likely than large and rich complainants to increase heir exports of the disputed products to the defendant's market after the dispute ends in the WTO relative to the GATT. I also find that the richest complainants (top 2% of the sample) will decrease their post-dispute exports to the defendant in the WTO relative to the GATT.
"Dispute Settlement and Power Asymmetries in International Trade: Regional Trade Agreements and the WTO."
Abstract: Regional trade agreements (RTAs) have become increasingly common in the international trading system since the end of the Second World War. The number of RTAs has increased rapidly during the past two decades. In particular, it doubled to reach more than 400 RTAs in force from 2000 to 2016. Notwithstanding the recent surge in regionalism, dispute settlement mechanisms (DSMs) are much less in use in RTAs than in the World Trade Organization (WTO). I argue that the frequent use of the WTO-DSM results from its superiority in avoiding systemic breakdown and leveling the playing field for less powerful countries in disputes. The extension of Rosendorff (2005) model of the WTO to RTAs demonstrates that RTA-DSMs increase the power disparity by providing more flexibility to stronger countries at the expense of weaker countries. Therefore, DSMs generate a trade-off in gains between large and small countries in RTAs instead of the trade-off between "rigidity and stability" in the WTO. The significant loss sustained by weak countries in RTA-DSMs generate the loss in the stability of the regional trading system. The findings imply that less powerful members insulate power politics in the multilateral trading system under the WTO more efficiently than in regional trade agreements.
Many scholars criticize international organizations and multilateral negotiations, arguing that they are driven by power politics. The current trend towards legalization of international institutions calls existing views on how international institutions shape state behavior into question. In the large literature on international adjudication, many theories and empirical results conflict with one another. In the context of international trade institutions, I examine whether legalization of dispute settlement mechanism helps put small and weak states on an equal footing with powerful states, thereby maintaining the liberal international trade order. I develop a game theoretic model of trade disputes and examine trade bargaining across international trade regimes. I test the implications of my theory using original data on disputes at the GATT/WTO from 1980 to 2018 and post-dispute trade flows for each GATT/WTO dispute initiated between 1989 and 2015.
CHAPTER 1: INTRODUCTION
"Bargaining in the Shadow of a Dispute Settlement Mechanism: GATT vs. WTO Adjudication."
"An Empirical Analysis of Delegation and Settlement at the GATT vs. the WTO, 1980-2018."
Abstract: This study lays out and empirically tests circumstances where the WTO's legalized dispute settlement system helps small and poor countries insulate themselves from power politics in the multilateral trading system. I argue that (1) disputes filed in the WTO are more likely to reach litigation than those filed in the GATT, and (2) the odds of litigation increase in the number of third parties involved. I develop a theory about a conditional effect of WTO dispute settlement on post-dispute trade flows between disputing parties. I argue that the WTO helps poor states disproportionally. This leads to such a strong post-dispute distributional effect in the WTO that poor states restore trade over the disputed products after WTO disputes more than they could do after GATT disputes, while rich states are unlikely to experience such a trade impact from the WTO relative to the GATT. I test my arguments using original data on disputes at the GATT and the WTO from 1980 until 2018 and post-dispute trade flows for each GATT/WTO dispute filed between 1989 and 2015. Empirical evidence strongly supports my arguments. This study contributes to the literature on the GATT/WTO disputes and legalization of dispute settlement systems, and also speaks to a broader literature on the role of international institutions.
Some interesting results below:
"Dispute Settlement and Power Asymmetries in International Trade: Regional Trade Agreements and the WTO."
CHAPTER 5: CONCLUSION
"Firms, Contract Enforcement, and the Institutional Sources of Trade Openness." with Timm Betz
Abstract: Why are democracies more open to trade than non-democracies? Existing explanations, which focus on the political power of voters, are at odds with many empirical regularities. In contrast to dominant theories, which emphasize the role of institutions in aggregating preferences, we point to the role of institutions in shaping the domestic preference landscape. We offer a theory of trade openness that combines two features. First, key beneficiaries and supporters of free trade are firms that export, import, and participate in global production networks. Second, concerns about contract enforcement impede trade between firms and therefore the emergence of firms that benefit from trade openness. Because democratic institutions are associated with better contract enforcement, they are also associated with the emergence of more firms that benefit from trade openness. We show that democracies boast more exporting firms; trade more products, especially contract-intensive products; and that the trade profile of democracies is skewed toward contract-intensive products, which involve more firms in the production process, spreading the benefits of open markets across the economy. We offer a new institutional theory of trade openness and, by emphasizing the role of contract enforcement, identify important parallels in the literatures over international trade and investment.
