Domestic structures, foreign economic policies and global economic order: Implications from the rise of large emerging economies
| Author | Andreas Nölke,Tobias ten Brink,Simone Claar,Christian May |
| DOI | 10.1177/1354066114553682 |
| Published date | 01 September 2015 |
| Date | 01 September 2015 |
| Subject Matter | Articles |
European Journal of
International Relations
2015, Vol. 21(3) 538 –567
© The Author(s) 2014
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DOI: 10.1177/1354066114553682
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E
JR
I
Domestic structures, foreign
economic policies and global
economic order: Implications
from the rise of large
emerging economies
Andreas Nölke
Goethe University, Germany
Tobias ten Brink
Goethe University, Germany
Simone Claar
Goethe University, Germany
Christian May
Goethe University, Germany
Abstract
The rise of the large emerging economies of Brazil, India and China can easily be counted
among the most important contemporary structural changes in the global political
economy. This article attempts to determine whether these countries have a common
institutional model for governing their economies and addresses the implications of
these commonalities for global economic institutions. The approach consists of three
major steps: first, a general ideal type for encompassing capitalism in these large emerging
economies is constructed, and dubbed ‘state-permeated market economy’; second, we
compare these countries empirically, with regard to the features highlighted by the ideal
type and in contrast to other varieties of capitalism; and, finally, we extrapolate some
long-term implications for the global economic order, based on the assumption that
foreign economic policies will be informed by domestic institutional structures. Based
Corresponding author:
Prof. Dr Andreas Nölke, Goethe University, Grüneburgplatz 1, Frankfurt, 60323, Germany.
Email: a.noelke@soz.uni-frankfurt.de
553682EJT0010.1177/1354066114553682European Journal of International RelationsNölke et al.
research-article2014
Article
Nölke et al. 539
on these three steps, we conclude that a further deepening of the liberal global order
is highly unlikely.
Keywords
Brazil, China, comparative capitalism, emerging economies, global governance, India
Introduction
The rise of Brazil, India and China (the BICs), accelerated by the Great Recession, is one
of the most important contemporary structural changes in the global political economy.
This development is relevant not only for business analysts and economists, but also for
Political Scientists and International Relations scholars, especially with regard to its
implications for global politics. It becomes even more relevant if we go beyond yearly or
quarterly gross domestic product (GDP) figures and adopt a long-term perspective.
Between 1990 and 2010, the share of world GDP by the BICs doubled, whereas the
shares of major established economies (the US, Great Britain, Germany and Japan)
decreased (see Figure 1). As Figure 2 shows, emerging economies were able to boost
their economic performance while many parts of the world economy, including the US
and Europe, stagnated.
Recent financial turbulence following the ‘tapering off’ of the ‘quantitative easing’ by
the US Federal Reserve hardly affects the long-term prospects of the largest emerging
economies. According to the 2013 Global Manufacturing Competitiveness Index, a sur-
vey of more than 500 chief executive officers (CEOs) of global manufacturing firms,
China will remain the top destination for manufacturing. It also predicts that India and
Brazil will overtake Germany and the US (currently ranked second and third, respec-
tively) in manufacturing competitiveness over the next five years. Similarly, a recent
World Bank report projects that by 2030, China and India will together account for 38%
of global gross investment and almost half of global investment in manufacturing (World
Bank, 2013). These figures show that the increasing importance of large emerging econ-
omies is not just hype initiated by the Goldman Sachs BRICs (Brazil, Russia, India and
China) studies (O’Neill, 2001), but instead represents a fundamental long-term shift in
economic power.
The concern of this article is to analyse the domestic economic architecture of the
BICs in order to understand possible implications of their rise for established global
economic institutions. Our argument departs from the obvious correspondence
between the policy outlook of global economic institutions and the domestic eco-
nomic principles of the leading economic powers, which culminated in the (Post-)
Washington Consensus under US hegemony. One future possibility for the institu-
tions of the global economic order sees state-led Sino-capitalism gradually replacing
Anglo-Saxon liberal capitalism as a general lead model (McNally, 2012). However,
for the foreseeable future, China alone is neither willing nor powerful enough to chal-
lenge the liberal economic order (Chong, 2013; Lieberthal and Jisi, 2012). Thus, a
more relevant contender might be an ensemble of large emerging economies from the
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