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Globalization and Policy Convergence Author(s): Daniel W. Drezner Source: International Studies Review, Vol. 3, No.

1 (Spring, 2001), pp. 53-78 Published by: Blackwell Publishing on behalf of The International Studies Association Stable URL: . Accessed: 22/01/2011 19:14
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Globalization and

Policy Convergence

Daniel W. Drezner

and economic, politicalinnoGlobalization is theclusterof technological,

vations thathave drasticallyreducedthe barriersto economic, political, and cultural exchange. Although its salience is self-evident to policymakersand the public, the vocal protests at the 1999 WorldTradeOrganization (WTO) ministerialmeeting in Seattle and elsewhere since highlight the growing interest in it. Protestors were convinced that the WTO was accelerating marketintegrationat the expense of environmentalstandards,consumersafety, and labor rights. Such clashes are largely about the anticipatedbut uncertain effects of globalization and the question of whether it will lead to the elimination of state regulation or to a new form of global governance. An implicit assumptionof most policy analysts and some academics is that globalization leads to a convergence of traditionallynational policies governing environmental regulation, consumer health and safety, the regulation of labor, and the ability to tax capital. Convergence is the tendency of policies to grow more alike, in the form of increasing similarity in structures,processes, and performances.' Some claim that the reduction of transnationalbarriersto economic exchange forces states to revoke long-standing social contractsthat protect their citizens from the ruthlessness of the free market. Globalization leads to a race to the bottom, where concerns about the environment,the treatment of labor, and the health of consumers are sacrificed on the altar of commerce.2 Others argue that the growth of transnationalgovernance structures leads to a negotiated convergence of ample regulationbut also a potentialdem-

Mass.:Harvard Press,1983),p. 3. sity? (Cambridge, University

'Clark Kerr,The Future of IndustrialSocieties: Convergenceor ContinuingDiver-

Has Globalization GoneTooFar? (Washington, D.C.:Institute International for Eco36. nomics, 1997),p.
? 2001 InternationalStudies Association Published by Blackwell Publishers, 350 Main Street, Malden, MA 02148, USA, and 108 Cowley Road, Oxford OX4 1JF,UK.

2Richard McKenzie and Dwight Lee, Quicksilver Capital: How the Rapid Movement of WealthHas Changed the World(New York:Free Press, 1991); Dani Rodrik,


Daniel W Drezner

ocratic deficit.3 Does globalization lead to policy convergence in these areas? More generally, does globalization lead to the rollback of regulation or its increase? These questions are more than intrinsically important.The question of national policy autonomy has triggeredthe most public anxiety about globalization. Polling datarevealthatU.S. citizensbelieve thatthe integration the United of States with the rest of the world has greatly constrainedU.S. policy autonomy, This anxietyis even creatingambivalenceaboutfurtherinternational integration.4 greaterin othercountries since they are far more dependenton the global econcharacterizes pressureof globthe omy thanthe UnitedStates.5ThomasFriedman alizationas the "GoldenStraitjacket," which leaves nation-statesthe starkchoice of "freemarketvanillaandNorthKorea." The battlein Seattleandthe now ubiq6 uitous protestsat meetings of international organizationsare only the most noteworthy manifestationsof the anxiety aboutglobalization. Second, the scholarly work on this subject is spread across multiple disciplines, including law, economics, political science, and sociology. This problem leads to a certainredundancyin theorybuilding, as disciplinaryboundaries prevent ideas from spreadingacross fields. This hinders accumulatingknowledge. In the long run, the lack of cumulation is dangerous; without rigorous reviews of such arguments,policymakersare proneto accept misperceptionsof globalization that are politically expedient.7 Third,internationalrelations scholars are debatingthe claim that globalization represents a structuralchange in the internationalsystem that must be addressedby new theories.8 Much of the discourse on globalization shows an

Mass.:Harvard Press, 1995);PhilipCerny,"GlobEconomy (Cambridge, University No. 1 (1999), pp. 1-26. 4 ChicagoCouncilon Foreign PublicOpinionandU.S. ForRelations,"American Center's "PublicOpinion on eign Policy 1999,"pp. 18-20; see also thePew Research ForeignPolicy Issues,"(, accessedJuly24, 2000. in Can SocialMovements Western 5 See JoelKrieger, Europe: TheySur"Egalitarian viveGlobalization theEMU?" and International Studies Review No.3(1999),pp.69-84. 1, and TheLexusand the OliveTree(New York: 6Thomas Friedman, Farrar, Strauss, 86. Giroux,1999),p. 7See Alan Blinder,HardHeads, Soft Hearts (Reading,Mass.:Addison-Wesley, 1987),ch. 1. Future theState(London: SAGE,1990);DavidM. Andrews, Mobilityand of "Capital a of International StateAutonomy: Toward Structural Relations," Theory Monetary
8Philip Cerny, The ChangingArchitectureof Politics: Structure,Agency, and the

3 David Vogel,

Trading Up: Consumerand EnvironmentalRegulation in a Global

alization and the Erosion of Democracy,"EuropeanJournal of Political Research 36,

InternationalStudies Quarterly38, No. 2 (1994), pp. 193-218.

Globalization and Policy Convergence


attempt to move away from the existing paradigms of internationalrelations theory, arguing that the changes wrought on world politics in the past twenty years overwhelm the assumptionsabout the state made in traditionaltheories.9 If globalization causes an inexorable policy convergence, then this discourse would be substantiated,fusing together the study of internationaland comparative political economy. If the effects of globalization have been exaggerated, then it should become common knowledge before discourse overwhelms praxis and wastes time and resources. will This reflectionandreappraisal examinethe arguments evidence about and the how globalizationaffects the convergenceof regulatorypolicies, in particular Two conclusionsfollow. First,theoof laborandenvironmental standards. setting ries of policy convergence diverge on whetherthe driving force is economic or ideational,andwhetherstatesretainagencyin the face of globalizationor aredomThese divergencesmirrorthe divisions among inatedby structural determinants. internationalrelationsparadigms.Globalizationthereforehas not led to the deexrelations,but merely transported velopment of new theories of international theories to new issue areas of the global political economy. Second, the isting evidence on policy convergenceacrossmultipleissue areassuggeststhatthe structurally based theories lack support.Globalizationcannot be reducedto a set of deterministic forces. This suggests that the transnationaleconomic and ideational forces commonly cited are not as powerful as previously suggested. It should be stressed what this essay will not cover. No single essay could discuss all of the supposedramificationsof globalization,which range from the end of the nation-stateto the end of history.It will not discuss the origins of the recent era of globalization.'0 At this juncture, such a question is primarily of historical interest. It will not discuss the voluminous literatureon the gross power of the nation-state and global capital." Although this is an important

U.K.:OxfordUniversity Press, 1999). (Oxford, 10For of discussions this, see JeffreyWinters, "Powerandthe Control Capital," of World Politics 46, No. 3 (1994), pp. 419-452; Benjamin Cohen,"PhoenixRisen: J. The Resurrection GlobalFinance," of World Politics48, No. 2 (1996), pp. 268-296. 11 KenichiOhmae,The End of the Nation State (New York:Free Press, 1995); Falk, "Stateof Seige: Will Globalization Strange,TheRetreatof the State;Richard Win Out?"International Affairs73, No. 1 (1997), pp. 123-136; LindaWeiss, The N.Y.:Cornell Press,1998);DanielW. Mythof thePowerlessState(Ithaca, University "Globalizers the World,Unite!"Washington of Drezner, 21, Quarterly No. 1 (1998),
pp. 209-225.

national Journal 51, No. 4 (1996), pp. 617-637; Susan Strange, The Retreat of the State: The Diffusion of Power in the WorldEconomy (Cambridge,U.K.: Cambridge University Press, 1996); Ian Clark, Globalization and InternationalRelations Theory

in the "Globalization and footnote,see PhilipCerny, g9Beyond citations theprevious in OtherStories:The Searchfor a New Paradigm International InterRelations,"


Daniel W Drezner

question, it presupposes the effect of capital on policy convergence, so the conclusions developed here do have clear implications for this debate. It will not cover the societal effects of globalization, which range from increased inequality within and between countries12 to the diffusion of new methods of corporate governance.13 These are important subjects in their own right but beyond the scope of this essay. Finally, the effects of globalization on macroeconomic policies such as monetarypolicy and exchange rate regimes will be discussed only in brief. These effects have been reviewed in depth elsewhere.14 The following discussionis dividedinto threemainsections.The firstreviews the various theoreticalexplanationsof how globalization could affect the ability of states to regulatetheir own economies. The following section reviews the empirical literatureon globalization and its effects on labor and environmental standardsand examines the performanceof the various theories. The concluding section offers some suggestions about future avenues for research.