Abstract: The rise of global value chains (GVCs) is reshaping the political economy of trade in several ways, including the politics of trade disputes. Trade disputes affect access to markets and suppliers in ways that are likely to affect investment decisions. Indeed, recent work examines how multinationals influence the initiation and duration of disputes. Yet we do not know how multinationals respond to trade frictions in a world of GVCs. We offer a theory of international trade and investment that interrelates trade, FDI, global production, and GVC participation. We expect that the effect of trade disputes will depend on how and to what extent the industry integrates into global value chains. Disputes over intermediate goods, relative to final goods, may cause serious disruption to tightly integrated GVCs. For industries reliant on imports of intermediates, disputes and the consequent risk will make investors seek alternate suppliers other than the host government involved in a dispute. Thus, disputes over intermediate goods will decrease FDI in that host. At the same time, a dispute will increase FDI in other potential supplier countries. The magnitude of the effects will increase as the industry becomes more dependent on the imports of intermediate goods for production. We use data on dyad-industry level greenfield FDI from FDI markets between 2003 and 2016 to test our hypotheses. We examine WTO disputes for all countries and use the United Nations-sponsored Integrated Database of Trade Disputes for Latin America and the Caribbean (IDATD) to examine all trade disputes in Latin America.
"Voter Rationality, Information Environments, and COVID-19: Evidence from Survey Experiments in South Korea." with Jongwoo Jeong
An important literature on democratic responsiveness evaluates voter rationality by examining whether voters punish their politicians based on events that are outside the control of their leaders such as natural disasters and external shocks. Do voters evaluate their leaders based on such events because they are irrational? While existing studies have suggested mixed results, Ashworth et al (2018) argue that voter responsiveness to such events does not necessarily determine voter (ir)rationality. Yet, voters learn new information about the incumbent through those events; and it bases rational voters’ evaluations. To test this claim, we take advantage of the recent global COVID-19 pandemic. We identify the citizens with exposure to different information environments about the government performance in response to this exogenous event. Using two survey experiments in South Korea, we show that individuals exposed to good news (positive evaluations on government reaction to the virus) were more likely to assess the incumbent favorably than individuals exposed to either neutral or bad news (n=600). To further understand which information matters, we also implement a conjoint experiment (n=600).
Our preliminary results (from the first experiment) below:
Results demonstrated that negative news about government performance in tackling the crisis did not have an impact on voters' evaluation of leaders, but that positive news caused voters to increase their support for leaders and the government. These results suggest that the informational effect of exposure to positive news about government performance was statistically significant and stronger than the effect of negative news which is statistically insignificant.
"Sectoral Heterogeneity in Investor Behavior: Greenfield FDI, Political Tensions, and Economic Interdependence." with Yohan Park
How do deteriorating political relations between states affect foreign direct investment (FDI)? Political tensions between home and host countries may cause government' retaliatory actions and consumer boycott activities which harm the interests of foreign investors. Tensions between states increase investors' perceived risk of expropriation and thus reduce the likelihood of future investment. We offer a new theory of FDI by focusing on two important channels through which political tensions can shape FDI flows. First, multinational firms' response to political tensions varies across industry-fixed asset intensity (FAI). FAI is associated with the irreversibility of investment, which shapes firms' vulnerability to expropriation and ex post policy changes in host countries and therefore their perceived risk following tensions. Thus, the effect of tensions between states depends on the level of industry FAI. Second, states seek to avoid conflict with other states with which they have heavy economic ties due to the disruption of economically beneficial exchange. As a result, investors' perceived risk arising from tensions depends on the extent to which home and host countries are economically interdependent. We test our theory of heterogeneity in investor behavior using industry-level greenfield FDI data and event-level conflict data between 2003 and 2016. We show that political tensions discourage investment in fixed asset intensive industries such as oil and gas extraction but not in low fixed asset industries such as textiles and apparel. We also find that the negative impact of tensions on investment as well as the heterogeneity in investor behavior decrease as states become more economically interdependent.
Empirical evidence below: