New School Economic Review

Introducing Transfer Pricing

This paper provides an overview of transfer pricing as an increasingly key issue in international business and trade and examines the topic from both micro (firm level) and macro (economy wide) perspectives. On a micro level, how transfer pricing decisions are made within a firm is examined via a case study,
highlighting the difficulty in solving the “corporate transfer pricing problem” and the shortcomings of recent regulations in providing a framework for a solution. On a macro level, recent literature is reviewed that demonstrates the impact that transfer pricing has on the larger economy.

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Urquidi, Alfredo J.  2008. “An introduction to Transfer Pricing”. New School Economic Review 3(1): 27-45

Volunteer child soldiers

Cruel methods of forced recruitment of child soldiers are popular images often used in the academic literature and by the media. Child soldiers are usually portrayed as vulnerable victims and their agency in violent conflict is denied. In some contexts this is justified. Overall this picture is largely misleading. A number of recent studies from Sub-Saharan Africa show that the majority of children and young people join armed groups voluntarily, for a number of reasons. Taking up arms may be a sensible choice and an attractive option, even – and especially – for the young. After pointing to the benefits of children’s participation in conflict, this paper analyses the reasons
for widespread denial of their agency, suggesting a number of hidden agendas by various actors. The micro-level benefits of child  soldiering (which become especially obvious where the common fallacy of comparing child soldiers with children in peaceful and prosperous societies is overcome) are nevertheless outweighed by the disadvantages on the macro-level when it comes to reintegration, economic growth and peace. Preventing children’s participation in war is therefore crucial. However, this can only be effective if children’s volunteerism and agency is recognized and addressed, for example through positive structural change.

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Schmidt, Alice . 2007. “Volunteer Child Soldiers as Reality: A development issue for Africa.” New School Economic Review 2(1): 49-76

The Development Orthodoxy

This paper traces the history and current state of international economic development through its institutions and attempts to reassess these institutions and their processes in a heterodox manner. There are many stereotypes and clichés to the foreign assistance industry: that it takes from the poor in rich countries and gives to the rich in poor countries; that it provides laboratories for economists and other social scientists to apply theories abroad that they would never attempt at home (the most obvious examples of these are population control programs and the privatization of pension funds); and that development creates “brain drain” from indigenous institutions to the very institutions of development itself. Although a brief summary of the major research programs in development is given, the paper does not attempt to disprove or confirm any of these or other research programs and their corresponding policy recommendations. The purpose of the paper is to question the very nature of international economic development through a historical and philosophical re-examination of its institutional constructs. The Hegelian dialectical method of analysis is applied to the institutions of economic  evelopment and is used to ask, “what next and why?”

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Weber, Cameron and Matthias Thiemann. 2007. “Questioning Development Orthodoxy.” New School Economic Review 2(1): 5-22

High Income and bad health?

The World Bank in 2004 sought to explain socialist Cuba’s success in public health, and juxtaposed Costa Rica as a contender for similar public health gains, through the orthodox model which stresses ‘broad based growth’, backed by increased private investment. However a unique public institution (the Caja Costarricense de Seguro Social) for health and social security insurance better explains Costa Rica’s health advances, and its superior performance to some higher income Latin American countries such as Mexico and Argentina. The relationship between increased income and improved health is positive, but weak and fragile. Other factors which may be more important are: levels of education (especially of women), numbers of trained health workers, universal access regimes for health services, well coordinated public health institutions, decent housing, and the adoption of new technologies. The experience of Latin America tells us that greater attention must be paid to well-organized public institutions, including those which train health workers, arrange universal access to health services and ensure adequate water, sanitation and housing.

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Anderson, Tim. 2007. “Health, income and public institutions: Explaining Cuba and Costa Rica.” New School Economic Review 2(1): 22-37

The Dollar’s secret history

As is customary during US presidential election seasons, the debate between free trade and protectionism rages in the coming election—this time in the guise of the debate on “outsourcing.” As in the past, most US economists are taking the line that free trade is the
“straight and narrow path” that we must all tread, despite the siren calls of the protectionist.

Interestingly, few of these economists seem to realize that the US is actually not the home of free trade it pretends to be. In the nineteenth century, when most US industries lagged behind their European counterparts, the country took the view that free trade was not in its national interest. This is clear from looking at American currency, which carries the pictures of politicians whose policies would have come under severe criticism from the World Bank and the WTO.

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Chang, Ha-Joon. 2004. “The Secret History of US Currency: Historical Double Standards in International Rules.” New School Economic Review 1(1): 73-74

The North-South environmental crisis: An unequal ecological exchange analysis

This paper offers a political economy problematisation of the current trends of production towards environmental degradation, while offering an environmental critique of mainstream economic thought and capitalist exchange and production. A case is made for a re-appraisal of ‘unequal exchange’ analysis of international trade. First, this essay explains the evolution of economic thought on trade, offering a brief explanation of where ‘unequal exchange’ analysis comes from. In Part two, unequal ecological exchange is introduced and a political analysis of how and why the South1 allows its environmental capacity to be appropriated is discussed. Part Three discusses the ecological impact of the current global trading system, and Part Four looks at the phenomenon of ‘Perverse Subsidies’ and their influence on free trade arguments. Finally Part Five examines responses to the environmental crisis, by questioning mainstream economists’ optimism about the ecological crisis. Further addressing the ‘ecological modernization’ paradigm and the Red-Green approach, in order to show the salience of an unequal  ecological exchange methodology for understanding the links between the expansion of global capitalism, environmental degradation and international inequality.

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Peace Economics: Private Sector Business Involvement in Conflict Prevention

Conflict prevention has escaped pure state responsibility and needs to involve a wide range of societal actors, including business. The private sector, especially multinational corporations, can powerfully contribute to comprehensive peace
building and derive profit from doing so. However, profit-oriented behavior can also endanger peace, unless the economic incentive structure induces conflict preventing business strategies. Yet, such ideal scenario requires commitment from the state, the civil society and the companies themselves.

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Felgenhauer, Katharina. 2007. “Peace Economics: Private Sector Business Involvement in Conflict Prevention.” New School Economic Review 2(1): 38-48

Regionalism and Trade: A Glimpse of Africa’s Experience

Regionalism has a long history in Africa. Its earliest manifestations can be traced to the pre-independence period when the regionalist impulse found expression in Pan-Africanism, highlighted in the Pan-African conferences organized in the first half of the last century. A few regional economic groupings were formed during that period, albeit in a colonial context. Two prominent examples dating from that period are the East African Community and the Southern African Customs Union (the world’s oldest customs union).

The struggle for and attainment of independence provided the main impetus for further regional integration, based on the belief that regionalism would result in strengthened political solidarity, mutual consolidation of newly-gained independence and collective
self-reliance. Thus, Africa’s post-independence efforts to implement regionalism focused on both political and economic changes. This article examines the progress made in regionalism in Africa and describes some of its key features, assesses its impact on intra-Africa and external trade in the context of globalization, and draws some conclusions.

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Otobo, Ejeviome Eloho. 2004. “Regionalism and Trade: A Glimpse of Africa’s Experience.” New School Economic Review 1(1): 75-81