Not surprisingly,scholars studied policy convergence long before the recent wave of globalization came about. In this earlier literature,convergence was postulated to occur throughthe homogenization of societies via industrialization and modernization.15 The recent trendtoward globalization reinforces the effects claimed by convergencetheorists.The ability of ideas to permeateacross bordershas existed for centuries,but advancesin telecommunicationsand computers have made this process much easier. Similarly, the erosion of capital controls has reinforced the claims about the effect of transnationaleconomic forces on national policy autonomy.16
12SaskiaSassen,The Mobility of Capital and Labor (New York: UniCambridge

versityPress, 1988).

ism (Ithaca,N.Y.:CornellUniversity Press,1996). 14Two excellentreviewsof thisliterature Geoffrey and are "Global Markets Garrett, National Politics: CollisionCourse Virtuous or Circle?" International 52, Organization of "Globalisation No. 4 (1998),pp.787-824; Giinther SchulzeandHeinrich Ursprung, theEconomy theNationState," World and The 22, No. 3 (1999),pp.295-352. Economy PolitiAmerican Diffusion,andInnovation," Eyestone,"Confusion, 15See Robert cal ScienceReview71, No. 2 (1977), pp. 441-453, and David CollierandRichard of versusDiffusion: Messick,"Prerequisites TestingAlternative Explanations Social What's New?AndWhat's Not?(AndSo What?)," Foresman, 1978),and"Globalization: No. 118 (2000), pp. 104-112 andJohnBrathwaite PeterDrohos, and ForeignPolicy, is GlobalBusinessRegulation York: Press).Oneproblem (New Cambridge University
AmericanPolitical ScienceReview69, No. 4 (1975), pp. 1299-1315. SecurityAdoption," 16Robert Keohaneand JosephNye: Power and Interdependence (Boston:Scott

Suzanne Berger and Ronald Dore, eds., National Diversity and Global Capital-

Globalization and Policy Convergence


The different theories that connect globalization to policy convergence fit into a simple 2X2 schema. The first dimension is whether the theory emphaforces or the power of autonomousagents. Strucsizes the primacyof structural tural approaches stress the environmentalconditions affecting political units. The pressures for convergence are external to states, determiningtheir course of action by tightly constraining national policy responses. Agent-centered approachesdo not dismiss the power of transnationalstructuresbut argue that states can at least choose from among multiple policies that are sustainable outcomes over time. A clear distinction between structuraland agent-based theories is the lantheoguage used to describe internationalregulatoryregimes. Structure-based ries deal with convergence as the dependent variable and imply that different nationalpolicies are homogenized into one global policy. Agent-based theories prefer the term coordination,which is more expansive than convergence. Policy coordinationimplies some agreement on the acceptable bounds of regulatory policies, but it does not mean that all states implement identical rules or regulations. The second dimension that separatesdifferenttheoreticalapproachesis the source of the convergence pressures.One view is that the primarypressurefor convergence is economic; the pressure to modify regulatory policies comes from the threat of mobile capital to exit, causing nonconverging states to lose their competitiveness in the global economy. The other possibility is that the pressure is ideational; states alter institutions and regulations because a set of beliefs has developed sufficient normativepower that leaders fear looking like laggards if they do not adopt similar policies. The most prominent of these convergence theories is the "race-to-thebottom" (RTB) hypothesis, an approach that combines a positive theory of regulation with strong normative disapproval of the predicted outcome. This theory assumes that the pressure for convergence comes from the mobility of trade and capital flows, and that the size of these flows overwhelms the ability of the state to act contraryto market forces.17 In the past thirty years, capital has become increasingly footloose, to the point where states cannot halt capital mobility, even if they tried.18 In such a world, capital will seek the location the tendency scholars explainanyexternal of to influenceon policymakers a prodas uctof globalization. a critique this,see StevenBernstein Benjamin For of and Cashore, Four and Cana"Globalization, Pathsof Internationalization Domestic PolicyChange,"

dian Journal of Political Science 33, No. 1 (2000), pp. 67-99.

Capital Controls?"Journal of Economic Perspectives 13, No. 1 (1999): 65-84.

the focuseslargelyon capitalflows, traded 17 Though RTBhypothesis goodsact as a proxyfor moreefficientcapitalinvestments madein othercountries. 18 See JohnGoodman andLouis Pauly,"TheObsolescence CapitalControls?" of World Politics46, No. 1 (1993), pp. 50-82; Sebastian "HowEffectiveAre Edwards,


Daniel W.Drezner

where it can earn the highest rate of return.High rates of corporatetaxation, strict labor laws, or rigorous environmentalprotection lower profit rates by raising the costs of production.Capitalwill thereforeengage in regulatoryarbitrage, moving to (or importingfrom) countrieswith the lowest regulatorystandards. States, fearing a loss of their tax base, have no choice but to lower regulatorystandardsto avoid capital flight. TheRTBhypothesismakesseveralstrongassumptions aboutthepoliticaleconof the nation-statebeyond the mobility of capital.'9First,it assumesthatthe omy state respondsexclusively to the preferencesof capitalandnot to other constituencies, such as voters, bureaucracies,or interestgroups. Second, it assumesthat no state has an economy large enough to endow it with marketpower vis-a-vis that global capital.If it did, such a state would be able to set regulatorystandards raisethe costs of investmentabove the marketrate,yet still lurecapitalbecauseof the potentialprofitsfrominvesting in a largemarket.Finally andmost controversially, it presumesthatstate regulationsimpose enough of a cost on producersto affect location, regardlessof differencesin laborproductivity.If state regulation of the environment,labor,consumersafety,ortaxationdo nothave an appreciable negative impacton firms, the logic of the RTBhypothesis comes into question. Concerns about RTB phenomenadate back centuries.Adam Smith warned in The Wealthof Nations about limits to the state's power to tax mobile factors of production: of attached Theproprietor stockis a citizenof theworld,andis notnecessarily in He the to anyparticular country. wouldbe aptto abandon country whichhe was ... assessedto a burdensome andwouldremovehis stockto some tax, wherehe couldeithercarryon his businessor enjoyhis fortune othercountry moreathis ease.By removing stockhe wouldputanendto all theindustry his in whichhe left.20 whichhe hadmaintained the country More recently, social scientists have put forward variations of the RTB hypothesis. Economists have extended this hypothesis in models of regional policymaking in a federal state.21 Political scientists who focus on the strucin Races to the Bottom," 19These are best summarized Miles Kahler, "Modeling

PoliticalScienceAssociation, at paperpresented the 1998 meetingof the American in Mass.See alsoPaulHirstandGrahame Globalization Question, Boston, Thompson, 2d ed. (Cambridge, Mass.:PolityPress,1999),ch. 1. Modern 20Adam Smith,TheWealth Nations(New York: 1937),p. 800. Library, of see fears Onothereighteenth- nineteenth-century about and Amin, globalization, Samir
"The Challenge of Globalization,"Review of InternationalPolitical Economy3, No. 3 Foreign Policy, No. 115 (1999): 106-116. 21 Charles Tiebout, "A Pure Theory of Local Expenditures,"Journal of Political Economy 64, No. 5 (1956), pp. 416-424

"Globalization the Returnof History," and (1996), pp. 216-259; EmmaRothschild,

Globalization and Policy Convergence


tural dependence of the state on capital have made similar argumentson the effect of globalizationon statepolicies, echoing Marxisttheories.22 Legal scholars have also used this model to argue against decentralizingregulatorypowers to lower-level jurisdictions.23 The normative implications of the RTB hypothesis are clearly negative. KarlPolanyi has offered the most eloquentdescriptionof its effects. He observed that once the market is permitted to organize some of society, the inevitable result was a society operatingas an adjunctto the market.24 arguedthat this He leads to a race to the bottom: "To allow the marketmechanismto be inevitably sole directorof the fate of human beings ... would result in the demolition of society.... Nature would be reduced to its elements, neighborhoodsand landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed."25 The predictionsof the RTB hypothesis are clear and concise. First, the more exposed a state is to global markets, such as reduced barriers to trade and controls on capital, the more likely its tax and regulatorypolicies will converge to other states with internationalexposure. Second, there should be a strong negative correlationbetween inward capital flows and a country's regulatory standards.Third,this policy convergence will be at the lowest common denominator;in any given regulatoryarena,states will gravitatetowardthe policies of the most laissez-faire country. RTB predictionsaboutthe welfare state more generally are mixed. Scholars like Dani Rodrik, Sven Steinmo, and Peter Katzensteinpoint out that increased exposure to global marketsshould generatemore demandson the welfare apparatus because of the distributionaleffects of globalization. This implies that welfare expendituresshould be positively correlatedwith globalization, which is what Rodrik finds. Yet RTB theorists point out that states are constrained from raising the revenue to finance these demands due to a race to the bottom in the taxation of mobile factors of production and the reluctance of capital markets to extend credit to countries that run persistent budget deficits. This makes point predictionsdifficult since at differentstages of this argumentstate 22Charles PoliticsandMarkets BasicBooks, 1977);Robert Lindblom, (New York: BatesandDa-Hsiang DonaldLien,"ANoteon Taxation, and Development, Representative Government," Politics and Society 14, No. 1 (1985), pp. 53-70; Adam Przewor-

ski andMichael "Structural of American Wallerstein, Dependence theStateon Capital," PoliticalScienceReview82, No. 1 (1988), pp. 11-29; MichaelWallerstein Adam and Taxation with OpenBorders," Reviewof International Political Przeworski, "Capital

Economy 2, No. 3 (1995), pp. 425-445. and 23William L. Cary,"Federalism Corporate Law:Reflections uponDelaware," YaleLaw Journal 83, No. 4 (1974), pp. 663-705.

