Global Power Shifts and the Changing Dynamics of Export Finance

Lead Research Organisation: University of Edinburgh
Department Name: Sch of Social and Political Science

Abstract

State-backed export credit (the use of loans and other forms of financing by states to boost exports) has recently burst onto the public stage, becoming a highly contentious area of both national policymaking and international negotiations. States have used export credit as a tool to encourage exports and stimulate their economies since the Great Depression of the 1930s (and in some cases, even earlier), although, since the 1970s, competition among states has been suppressed by a set of international rules established at the Organization for Economic Cooperation and Development (OECD) that restricted the use of export credit as a form of state subsidy. However, the rise of the BRICs - who are not party to the OECD (a club of rich countries) or bound by its rules - has profoundly altered the landscape of export credit and destabilized its existing governance arrangements. Growing competition among states in the context of global power shifts is clearly manifest in the arena of export credit, where a dramatic increase in the use of export credit by the BRICs to give their exports a competitive edge in global markets is prompting nearly all OECD countries to respond in kind and leading to an erosion in the efficacy of existing disciplines. The one exception among the major economies is the American hegemon, who, due to the rise of the powerful Tea Party movement, is moving in the opposite direction of eliminating or severely circumscribing its use of state-backed export credit; in effect, amidst signs of what could be a brewing global trade war, the US is unilaterally disarming.

This study will be the first to analyse major changes taking place in the global dynamics of export credit - including both national policies and international governance - as a result of contemporary power shifts. Taking a multi-pronged approach, the project will draw on the case of export credit to address several important and interrelated theoretical questions: What are the implications of multipolarity for multilateral cooperation and global economic governance? How does the emergence of multiple centres of global political and economic power impact the nature of global policy competition and diffusion? And, how are domestic political forces affecting American competitiveness and its global hegemony?

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

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

Planned Impact

I am dedicated to communicating my research findings in meaningful ways to policymakers and the wider public in order to inform debate and policymaking. Knowledge exchange and impact activities are a central part of EXFIN; the overarching objective of its dissemination activities is to ensure that the main findings reach both the academic community and other actors as widely as possible.

Besides the academic beneficiaries outlined above, a number of non-academic users and beneficiaries of this project can be identified:

1) national Export Credit Agencies (ECAs), legislatures, and related policymaking authorities;

2) international organizations such as the OECD, the Berne Union, the EU, and the WTO;

3) non-governmental organizations (NGOs), business actors, think tanks, and policy institutes engaged in debates and advocacy on export credit; and,

4) the national and international media and the general public.

Importantly, many of the policy actors listed above - including at the level of both national governments and international organizations - have explicitly identified a pressing need for more academic research on export credit, as well as trade finance more broadly (e.g., WTO 2013; BIS 2014; Exim 2015). The EXFIN project will thus contribute to filling a crucial gap, by providing the first cross-national analysis of contemporary export credit policy and provision. Moreover, for those engaged in policy, the project promises to offer a new perspective on export credit stemming from an approach grounded in international political economy: EXFIN will provide an essential complement to the more narrow and technically-oriented perspective of many practitioners by offering a broader, systematic analysis of how this important area of national policymaking and international negotiations is being influenced by, and contributing to, larger geopolitical and geo-economic shifts.

In order to foster knowledge exchange with the policy arena, I will engage in a number of activities that will draw from, and extend, my existing network of professional contacts with trade negotiators and officials. I will organized a panel on export credit at the WTO Public Forum in October 2017, in order to foster dialogue, present preliminary findings from the project and gather input from the trade community. I will also feed my research findings back to policy practitioners via a policy brief, to be circulated and promoted through the Scholars Strategy Network, as well as two working papers to be disseminated through the WTO and OECD Working Paper series. I will then invite policymakers and stakeholders to a two-day international workshop in April 2018, to discuss their thoughts on the project and how they might use the findings in their work. This will launch a new BRICS & Beyond Research Network, designed to create a bridge between academic research and policymaking.

In addition to its policy relevance, EXFIN will also be of interest to the media and large parts of the general public. Once a seemingly obscure area of economic policy, reserved for highly specialized technocrats and virtually unknown to the general public, export credit has recently burst onto the public stage and grabbed international headlines. In the US, for example, export credit has become front page news and a core issue in the 2016 presidential campaign, while elsewhere, export credit is generating increasing attention and becoming a key issue in public debates on economic policy, including in the UK, other European states, and the BRICs. Growing interest and controversy surrounding export credit is fuelling significant demand for informed media interventions backed by solid research and analysis. With the support of my Press Office, I will seek to place op-ed pieces in major media outlets and to communicate the project's findings through media interviews and commentary. Media training and mentorship is also a key part of my skills development plan.
 
Description The research project is still ongoing, but 2 key findings have been identified thus far.

First, my research has shown that the global governance of export credit is being profoundly disrupted by contemporary power shifts. An explosion in the use of export credit by the rising powers, particularly China, is eroding the efficacy of existing international rules intended to prevent a competitive spiral of state subsidization via export credit. The case of export credit, I argue, highlights a fundamental tension between liberal institutions of global governance and the development objectives of the emerging powers.

Second, my research has shown that the disruption of export credit provision in the US - caused by the shuttering of its Export-Import Bank - is undermining the competitiveness of key US industrial sectors and encouraging the movement of advanced, high-value-added manufacturing overseas. I have shown that the internal US attack on export credit is fueled by the prevailing market fundamentalist ideology that has obscured the role of an active state in fostering the US's economic success. This research demonstrates how the rise of a powerful anti-state movement is hindering the ability of the US to conduct effective industrial policy and maintain its economic primacy in the face of growing global competitive pressures.
Exploitation Route My findings may shape current political and policy debates about export credit, and industrial policy more broadly, in advanced and emerging economies.
Sectors Aerospace, Defence and Marine,Chemicals,Construction,Energy,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology,Transport

 
Description "Liberalism versus Development? Shifting Power and the Challenges of Global Trade Governance." 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Invited by the Government of China to present at the BRICS Seminar on Governance, a side-event to China's hosting of the 2017 BRICS Summit, August 2017.
Year(s) Of Engagement Activity 2017
 
Description Briefing to Scottish Parliament 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Briefing session for Scottish Parliament, approximately 60 MSPs and staff attended, with formal panel presentation followed by Q&A.
Year(s) Of Engagement Activity 2016
 
Description Charleston Gazette-Mail 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact Media interview - quoted in article
Year(s) Of Engagement Activity 2017
 
Description Chicago Tribune 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact Media interview - quoted in newspaper article
Year(s) Of Engagement Activity 2017
 
Description Foreign Policy 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Media interview - quoted in article
Year(s) Of Engagement Activity 2017
 
Description Media coverage of participation in BRICS Summit side-event 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact Coverage of my participation in several international media outlets, including: Xinhua, China Daily, China News Service, ChinAfrica, Bulgarian News Agency.
Year(s) Of Engagement Activity 2017