trade

Venezuelan President Hugo Chavez and Cuban leader Fidel Castro in 2004Venezuelan President Hugo Chavez’s recently announced plan to nationalize the telecommunications and electricity industries in his country sent shockwaves through the boardrooms of multinational corporations with large holdings in Latin America. While some see Chavez as the leading edge of a “socialist revolution,” research from Washington University in St. Louis suggests this latest nationalization push is nothing more than politics as usual, part of a predictable pattern of political tensions that often arise when corporations make large foreign investments.

Spurred by concerns over China’s booming economy, the Bush administation plans to crank-up pressure on Chinese authorities to curtail the rampant theft of intellectual property — the black market in pirated films, software and equipment that costs American companies billions in lost sales. While anti-piracy rhetoric plays well in Washington, a new book on the “Politics of Piracy” in China suggests that external diplomatic pressure will have little effect on China’s ability to enforce international norms on copyrights, trademarks and patents. “The key to gaining enforcement of those laws lies at the local level,” says the book’s author, WUSTL China specialist Andrew Mertha.

The International Monetary Fund (IMF) bills itself as an organization of 184 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty. While the IMF’s objectives are laudable, a study just published in the Journal of Conflict Resolution provides compelling evidence that IMF intervention actually has a substantial negative impact on at least one important indicator of a country’s long-term economic vigor – the level of foreign direct investment in that country by private investors.

The European Union (EU) will impose trade sanctions on billions of dollars of U.S. goods starting March 1 if Congress fails to repeal an export subsidy ruled illegal by the World Trade Organization (WTO). The export subsidy provision — known as the “extraterritorial income” deduction — gives U.S. companies a big leg up on competitors, but is paid for by the U.S. taxpayer, said William J. Streeter, a professor of international business at the Olin School of Business at Washington University in St. Louis. Streeter says legislation to repeal the export subsidy that has yet to be passed by Congress is projected to save U.S. taxpayers $80 billion over the next decade, but will be offset by lower corporate taxes on the earnings of U.S. firms abroad.

Joe Angeles/WUSTL PhotoSobelGlobalization is creating divisive tensions between developed and developing nations. Many fear globalization, blaming it for their societal ills. Yet, globalization has produced opportunity and improvements in social welfare for those nations able to take advantage of its benefits. Nations who fail to take full advantage of globalization may have only themselves to blame, according to a study in a forthcoming issue of the Journal of International Management.