24KarlPolanyi,TheGreatTransformation (Boston:BeaconPress, 1944),p. 57. 25Ibid., 73. p.


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expendituresare increasing, then budget deficits are increasing, and then welfare expendituresare declining.26 Neoliberalinstitutionalismdiffers from the RTBhypothesisby downplaying economic factors. States are assumed to have some the magnitudeof structural marketpower in their relationshipwith capital.27 Even if the state imposes regulatoryburdensthatraise the cost of production,firms will still have an incentive to comply with those rules because of the potential profits of servicing a large market.The neoliberal hypothesis also factors in the costs of changing regulathat Nationalregulationis embeddedwithina historicalframework torystandards. constrainspolitical actors.Acting to changethis frameworkincurscosts in social and institutionaldisruption.28 In alteringthese assumptions,the neoliberal approachpresentsa moreconventionalpictureof the globalpoliticaleconomy.States of mustcope with the externalitiesof the internationalization productionandneed to cooperateto createglobal public goods (or reduce "publicbads").As a result, the range of possible equilibriumoutcomes is greaterthan a race to the bottom. Neoliberals argue that convergence is the result of the conscious policy coordinationof nation-states,predictingseveral factors that contributeto cooperative outcomes. Neoliberals predict coordination if there are relatively few actors that are bargaining,if monitoring is easy, and if there are international institutionsto enforce the outcome.29Therefore,coordinationis more likely to occur under the rubric of internationalorganizationsthan without, and under internationalorganizationswith enforcementcapabilitiesthan without. Consistent with theories of collective action, an asymmetryof size and power should also contributeto more cooperation.Furthermore,neoliberals would also preSee Rodrik, Globalization "TheEndof RedisHas GoneTooFar?;SvenSteinmo, and Pressures DomesticTaxPolicy Choices,"Challenge37, International tribution? Markets(Ithaca, SmallStates in World No. 6 (1994), pp. 9-17; PeterKatzenstein, N.Y.:CornellUniversity Press,1985). 27 N.Y.: States,Firms,andPower(Albany, Vogel,Trading GeorgeShambaugh, Up; SUNYPress, 1999). 28 N.Y.:Cornell MoreRules(Ithaca, Press, University Stephen Vogel,FreerMarkets, Institutions International and "Domestic CooperaRegulatory 1996);Kal Raustiala, PolWorld on to tion:Comparative Responses the Convention BiologicalDiversity," in itics 49, No. 4 (1997), pp. 482-509; SusanaAguilarFernandez, "Convergence Environmental Designsin Spainand Policy?The Resilienceof NationalInstitutional see Journalof PublicPolicy 14, No. 1 (1994),pp. 39-56. Moregenerally, Germany," A Preferences Andrew Moravcsik, Theoryof International Seriously: Liberal "Taking
Politics," International Organization51, No. 4 (1997), pp. 513-553.

N.J.:Princeton 29Robert Keohane, (Princeton, UniversityPress, AfterHegemony under AxelrodandRobertKeohane, Robert Anarchy: 1984); Cooperation "Achieving World Politics 38, No. 1 (1985), pp. 226-254; Kenneth and Institutions," Strategies and 'Standards' International AbbottandDuncanSnidal,"International Governance," 2000. of Chicago,February University manuscript, unpublished

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dict convergence to be stronger among regional institutions than global ones because of the reduced numberof actors. Because of the possibility of multiple equilibria,neoliberal institutionalism is fuzzier about the location of the convergent policies. Neoliberals accept the neorealist assumptionthat more powerful actors are more likely to have their would predictsome preferencesrealized.30 Unlike neorealists,a liberalapproach accommodationby hegemonic powers to other states' concerns to foster cooperation.Therefore,neoliberals would predict an outcome that varies somewhat from great power preferences. Generally, the predicted outcome is a compromise between laissez-faire and interventioniststates, with a strong tilt toward the preferences of the more powerful states. Given that the Organizationfor Economic Cooperationand Development (OECD) countries are the most powerful in the internationalsystem and given that societal preferences in these countries are for strict regulatorystandards,this implies a more interventionist bent. The world society approacheschews the material aspects of globalization, focusing instead on the spreadof models and ideas throughglobal culturaland associationalprocesses.31 In this approach,policy convergence is drivennot by capital mobility but ratherthe development and spreadof abstractconcepts and the need for nation-statesto conform to an ideal of the rationalizedbureaucratic state. Once a dominantidea emerges, alternativemodels and policies lose their legitimacy. This leads to a strong degree of institutionalisomorphism.Laggard states emulate the practices of global leaders, causing a convergence of regulatory policies in the process. As with the RTB hypothesis, structuredominates is thanthe global economy. agency.In this case, the structure global culturerather The world society model predicts policy convergence, but convergence to which point? The answer here appearsto be in favor of more regulation. This of permits the "expansive structuration" the state and the development of new bureaucraciesto regulate both society and economy. The structuration process has an implied feedback mechanism;as the state expands, the numberof transnational interstateinteractionsincreases, leading to a greaterdemandfor world society integration.As John Meyer and his coauthors observe, "Holding constantthe functionalpressuresof size, resources,andcomplexity,in recentdecades nation-states... have clearly expandedinordinatelyacrossmany differentsocial
30A realist wouldpresume the agreed-upon that standard wouldrepresent approach theinterests themostpowerfulactors.See Kenneth of "Globalization Govand Waltz,

ernance," PS: Political Science and Politics 32, No. 4 (1999), pp. 693-700; Lloyd

N.J.:Princeton Gruber, Press,2000). (Princeton, Rulingthe World University 31 John W.Meyer, JohnBoli, George and "World SociThomas, Francisco Ramirez, American Journal Sociology103,No. 1 (1997),pp. 144of ety andtheNation-State," CornellUniversity Press, 1996).
181; Martha Finnemore, National Interests and International Society (Ithaca, N.Y.:


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domains. This is precisely the period during which world society has been consolidated."32 It would be hard to reconcile the structuration phenomenon with a convergence toward antistatistpolicies. This school of thought is vague on the processes through which convergence occurs, makingfalsification tests difficult.33The literaturediscusses multiple processes throughwhich states agree on desiredpolicy outcomes. The first is the growthof a global scientific discourse.Once a particular issue areaacquires the mantle of scientific inquiry,metanormsgoverning the discourse are established. This makes it far easier for common models to be developed andemerge. of Second,the establishment international (IGOs) governmental organizations facilitates the teaching of new policy models and helps less developed countries modify their governance structuresto these policies. According to the world society approach,diffusion will be most rapid between like units. IGOs create the image of all states as homogenous units, accelerating the spread of common practices between them.34Globalizationthus accelerates policy convergence throughthe proliferationof internationalorganizations,in particular the expansion of the U.N. system. Third, states act mimetically to copy the forms and policies of successful nation-states.35 In the currentcontext, this implies the adaptation othercounby tries to policies that have been instituted in the United States. It also implies that states on the periphery(i.e., non-OECDcountries)will be as willing, if not more so, to adopt convergent policies. Other core states may also converge toward a particularpolicy, but since these states have a better track record of success, they are likely to resist policies that contravenedomestic norms. The elite consensus approachto policy convergence shares with the world society paradigmthe importance of ideational factors in determiningconvergence but gives a greater role for the agency of states and individuals. This

et p. 32Meyer al., "World Societyandthe Nation-State," 156. 33 Evenadherents thisview acknowledge Mei and this.See DavidStrang Patricia to and Yin Chang,"The International LaborOrganization the WelfareState,"International Organization47, No. 2 (1993), p. 237. and Society 22, No. 4 (1993), pp. 487-511; Finnemore, National Interests in International Society, ch. 1. ican Sociological Review 48, No. 2 (1983), pp. 147-160. In this respect, the world

Conditions Diffusion," for 34DavidStrangandJohnMeyer,"Institutional Theory

35Ibid.;see also Paul Dimaggioand WalterPowell, "The Iron Cage Revisited: in Amerand Institutional Fields," Isomorphism CollectiveRationality Organizational Kenneth is neorealism. Waltz,in discussingglobsocietyapproach akinto structural that but alization,assertsgreatpowerautonomy acknowledges stateswill adoptthe See of bestpractices otherstates,leadingto policyconvergence. Waltz,"Globalization andGovernance," 697. p.

