Bich Vy-Gau Gi (Dominiko Minami, 阮妮小碧, 빅비 뉴엔, BV Nguyen, Theresa Mc)

I gave up a lot of neuron to write this literature review...man...By the way, sorry for talking bad about my coauthor. She is doing a great job...I'm appreciate her~

I.                   Introduction

Recall the history of the European Union (UN) establishment and enlargement, the initial focus of this organization was to create a free-barrier trading environment among the country members rather than to enhance political development (Grabbe, 2006). The six first members (French, Italy, West Germany, Netherlands, Luxembourg and Belgium) signed the agreement to unify steel and coal production in Western Europe and form European Coal and Steel Community (ECSC). After that, the community was more enlarged with the accessions of new member countries—United Kingdom, Denmark and Ireland joined in 1973, increase the size of the organization to fifteen members. After the last accessions of Romania and Bulgania, European Union has twenty seven members in total.

 

Countries who accessed to EU after 2000 are defined as new members. Most of them have GDP per capita in Purchasing Power Standards (PPS) lower than 20,000 and are post-communist countries. Since these new economies are not advanced as the first group of economies whose capita in PPS higher than 20,000 (Bosker, 2009), they are defined as ‘small countries’ and the formers are ‘large countries’. Interestingly, the recent enlargement of the EU clearly shows the difference in accessional motivations between these two groups. Whereas the large countries looks at EU as the environment for more trade liberation (Moss and Michie,1998), the small countries joined EU to seek for both free trade, and political defense (Gower and Redmond, 2000).  The reason for this is clearly stated by Jackie Gower and John Redmond in Enlarging the European Union, the Way Forward:

 

…while the larger a state is the more resources and independence it has in tackling its security problematique, the smaller a country is, the less it can rely on its own resources to achieve these tasks, since these by definition are limited, and therefore the greater is its dependence on the outside world. Thus for the small country, the solution to its security dilemma lies outside more than in the case of the larger states (pg. 108).

 

The difference in accessional motivations between large and small countries perhaps require further discussion in whose accessional decisions are taken into account: government or the citizens. The driving force for EU accessions of the large countries is to satiate the desire of domestic producer and interest groups since their concern are mainly about liberation in trade (Moss and Michie, 1998). However, since small countries do not only focus on free trade, but expect also to gain security from organization admission. As citizens in small countries (most of them are post-communist countries) look at EU as the prosperity of economic reform (Herzog and Tucker, 2008) and identity changing (Pace: pg. 107), integration is more the decisions of both states and citizens (Gower and Redmond, 2000).

 

More and more new members access to the EU to seek for the organizational protectionism. Small countries make up 67% of member states create the internal imbalance to EU (Gower and Redmond, 2000). Unemployment in EU since early 1980s has tended to be worse in high per capita GDP countries (Corcoran, 1998). Large states see the threats of unemployment, issues of migration and border control and become more ambivalent about the enlargement of EU as more new small countries enter the organization (Grabbe, 2006).

 

In sum, the integration is attractive to interest groups and domestic producers in large countries but appear as a risk to the government, whereas in small country case the conflict between government and citizens is not evident (Gower and Redmond, 2000). The puzzle occurs when governments of some large countries recently gain their power of market control in order to deal with economic crisis. After the economic crisis 1970s, the patterns of state involvement have become highlighted in large states such as France and UK. Starting at 1980s, many large countries have seen Keynesianism more appealing when dealing with slow growth and high unemployment (Butler and Stokes, 1976). These governments express their unsupportive attitudes towards integration by enforce more restrictive conditionality on new accessions, make it harder for EU to enlarge (Grabbe, 2006). This may not favor interest groups and domestic producers.

 

This puzzle raises questions: In large countries, since the conflict between government and public preference is obvious, will the governments’ interventions in EU make this organization less attractive to the interest groups and domestic producers? How does the gaining in government’s market control in large countries affect the small countries’ government and public opinions about integration?