Globalization and Policy Convergence


approachborrows considerably from the literatureon economic ideas36 and emphasizes the role of epistemic communitiesin bringing about policy convergence.37 An epistemic community is defined as a network of policy experts who sharecommon principledbeliefs over ends, causal beliefs over means, and common standardsof accruing and testing new knowledge. These actors play an important role in issue areas where state leaders are uncertain about the consequences of different policy options and where interdependencedemands coordination.Under those circumstances,transnational epistemic communities can mold state preferences over various regulatory options, making negotiations easier and more likely to lead to a harmonizationof policies. The causal processes of the elite consensus approachare similar to those of the world society approach.As with the world society view, the developmentof expert communities in and out of governmentis a key pathwayto elite consensus. Peter Haas argues that "the expansion and professionalizationof bureaucracies and the growing technical natureof problems have fostered an increase in the deference paid to technical expertise and, in particular,to that of scientists."38 Also similar to the world society and neoliberal paradigms,the elite consensus model emphasizes the role of internationalinstitutions in forging and promulgatingan epistemic community. There are a few key differences. The elite consensus approachhas a relational ratherthanstructural is storyof convergence.Interdependence a necessary antecedentto policy coordination.39 The world society paradigmpresumesthat stateswill convergeto particular policies regardlessof materialfactors.40 The elite consensus model arguesthatbefore therecan be policy coordination,states must at least recognize the existence of policy externalities.Only at this stage can the normative consensus of an epistemic community guide states toward convergence to a particularpoint. In this way, this approachshares more with the neo-

ton UniversityPress, 1989);JudithGoldsteinand RobertKeohane,eds., Ideas and Press, 1993);NgaireWoods,"EcoForeignPolicy (Ithaca,N.Y.:CornellUniversity nomicIdeasandInternational Relations: International StudBeyondRational Neglect,"
ies Quarterly39, No. 1 (1995), pp. 161-180.

36 Peter Hall, ed.,

The Political Power of Economic Ideas (Princeton, N.J.: Prince-

PolicyCoorInternational No. 1 (1992),pp. 1-35; PaulWapner, "Poldination," 46, Organization iticsbeyond State: the Environmental Activism World and CivicPolitics," World Politics 47, No. 3 (1995):311-340. 38Haas,"Introduction: Communities International and Epistemic PolicyCoordination,"p. 11.
39Ibid., pp. 3-4. 40Strang and Meyer, "InstitutionalConditions for Diffusion."

37 Peter Communities International and Haas,"Introduction: Epistemic


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liberal paradigmthan the world society model. Epistemic communities might contributeto policy convergence, but they are not a sufficient condition. The two approachesalso disagree on the convergence point. The preferred point of convergence depends on the normativebias of the epistemic community; it is not automatically in favor of stricter regulation. It is possible, for example, for there to be an epistemic communityof economists that argues for reduced state regulation.Histories of globalization arguethat it was the spread of neoclassical economics that led to the waves of globalization in the nineteenth and twentieth centuries.41 Therefore, in policy dimensions where free marketeconomists have expertise, policy coordinationwould be predicted,but does not necessarily occur. structuration Comparingand contrastingthe theories of regulatorypolicy reveal familiar parallels. Each of these approachesuses ontological givens, limiting assumptions, and causal mechanisms derived from preexisting paradigms of internationalrelations.The RTB hypothesisresemblesMarxismin modeling a world of economic determinism.The neoliberal approachis merely an extension of the neoliberal institutionalistparadigmdeveloped by Robert Keohane and his disciples. World society theory borrows from the constructivist and English school of internationalrelations.These approachesposit a world where an ideational structuredominates individual agency. The typology developed here corresponds closely to Alexander Wendt's This suggests a disconnect typology of currentinternationalrelations theory.42 theobetween the broaderdiscourse on globalization and the "middle-range" ries of policy convergence discussed here. Despite claims in the broaderliterature that globalization requires completely new paradigms of international relations theory, the approachesdescribed correspondto preexisting theories. characterof Once scholars try to explain specific issues, the "transformative" the globalization discourse disappears. Anotherinterestingfactor is the emphasis placed on internationalorganizations as a means of ensuring policy convergence. Except for the RTB hypothesis, they play an importantrole in the policy convergence models.43 In the neoliberal model, internationalinstitutionsreduce the transactioncosts of bargaining and enforcement. The elite consensus and world society approaches proffer a different role for regimes-the provision of norms and discourse that

41Polanyi,The GreatTransformation; Daniel Yerginand JosephStanislaw,The York:SimonandSchuster, 1997). Commanding Heights(New 42 U.K.:CamAlexander SocialTheory Wendt, oflnternational Politics(Cambridge, Press, 1999),p. 32. bridgeUniversity similarto the RTB neorealismand Marxism,the paradigms 43Not surprisingly, also discountthe role of interhypothesisin the emphasison materialincentives, institutions. national

Globalization and Policy Convergence


govern internationalbehavior.Again, these functions correspondto those discussed in the broaderliteratureon internationalinstitutions.44 A comparisonof these theories shows that the structuralmodels (RTB and world society) have the comparativeadvantageof elegance, in that the causal mechanisms and predicted outcomes are clear. This makes these approaches more conceptually elegant and easier to falsify. The structuralapproachesare also more parsimonious because the key variables are hypothesized to overmodels (neoliberalinstiwhelm all otherexplanatoryfactors.The agent-oriented tutionalismand elite consensus) permitmultiple possible outcomes. This makes these approachespotentially more realistic but more difficult to falsify. THE EMPIRICAL EVIDENCE ON POLICY CONVERGENCE Beyond its paucity, the empirical literatureon policy convergence has several flaws. One problem that carries over from the theories is the difficulty in separating normative agendas from an analytic appraisal of the evidence. These normativebiases can be crude, such as nongovernmentalorganization(NGO) publications intent on painting globalization as an unmitigated bad45 or an unmitigatedgood.46 They can also be subtler,such as scholarly work designed to supportcorporatistgoverning structuresor particularsocial movements.47 Another difficulty is that few empirical studies genuinely comparethe different convergence hypotheses. The lack of empirical work on structuralapproaches usually limits data to surveys of the advanced industrialstates of the OECD.This empiricallimitationis unfortunatesince the world society approach predictsmore dramaticeffects in the developing world.48 Those empiricalstudies focusing on agent-orientedapproachesto policy coordinationhave frequently used comparativeor case-studyapproaches.Such a dichotomyof empiricalwork is not surprising.It is significantly easier to develop statisticalmeasuresfor the structural factorsused in the RTB and world society hypotheses.Agent-oriented approachesnecessarily allow more contingencyin theirpredictions,andtheirindependentvariables are tougherto code across issue areas.
44 Stephen Krasner, D. N.Y.:CornellUniversity ed., International Regimes(Ithaca, PeterMayer,andVolkerRittberger, Theoriesof Press, 1983);AndreasHasenclever, International U.K.:Cambridge Press, 1997). Regimes(Cambridge, University 45 LoriWallach andMichelleSforza,WhoseTrade GlobOrganization? Corporate

alization and the Erosion of Democracy (Washington,D.C.: Public Citizen, 1999). 46Edward Hudgins, ed., Freedom to Trade:Refutingthe New Protectionism(Wash-

ington,D.C.:CatoInstitute,1997). 47GeoffreyGarrett's See corpusof workstandsout in particular. also Brathwaite be in the mostregulated countries-i.e., the OECDcountries.
and Drohos, Global Business Regulation. 48This is less problematic the RTBhypothesis for since the biggesteffects should


Daniel W Drezner

The incommensuratenatureof the empiricalwork makes it difficult to evaluate competing hypotheses, which raises troublingquestions. How can the different theories of policy convergence be evaluated against each other? Is it possible to control for omitted variable bias? The answers largely rest on the power of the theories. Omitted variable bias is less problematic with more accurate and complete theories of policy convergence.49 The empirical work can thereforebe judged on whether the hypotheses tested receive any support. If an argumentreceives weak empirical support without controlling for alternatives, it suggests at best thatothertheorieshave significantexplanatorypower, and at worst it suggests the argumentbeing tested is false. Anotherpotentialproblemis thatmuch empiricalwork on globalizationand policy formulationfocuses moreon the directionof policy trajectoriesandless on whetherpolicies acrosscountriesareactuallyconverging.Attemptsto show conor vergenceareoftenpoorlyconceptualized merelyassumed.50 Thisis a surmountbecausetheparadigms discussedabovemakeadditional ableroadblock predictions aboutthe directionandlocationof policy convergenceunderglobalization.These are theories. powerof thedifferent predictions usefulforevaluatingtheexplanatory The policies that have been discussed most frequently in terms of converenvironmental issues, regulation,taxation,antitrust gence includelaborstandards, consumer health and safety, and the protection of intellectual propertyrights. Space constraintsprevent an exhaustive review of all of these areas; the following sections focus on labor standardsand environmentalprotection.

Labor standardsare broadly defined as the humane treatmentof workers by firms and governments.What this means in practice varies. There is a general distinction between "core"labor standardsand additionalprovisions to protect workers' rights.51Core standardsconsist of protections against forced labor, slavery, and child labor; nondiscriminationin employment practices; the right to unionize; and the right to engage in collective bargaining.Additional worker includehealthand safety conditionsin the workplace,minimumwages, standards governmentprovision of unemploymentinsurance, old age and survivor benefits, and health care.
49On this question, GaryKing,Robert and see Keohane, SidneyVerba, Designing N.J.:Princeton SocialInquiry Press, 1994),pp. 168-176. (Princeton, University 50 ColinBennett, Is and "What PolicyConvergence WhatCausesIt?"BritishJournal of PoliticalScience21, No. 2 (1991),pp. 287-306; RobertSeeliger,"ConceptualJournal24, No. 2 (1996), PolicyStudies PolicyConvergence," izing andResearching pp. 287-306. 51 On the distinction, see BrianLangille,"Eight Waysto ThinkaboutInternational

Labour Standards," Journal of WorldTrade31, No. 4 (1997), pp. 27-53.

Globalization and Policy Convergence


Policy journals are replete with claims that globalization causes downward pressureon wages and a race to the bottom in labor standards.52 If this hypothesis were true, one would expect to find worsening labor standardsin those countries most exposed to trade and foreign investment. The effect should be especially pronouncedin export processing zones (EPZs). These are geographically bounded areas established in less developed countries to attractforeign investment. To invest in these areas, governments offer inducements such as investment, and reduced reguladuty-free imports and exports, infrastructure interference.This could include exempting the EPZ from any labor legistory lation. If there is a race to the bottom, it should be most pronouncedin EPZs. There is little empirical evidence to supportthe RTB hypothesis, but there are anecdotalexamples of corporationsmoving productionto countriesbecause of cheap labor and, implicitly, lax labor standards.53 a 1996 OECD report Yet reviewingthe issue concluded:"Thereis no evidence thatfreedom-of-association rights worsened in any of the countriesthat liberalized trade. .... The strongest between successfully sustainedtradereforms finding shows a positive correlation 54 and improvementsin core standards." Statisticaltests supportthis assertion. Dani Rodrikregressed textile exports (as a measureof labor-intensiveactivity) against an arrayof labor and humanrights standards,as well as several control variables. He found that labor standardshad no consistent effect on the pattern of exports.55Later studies have also demonstrateda weak to nonexistent correlationbetween laborstandards exportpatterns.56 relationshipbetween and The foreign direct investment (FDI) and labor standardsis strongly positive, given that in the past decade more than 90 percentof FDI took place in OECD countries, which have the highest labor standards.57

52 Kathleen of Now What?" Newland,"Workers theWorld, ForeignPolicyNo. 114 "Workers theWorld and (1999),pp.52-65; Ethan Kapstein, Economy," Foreign Affairs 75, No. 3 (1996), pp. 16-24. 53 See, for example, International Confederation FreeTrade of the Unions,"Behind Wire: Anti-Union in Zones,"( Repression theExportProcessing accessedJanuary 2000, or AlanTonelson,TheRace 26, english/tncs/etnexpzo.html), to the Bottom(Boulder, Colorado: WestviewPress,2000). 54Organization EconomicCooperation Development, for and Trade, Employment,

and Labour Standards:A Studyof Core Workers'Rights InternationalTrade(Parand

WorldEconomy 21, No. 1 (1998), pp. 57-73. 57 OECD, Trade,Employment,and Labour Standards;Hirst and Thompson, Globalization in Question.

is: OECD,1996). "Labor in Standards International Trade: TheyMatter What Do and 55DaniRodrik, Do WeDo aboutThem?" D.C.:Overseas Council,1996). (Washington, Development Standards TradeFlows of OECDCountries," and 56Cees van Beers, "Labour The


Daniel W Drezner

The data on EPZs also fail to support the image of a race to the bottom. Some countries-Pakistan,Bangladesh, Panama, and Zimbabwe-exempt their EPZsfromregulationcoveringcore laborstandards. to Contrary the RTBhypoththis has failed to put pressureon other countriesto relax labor standardsin esis, their EPZs. Several countries, including the Dominican Republic and the Philippines, reversed course in the mid-1990s, introducinglabor standardsin their EPZs where none previously existed. An InternationalLabour Organization (ILO) report reveals no evidence that countries with strong trade union presence have suffered any investment loss in their EPZs.58A WorldBank survey notes a strongpositive correlationbetween higheroccupationalsafety andhealth conditionsandforeign investmentin EPZs. Furthermore, comparisonof wages a in EPZs relative to the rest of the host countryreveals thatwages are on average

higherin the EPZ.59

Similarly, the world society approachalso finds limited support.As noted, there has been a secular increase in government commitment to labor standards, which supports the structurationhypothesis. In contrast to the world society approach,the effect has been more pronouncedin core countriesthanin those on the periphery. David Strang and Patricia Mei Yin Chang examine whetherstates adoptingILO conventions increase welfare expendituresthatare included in the expanded category of labor standards.60 They find that ILO ratification has a positive and significant effect on eighteen OECD countries, even when trade exposure is included as a control for external exposure. This result suggests the power of ideational factors relative to the materialeffects of globalization. Yet there is no effect of ILO ratificationon welfare expenditures in less developed countries, which is where the world society paradigmwould predict the greatest effects. The limited area of policy convergence on labor standardssupports an elite consensus explanation more than a world society view. Neoliberalism has only limited success in explaining the patternof convergence. If Strangand Chang are correct,then the source of convergence among OECD countries is the ILO, an organizationthat has no sanctioning power. A variantof neoliberalismwould argue that the ILO's extensive monitoringabil-

International Labour Zones(Geneva: 1998). Processing Organization,

58International LabourOrganization,Labour and Social Issues Relating to Export

WorldBankPolicy Research Working PaperNo. 2238, November1999, p. 49. RTB of obscures greater a variance wages advocates counter the average that wagemeasure in EPZs. 60 and "TheInternational Labour and Strang Chang, State," Organization theWelfare 235-262. pp.

59DorsatiMadami,A Review of the Role and Impact of Export Processing Zones,

Globalization and Policy Convergence


ities suffice to ensure compliance.61 The neoliberal paradigmcan explain the U.S. inability to convert its preferencesinto global policy convergence by connecting labor standardsto trade issues. From the Eisenhower administration onward, the United States has been unsuccessful in its attempts to add labor issues onto the internationaltrade agenda.62Less developed countries resist this attemptbecause they prefer that the issue be handled by the ILO and not impairaccess to FirstWorldmarkets.The U.S. effort to move the monitoringof labor standardsfrom the ILO to the WTO, with its more powerful enforcement mechanisms, is consistent with neoliberaltheory.Yet the United States has also been willing to circumventthe ILO, applying unilateraleconomic sanctions to This behavioris harder force developing states to tightentheirlaborstandards.63 to square with neoliberal institutionalism. Evidence from regional institutions is also mixed. The mere existence of labor standardsin the EuropeanUnion and North AmericanFree supranational TradeAssociation (NAFTA) suggests internationalorganizationscan foster the harmonizationof labor standards.Whether these standardshave any effect is anotherquestion. A comparisonof social insurancepolicies in Europe shows a secular increase in these policies across the board, but it also shows greater convergence among countries not in the EuropeanUnion than those within it. This study's data ended in 1985, before Maastricht,but they still cast significant doubt on the neoliberal hypothesis.64 In the aggregate, the picture of labor standardsis one where there has been a convergence in the OECD countries toward strict standards,while among developing countries there is a slow drift toward the enforcementof core labor standards.This patternis inconsistent with either structuralapproachand fits uneasily with the neoliberal hypothesis. The elite consensus model would pre61See PaulMilgrom,Douglass "TheRole of InstituNorth,and BarryWeingast, The tionsin the Revivalof Trade: LawMerchant, Private Judges,andthe Champagne
Fairs,"Economics and Politics 2, No. 1 (1990), pp. 1-23.