 

II.                Literature Review

The discussion Matthew J. Gabel in 1998 clarifies the difference in public attitudes towards EU. He addresses that citizens’ occupations constructs attitudes. High-wage manual workers are the most disadvantageous of integration and thus are the least supportive to the concept. Executive and professionals who can be defined as interest groups and domestic producers show more support to EU. However, Gabel’s argument does not dive in the issues of large and small countries. He assumes that there is no difference in country status among the EU country members. The finding of Anna Maria Mayda on public attitudes towards immigration (2006) expands Gabel’s discussion in aspects of country comparison. Since immigration is the product of integration, her research is appealing to us. First, Mayda agrees with Gabel that unskilled workers show less support to the idea of integration since they face high competition from unskilled immigrants. However, Mayda may show Gabel’s discussion only right in more advanced countries. Add in the discussion on increasing mobility, the killed tends to mobilize from rich to poor countries, threatens the skilled workers in poor countries. Therefore, in small country case, skilled workers oppose the integration. Both of Mayda and Gabel favor the H-O Theory Model in the sense that individual skills have positive correlation with pro-immigration or pro-trade in capital abundant economies and have negative correlation with pro-immigration or pro-trade in capital disadvantage economies. Whitefield and Rohrschneider (2006) and their study on public opinion in post-communist countries find evidence against the findings of Mayda and Gabel. According to the two researchers, in Estonia and Lithuania, high income labor associate with increase support for EU. Also, more educated citizens in three Baltic States (Estonia, Lithuania and Latvis) see EU more appealing. Herzog and Tucker (2008) also address that skilled labor in small countries support to EU since they expect the organization admission promises more economic growth. In this paper, we agree to the latter viewpoint.

 

However, none of the studies address the role of government in the economies. They assume that integration tolerates free trade with no government intervene but in fact that is not what happens in the reality. As discussed in the introduction, the driving force of small countries to EU accession is to seek for economic and political security. The government in these countries is not very effective in controlling their markets and independent in managing their resources. Therefore, we want to prove that ineffectiveness in government control gives the interest groups of small countries more active role in expanding themselves to the larger economies and thus they prefer more integration.

 

In the case of large countries, the macro problems that are caused by recent EU enlargement allow the government to have more intervention in the market. We expect to see the gain in control power of these governments in the economies. We expect to find more evidence to prove that large countries’ government opposes EU through adding restrictions on EU accession to protect their workers—in this case are unskilled workers—reducing chance for skilled workers in large countries to more expand in EU. In sum, we expect to see the changing in attitudes of the skilled workers in the large countries towards the EU. They will see this organization less attractive and seek for another trading environment.

Be thankful that you don't already have everything you desire.

If you did, what would there be to look forward to?

Be thankful when you don't know something,
for it gives you the opportunity to learn.

Be thankful for the difficult times.
During those times you grow.

Be thankful for your limitations,
because they give you opportunities for improvement.

Be thankful for each new challenge,
because it will build your strength and character.

Be thankful for your mistakes.
They will teach you valuable lessons.

Be thankful when you're tired and weary,
because it means you've made a difference.

It's easy to be thankful for the good things.
A life of rich fulfilment comes to those who
are also thankful for the setbacks.

Gratitude can turn a negative into a positive.
Find a way to be thankful for your troubles,
and they can become your blessings.
                                                         ~~~~~~

Be Thankful Thanksgiving Poem

Starting to write a very very long research paper...Dear god, can you please make my "coworker" more productive, and talk less? This is class work, not a competition between Chinese and Vietnamese, okay?! Rather, idea of one can be shared so that the paper can be done quickly....Man, I have never seen any one as competitive as this girl (who happens to be my coauthor) .... Ok, wanna sound smart? I'm not gonna compete, but be sure my paper has your contribution, girl! Work harder, man, and stop throwing ideas!!!!!!! GAHHH!!!!!!!!!!!!!!!!!!

"I will be father, you will be mother. I will make money to buy milk. Who's dare to look down on you being a single mom, I will slam their faces like hitting drums....." (T_T) ~ love this from SINGLES...