"TheInfluence International of Labour Standards theWorld on SteveCharnovitz: A HistoricalOverview," International LabourReview 126, No. 4 TradingSystem: (1987), pp. 565-584, and "Promoting QuarHigherLaborStandards," Washington
terly 18, No. 3 (1995), pp. 167-190.

Drusilla AlanDeardorff, Robert Stern,"International and M. Labor StanBrown, A dardsand Trade: Theoretical Analysis,"in JagdishBhagwatiand RobertHudec,
eds., Fair Trade and Harmonization: Economic Analysis (Cambridge, Mass.: MIT Press, 1996); Peter Dorman, Worker Rights and U.S. TradePolicy (Washington,D.C.: lation in the EuropeanCommunity,"EuropeanJournal of Political Research 27, No. 1

U.S. Department Labor,1989). of 64IngalillJairensjt "Harmonization SocialPoliciesandSocialReguof Montanari, (1995), pp. 21-45.


Daniel W Drezner

dict this outcome, given the extent of ideational interactionamong the OECD nations. To date, there has been no study to see if epistemic communities play a causal role in determining labor standards.Another interesting test for the futurewould be whethernew OECD membersthat are still developing, such as Mexico, Poland, or South Korea, start to converge toward the OECD norm.

Environmental Protection
Issues that fall under the environmentalumbrellarange from the protection of endangeredspecies to the preventionof global warming.As with the literature on labor standards,the structural explanationsare more commonly tested using statistical evidence while agent-basedparadigmsrely more on case studies. There are examples of countries, such as Ireland, purposefully lowering in environmental standards orderto attract dirtyindustries.This example appears to be anomalousbecause there is no evidence that other countrieshave adopted this strategy in response to Ireland's success.65 Nancy Birdsall and David Wheeler,examiningthe bivariaterelationshipbetween tradeopenness and environmental pollution in Latin America, conclude that the pollution-intensive industrieswere more likely to be located in the most protectionistcountries.66 Statistically,two categories of tests have been tried. The first type seeks to determineif environmentalregulationsadversely affect tradepatterns.If this is true, it would supportone leg of the RTB hypothesis-i.e., that strict environmental standardsweaken the competitivenessof industry.The second type tests whetherfirms choose theirinvestmentlocations based upon environmentalregulations. James Tobey tests data from the 1970s to see if environmentalregulations affected trade patterns in both the developing and developed world. Controlling for factor endowments, he finds the regulations to have no significant effect.67 A more recent study,using 1992 data with similar controls, finds that environmentalregulationsshow a statistically significant effect on the patThis would suggest the potentialfor strict tern of exports of OECD countries.68
Jeffrey Leonard, Pollution and the Struggle for the WorldProduct: Multiand national Corporations,Environment, InternationalComparative Advantage(Cam65 H.

U.K.:Cambridge Stevens,"DoEnvironmental Press,1988);Candice University bridge, OECDObserver, 183 (1993),pp. 22-25. No. PoliciesAffectCompetitiveness?" 66 Pollutionin Nancy Birdsalland David Wheeler,"Trade Policy and Industrial
and LatinAmerica:WhereAre the Pollution Havens?"Journal of Environment Devel-

opment2, No. 1 (1993), pp. 137-149. 67 Policies on Patterns of JamesTobey,"TheImpactof DomesticEnvironmental An World Trade: Empirical 43, Test,"Kyklos No. 2 (1990), pp. 191-209. 68 Cees vanBeersandJ.C.J.M. vanderBergh,"AnEmpirical Multi-Country Analyon sis of the Impactof Environmental Flows,"Kyklos50, Regulations ForeignTrade No.1 (1999), pp. 29-46.

Globalization and Policy Convergence


regulations to affect investment decisions. Yet tests of investment decisions suggest otherwise. Arik Levinson conducts the most rigorous study at the U.S. state level. Levinson looks specifically at whetherthe extent of environmental regulationaffects the location of new plants, finding that strictregulationsminimally deter investment.69 Increases in regulation by one standarddeviation leads to at most a 1.8 percent decline in investment. Investigationsat the country level confirm the absence of an RTB dynamic in explaining firm decisions.70Looking at EPZs, a WorldBank studyconcludesthatEPZ environmental laws are roughly consistent with host countrylegislation.71In a separatereview essay, Levinson summarizes: "The conclusions of both the internationaland domestic studies of industrylocation are that environmentalregulationsdo not deter investment to any statistically or economically significant degree."72 The world society approachreceives greater supportin this arena than for labor standards.Two empirical studies, one by David John Frank and one by John Meyer and his coauthors, argue that the growth of the U.N. system, the rationalizationof scientific discourse, and the growth of nationalbureaucracies can explain the explosion of internationalenvironmentalregulationduring the The authorsconstructtheir independentvariables while analyzpast century.73 the factors of a plethora of colinear variables.74 Their results show a coning sistent growth in the number of environmental associations, treaties, and of organizations,to the point where the structuration the global environmental reduces the need for new organizations. regime
69ArikLevinson, "Environmental and Location Choices," Regulations Manufacturers' Journal of Public Economics 62, No. 1 (1996), pp. 5-29. There has been no test of the

Environmental Affairs 5, No. 3 (1993), pp. 147-172. 71 Madami,A Review of the Role and Impact of Export Processing Zones, p. 50. It

between investment environmental and at level. relationship regulation theinternational Given thatthe predominance FDI is withinOECDcountries, wouldbe hardto of it extracta resultthatfavorsthe RTBhypothesis. 70Gordon and Performance Ausof Clark,"Global Competition theEnvironmental tralianMineralCompanies: the 'Race to the Bottom'Inevitable?" Is International shouldbe notedthatthesecountries farfromparagons environmental are of protection. 72ArikLevinson,"Environmental andIndustry Location: International Regulations andDomesticEvidence," Jagdish in and and Hudec,eds.,Fair Trade Bhagwati Robert
1990," International Organization51, No. 4 (1997), pp. 623-65 1; David John Frank,

Harmonization:Prerequisitesfor Free Trade? (Cambridge,Mass.: MIT Press, 1996).

W.Meyeret al., "TheStructuring a World of Environmental Regime,187073 John

and of SocialForces "Science, Nature, theGlobalization theEnvironment, 1870-1990," 76, No. 2 (1997), pp. 409-437. 74 Forexample, of of Meyeret al.'s measure the rationalization scientificdiscourse is created froma factoranalysisof thecumulative number officialscientificunions, of the numberof international scientificNGOs, and the numberof nation-states with national parks.


Daniel W Drezner

The evidence is compelling but, as the authors acknowledge, incomplete. First, it is an open question whether these results demonstratecorrelation or causation.75It is not shocking that the growth of scientific unions is correlated with the growth of environmentalassociations, but it is unclear which causes which. Second, the dependent variable of internationalagreements masks the fact that these agreements often impose different regulatory standardson different countries. The Montreal Protocol on stratosphericozone, or the Kyoto Protocol on global warming,imposes far more rigorousregulatorylimits on the developed countries.76 Even if there is policy coordination,there is not necessarily convergence. Third, far less care is taken by the authors to test their theory against alternative hypotheses." Variables consistent with alternative explanations-growth in global GDP, the rate of urbanization,the growth of international trade, the distribution of power, changes in communication technologies-are not included in the regressions. The elite consensus argumentalso tests its hypotheses on the forces behind multinationalagreementsto regulatethe environment.Insteadof statisticalevidence, the empirical works focuses on case studies of regimes governing environmentalissues such as deforestationor stratospheric ozone. PeterHaas argues that an epistemic community,based in the United Nations EnvironmentalProgram, elite research institutes, and national governments, was responsible for persuading governments to agree to cooperate on the Montreal Protocol on stratosphericozone. In particular,Haas focuses on the epistemic community's ability to persuade an ideologically hostile Reagan administration,as well as the DuPontCorporation, the connectionbetween chlorofluorocarbons of (CFCs) and the ozone layer. The elite consensus approachuses a similar narrativeto explain the internationalwhaling regime and the 1992 summit on biodiversity in Rio de Janeiro.78 There remain significant criticisms of this narrative.Lawrence Susskind argues that the preconditions necessary for epistemic communities to play a role are rare:"Areview of most of the international treatiesnegotiated since the statistical flaw is thatin bothof thearticles,one-tailed t-testsareusedto 75 Another If determine results significance. two-tailedtests are used, manyof theirsignificant below the 95 percent confidence threshold. drop or 76Otherissue areas,such as deforestation endangered speciesprotection, place burdens developing on countries. disproportionate regulatory and dioxideemissionsas studyincludesonly worldpopulation carbon 77 TheFrank alternative the variables; Meyeret al. studyincludesonly population. explanatory and 78M.J. Peterson,"Whalers, Cetologists,Environmentalists, the International on International 46, Organization No. 1 (1992),pp. 147-186. Management Whaling," Moregenerally, Wapner, see Eliz"PoliticsBeyondthe State," AnnMarieClark, and abethFriedman, Kathryn and "TheSovereign Limitsof GlobalSociety," Hochstetler,
WorldPolitics 51, No. 1 (1998), pp. 1-35.

Globalization and Policy Convergence


1972 Stockholm conference shows that scientific evidence has played a surprisingly small role in issue definition, fact-finding, bargaining, and regime 79 strengthening." Regardingthe MontrealProtocol,Haas overestimatesthe role that scientific norms had to play in DuPont's decision to back successively tighter restrictions on CFCs. Other observers have noted that DuPont had a substantialeconomic incentive to be the marketleader in environmentallysafe The incentives for large multinationalsto gain a competitive CFC substitutes.80 in environmentally safe products has led to a series of "baptist/ advantage bootlegger" coalitions, somewhat undercuttingthe importance of epistemic communities.81 Another problem is the potential marginalizationof the epistemic community over time. Analysis of the various U.N. conferences reveals that over time states have become adept at excluding various NGO groups from key bargaining sessions.82 The inclusion of other professional groups, including economists and corporate officers, also undercuts the power of the environmental Finally, this approachoverlooks the role that domestic epistemic community.83 in implementing environmental accords. Case studies suggest politics plays that countries adhereto environmentalaccords as much as their domestic political institutions permit.84

U.K.:Oxford in Press,1994),p. 64; quoted Michael (Oxford, balAgreements University "TheRise of International Environmental Politics 50, No. 4 Politics,"World Ziurn,
(1998), pp. 617-649.

79LawrenceSusskind, Environmental Diplomacy: Negotiating More Effective Glo-

and Man80See Kenneth Oye and JamesMaxwell,"Self-Interest Environmental in and agement," RobertKeohaneandElinorOstrom,eds., Local Commons Global
Interdependence(London: SAGE, 1995).
81Elizabeth DeSombre: and for "Baptists Bootleggers theEnvironment: Explaining of the Origins UnitedStatesUnilateral Journal Environment Develand Sanctions," of

opment 4, No. 1 (1995), pp. 53-75, and Domestic Sources of International Environmental Policy: Industry,Environmentalists,and U.S. Power (Cambridge,Mass.: MIT Press, 2000).

82Clark, and "TheSovereign Limitsof GlobalSociety." See Friedman, Hochstetler, alsoKalRaustiala, andInternational Environmental Inter"States, NGOs, Institutions," See Margaret KeckandKathryn Activists Borders Sikkink, (Ithaca, beyond N.Y.: CornellUniversityPress, 1998), p. 161;Miles Kahler, International Institutions and

national Studies Quarterly41, No. 4 (1997), pp. 719-740. the Political Economyof Integration(Washington,D.C.: Brookings Institution,1995);

Jennifer of Governance: 14000 ISO Clapp,"ThePrivatization GlobalEnvironmental andthe DevelopingWorld," GlobalGovernance No. 3 (1998), pp. 295-316. 4, "DomesticInstitutions and International 84Raustiala, RegulatoryCooperation"; without Carrotsor Sticks: How International InstituXinyuanDai, "Compliance tions InfluenceNationalPolicies,"Ph.D. dissertation, Universityof Chicago,June


Daniel W.Drezner

The neoliberalapproacharguesthatpolicy coordinationis determinedby the numberof actors,the power of internationalorganizations,the amountof available information,and how much convergence has distributionalconsequences. For environmentalissues, the neoliberal hypothesis holds up well. Policy conozone depletionhas been assisted by the power of the vergence on stratospheric MontrealProtocolto permitthe sanctioningof noncompliantstates,as well as the ability of the Global EnvironmentFacility to proffercarrotsto reluctantstates. Observationsshow a similarprocess to explain the degree of environmentalcooperationin the EuropeanUnion and NAFTA.85The uneven patternof success in deforestationpreventioncorrelatesdirectly with the extent of WorldBank leverage over recipientcountries.86 The lack of progresson global warmingis also consistent with the neoliberalhypothesis. Objectionsin the United States about the Kyoto Protocol's costs of implementation,the distributionof costs, and the lack of enforcementmeasureshave made implementationunlikely.87 The neoliberal paradigmalso receives supportfrom the effect of the WTO on environmentalpolicy. The WTO representsa classic case of a cooperation outcome, in which each party sacrifices a little to obtain the largerbenefits of cooperation.The benefit for the WTO was freertrade.The developed world has paid for this by having to curtail environmentalregulationsthat are deemed as restricting trade. Examples include WTO rulings against U.S. environmental laws such as the Marine Mammal ProtectionAct, the Clean Air Act, and the EndangeredSpecies Act. The WTO has also been used to alter EU policy on leg-hold traps.88This has drawn considerableire from antiglobalizationactivists who claim that the WTO will force a reductionof environmentalstandards. Althoughthis claim is exaggerated,the reactionsupportsthe neoliberalhypothesis that strong internationalorganizationscan drive policy convergence.89

85 Vogel,Trading Up, chs. 3

tition, and the Autonomous Market Fallacy," Columbia Journal of European Law 1, No. 1 (1994/95), pp. 29-62. 86Keck andSikkink, Activists beyond Borders, ch. 4.

and7; Joel R. Paul,"Free Trade,Regulatory Compe-

87 ScottBarrett: and "Montreal versusKyoto:International Cooperation the Global and in Environment," Inge Kaul,IsabelleGrunberg, MarcStein,eds., GlobalPublic of Oxford Goods(New York: Press,1999),and"ThePolitical Economy the University

Kyoto Protocol," OxfordReview of Economic Policy 14, No. 4 (1998), pp. 20-39. 88Wallachand Sforza, Whose Trade Organization?,ch. 2.

sensi89International lawyershave pointedout thateven a moreenvironmentally the countries thesecases. See Samon tive WTOwouldhaveruledagainst developed Tradeand Sourcesof International uel Barkinand Elizabeth DeSombre,"Domestic StudiesAssociation at the International Environmental Conflicts," paperpresented InterLos annual Dunhoff, 2000;Jeffrey "Reconciling meeting, Angeles,Calif.,March Can of nationalTradewith Preservation the GlobalEnvironment: We Prosperand
Profit?"Washingtonand Lee Law Review 49, No. 3 (1992), pp. 1407-1454.

Globalization and Policy Convergence


The pattern in environmental regulation mirrors that of labor standards. There is an upwardconvergence among OECD countries and a slow and erratic upswing toward more protection in the developing world. The key difference from the story about labor standardsis that the divergenttrendsin environmental regulation are codified by internationalregimes. This suggests that the neoliberal paradigmmay have more explanatorypower for environmentalissues than the elite consensus model. CONCLUSIONS Most discussions of globalization stress two facets. The first is the magnitude of private economic forces such as capital flows and tradedgoods. The second is the deterministicquality of the phenomena;once states decide to lower their barriersto exchange, a Pandora'sbox is unleashed that cannot be reversed. A review of the policy convergence literature suggests both claims have been ecoexaggerated.Although globalizationhas increasedthe size of transnational nomic flows, it has not forced a race to the bottom in regulatory standards. Ideationalforces have played an equally significant role in determiningthe rate and location of policy convergenceon laborandenvironmental standards. Where harmonization has occurred, it has been a conscious choice of states made under the aegis of an internationalorganization. The lack of supportfor the RTB argumentis striking.This absence of supportingevidencecontinuesif one looks atotherissue areas.Mosteconometricstudies show thatincreasedcapitalmobility has not constrainedthe ability of statesto tax capital.90One comes to a similarconclusion with regardto the regulationof consumerhealthand safety.91 Even in macroeconomicpolicy, an areacommonly thoughtto providethe strongestsupportfor the RTBhypothesis,the empiricalevidence is debatable.92 Repeated studies show that domestic institutions, interests, andpoliticalpartieshave a significanteffect on fiscal andmonetary policies.93 This sort of variationis inconsistent with a race to the bottom. 90 and Trade, the DomesticPoliticsof Economy "Capital Mobility, Policy," Garrett,

International Organization49, No. 4 (1995), pp. 627-657; Duane Swank, "Funding

the WelfareState:Globalization the Taxation Businessin AdvancedMarket and of PoliticalStudies No. 4 (1998),pp.671-692; SvenSteinmo Duane and Economies," 46, of at Swank,"TheNew PoliticalEconomy Taxation," paper presented the 1999American PoliticalScienceAssociationannual meeting,BostonMass. ter 16. 92Garrett, "Global Markets NationalPolitics." and 93 Geoffrey Garrett, Partisan Politics in the Global Economy(Cambridge,U.K.: Cambridge University Press, 1998); Carles Boix, Political Parties, Growth,and Equality 91Vogel, Trading Up; Brathwaiteand Drohos, Global Business Regulation, Chap-

U.K.:Cambridge Press, 1998). (Cambridge, University


Daniel W Drezner

This result is not particularlysurprisingwhen put in historical perspective. The currentera shows a patternsimilar to the previous era of globalization. In the late nineteenth century, there was an enormous increase in the flows of capital, goods, and labor among countries in the Atlantic basin. Several scholars argue that the degree of market integrationin the nineteenth century surpasses the presentera.94 Despite the magnitudeof these flows, states responded to the trendtowardglobalization by increasing tariff and immigrationbarriers; initiatingregulatorystandardsfor consumersafety, labor,and the environment; and developing regional institutions (including a predecessor to the European The process CentralBank) to cope with the vicissitudes of financial markets.95 of globalizationdid not constrainstatesfrommakingautonomouspolicy choices. Economic determinismcan be rejected as an explanation for international regulatoryregimes; where does that leave us? Most immediate is the need for more refined theories and better empirical work because good theories can be easily falsified. If the structuralapproacheshave less empirical support, it is partly because their predictionsare more precise and thus easier to falsify. The agent-basedapproachesto policy convergence must be able to predictthe location of policy convergence better.Empirically,tests need to be developed that compare multiple theories of policy convergence against each other. One theoretical possibility is the elimination of the agent-structureontology as a way of crafting new theories about the state. Ian Clark argues that much of the debate about globalization has been misdirectedbecause of squabbles about whether the primacy of the state has been threatened.96Instead, globalization must be understoodas a phenomenonthat simultaneouslyaffects states directly and internationalrelations through reconstitution of the state. Such an approachmirrorsthe repeatedcalls from internationalrelations scholars to move past the agent-structuredebate to a more integrative approach.97 Given the ambiguous empirical support for existing theories of convergence, this is a promising way of improving causal inferences. To date, this call for relationstheoryhas producedsome trenchangingthe ontology of international
94 Hirst Bob in andThompson, Globalization Question; SutcliffeandAndrew Glyn,

of Radical Political Economics 31, No. 1 (1999), pp. 111-132.

Review of and "StillUnderwhelmed: Indicators Globalization Their Misinterpretation,"

95 KevinO'Rourke and andJeffrey Globalization History(Cambridge, Williamson, Luca Mass.:MITPress, 1999);Polanyi,TheGreatTransformation; Einaudi,"From Transformation andtheAttempted GreatBritain, the Francto the 'Europe': Germany CenUnioninto a European of the LatinMonetary Union,"working paper, Monetary trefor HistoryandEconomics, University. King'sCollege,Cambridge

96In Clark, Globalization and InternationalRelations Theory. Theory,"International Organization41, No. 3 (1987), pp. 335-370; Ian Clark, Globalization and InternationalRelations Theory.
97AlexanderWendt,"The Agent-Structure Problemin

Relations International

Globalization and Policy Convergence


chant criticisms but little in the way of positive theorizing. The failure of the discourse on globalization to propose a genuinely new set of ontological givens suggests that these divisions are more difficult to overcome than previously thought. Another possible research avenue comes from the recognition that globalization does not eliminate internationalpolitical economy theories as much as find new issue areas for their application.There is a parallel here between the political economy of regulatorypolicy and that of macroeconomicpolicy coordination. Michael Webb arguesthat the removal of capital controls did not lead to the collapse of exchange rate coordination.Rather,it forced states to coordinate fiscal and monetarypolicies to manage exchange rates.98 The elimination of capitalcontrolsforced a deeperlevel of policy coordination. reduction The of tariffs and quotas has similarly led to a change from negotiating over tariffs to negotiating over regulatorypolicies that can act as tradebarriers.Globalization has alteredthe internationalpolitical economy throughthe generationof a new set of contentious global issues that were previously purely national.This has led to new arenas of bargaining,not a new global politics. Looked at in this way, an approachwith its foundations in realism might prove to be useful. A realist theory of policy convergence would assume that states retain policy autonomy and that they can use their market power and access as a tool for negotiating and coercing.99Bargaining occurs when regulatory convergence increases the size of the economic pie but also redistributes benefits toward states with domestic regulationsclose to the agreed-uponstandard.'00Regional trading agreements are a strategy for expanding the domain of a state's regulatorystandardsand increasing leverage in global negotiations. Such an approachwould also highlight somethingmissing from existing empirical work: the use of economic coercion by the great powers to force other statesto accepttheirregulatorystandards.101 date,realistshave eitherignored To

nization 45, No. 3 (1991), pp. 309-342, and The Political Economy of Policy Coordination: InternationalAdjustmentsince 1945 (Ithaca, N.Y.: Cornell University Press, 1995). 99DeSombre, Domestic Sources of International Environmental Policy; Shambaugh, States, Firms, and Power.

International Coordination Macroeconomic of International Policies," Adjustment Orga-

98Michael Webb:"International EconomicStructures, Government and Interests,

"Global Communications National and Power:Life on the StephenD. Krasner, ParetoFrontier," World Politics43, No. 3 (1991),pp. 336-366. N.Y.:SUNYPress,1998);DanielW.Drezner, "Outside Box: Explaining the (Albany, Sanctionsin Pursuitof ForeignEconomicGoals,"International forthInteractions, coming2001.
'o' See DeSombre, Domestic Sources of InternationalEnvironmental Policy; Susan Sell, Power and Ideas: North-South Politics of Intellectual Property and Antitrust



Daniel W.Drezner

the globalization phenomenon or minimized its importance.1'02An approach that concedes the significance of globalization but asks how states try to maximize their relative advantagein such a world might be fruitful. The absence of a race to the bottom also suggests more research on the question of why the power of capital is constrained. The absence of private firms influencing the pace and location of policy convergence suggests that something has been overlooked in the firm-state dynamic. Firms might be more constrainedin their economic decisionmakingthan previously supposed. This could be due to the marketpower of states,103 or the dependenceof multiAnother nationalfirmsuponthe institutionsdevelopedin theirhome countries.'04 possibility is thatthe economic effects of globalizationvary sectorally.In industries where asset specificity is minimal and labor costs are an importantcomponent of production,races to the bottom may be more likely to exist.'05 Finally, the study of globalization needs to be rescued from the pop commentators.1'06As noted in the introduction,one reason the globalization phenomenon is importantis the perception by many scholars and policymakers that it transformsinternationalpolitics. The evidence to date rejects this perception. Globalizationis not deterministic;there is no single predictedlocation for policy convergence. The ability of states to cooperate and their ability to agree on norms of governance determines the extent of policy convergence. These factors are at the core of the principaltheories of internationalpolitical economy.'07 Globalization has led to the emergence of new issues to be analyzed by internationalrelations scholars;it does not imply that new paradigms are needed to explain these issues.

D. Waltz,"Globalization Governance"; and JaniceThomson Stephen Krasand in of and Transactions the Consolidation Sovereignty," E.O. Czempiel ner, "Global
and James Rosenau, eds., Global Changes and Theoretical Challenges (Lexington,


Ky.:D.C. Heath,1989). '03Shambaugh, States, Firms, and Power.


ton University Press, 1998). '05 See, for example, A Mark Exit,andFreeSocialRiders: Aspinwall, "Globalism,
Dysfunctional IntegrationTheory,"EuropeanJournal of Political Research 33, No. 3

PaulDoremuset al., TheMythof the Global Corporation(Princeton,N.J.:Prince-

ider, One World,Ready or Not: The Manic Logic of Global Capitalism (New York: Simon and Schuster, 1997); Friedman,The Lexus and the Olive Tree.

(1998),pp. 323-346. Jihad vs. McWorld (New York:Times Books, 1995); Paul 106Benjamin Barber, Mass.:MITPress, 1996);WilliamGre(Cambridge, Pop Krugman, Internationalism

107 D. and RobertKeohane, Stephen Krasner, PeterKatzenstein, eds., "Exploration International in andContestation the Studyof World 52, Politics," Organization No. 4 (1998),pp. 645-686.