Democracy has always been a tool that the developed countries can use to attack the weaker developing countries. Obviously, just in everybody's expectation, Obama's journey to Asia this time touches on this issue a lot. It is like a habit of giving suggestion to a developing country like China (a dictator?) that "your economic growth is good, but you need more democracy." If in the consideration of fairness, this suggestion of Obama needs not to attack China alone. In fact, there are some other countries that have not enforced enough democracy but still have good economic growth. Note that Japan had been under one party's control (the Liberal Democratic Party--LDP) for more than 50 years before the rise of Democratic Party (JDP) in recent time. Or Singapore which may not be enjoying stable development without the rule of a "dictator" Lee Kwan Yew and his People's Action Party (PAP). Then, if we discuss that diversity in parity system doesn't decide the degree of democracy of a nation, then what decides?

This argument will focus on stability of economic growth and question the necessary of political stability under the broad term, democracy. Is democracy always an answer for a full growth of a civilization? Does democracy promise stable economic growth and polity?

In order to analyze this issue, I would like to opine the "good end" of one society: The most developed country is where the citizens have freedom of choice, when they can express themselves, enjoy the products of their hard works, and maintain fairness in their community. That is a good end. Then economic growth is the good end in this sense. Stable economic growth give good education to citizens, adequate material life and the freedom to make choice. Hence, whatever enhances this good end should be prolonged and continued, whatever betrayed this good end should be dismissed. However, what ensures stable economic growth? That it is not something happens in one night and over. People want to enjoy their good end in centuries, not in decades, so how to make that happen?

Many scholars use democracy as an answer. The U.S. has tried to get involved in many countries' domestic issues when it sees those nations are threatened by undemocratic forces. However, I argue that democracy is not the best choice.

Consider the two system--democratic and autocrat. Some arguments say that democratic system usually have large coalition size. It tries to benefit its majority of citizens because the citizens have the power in their voting decision. The politicians in this system therefore face more threat of being overthrown. The only way to survive is to satiate the voters' needs. Politicians will try to compete on good policies that may help them generate as many voters as they can. These voters are called "the median voters." In case of autocrat system, everything goes reverse. Instead of satisfying the large community, autocrat system wants to benefit a smaller coalition size. For instance, the desire of members of communist party are the driving force for Soviet Union to make decision. The candidates use private goods as the promise to these small community. "If you vote for me, I promise you a chair in the party" and so on. Therefore, under this system, people do not see many good policies that benefit the people as whole. I expect that there is more chance for economic growth in democratic system than in autocratic system. That is easy to understand and logical enough.

However, there are many cases that democracy leads to high socio-political instability. Countries that suffer with strikes, riots, severe violence between groups of people whose desires are in conflict usually do not show much economic growth. Yes, democracy include freedom of speech and freedom to go on strike, but in a extreme case, it harms the economic development. Let's recall what happened to Thailand last year. The Red voters and the Yellow voters in turn went on strike to ask for changes in leadership. This is not a solution for change, eventually! Proved by many quotes of investors who really concerned about investing in Thailand or tourists who considered whether or not they would revisit the country. Then, there should be some limits to this freedom. In sum,democracy should be in moderate degree. Too much democracy doesn't show much promising in economic growth!

Some arguments indicate that political order happens when there are still agreements between government and citizens. The government needs to have good negotiation skill in order to keep its standing. The government needs to enhance credibility in its governing system. There must be a credible bounds that are self-enforced by the political officials. This recalls me about the case of England in the 17th century when the King continuously broke his promise when he failed to repay his debts to the investors. Then, the Parliament enforced credibility in the Crown (the King) by strengthening the power of banking system (which ensure the payments of King) and the independence of judges (check and balance power). The result was the improvement in banking system, investors' trust and the birth of securities market in this country.

Now, consider the perspective of investors, the main players of economic growth. Do investors care about political instability? The answer is no! In fact, the investors who really like risks think instability gives more chance of return! The investors only concern about whether their property rights are secured. As long as the government respect their property rights, they are fine with the system. Property rights include their rights of owning lands, securities, and loan payments. If the government allows them to have good share in their investments, they consider that is a good investment, they will not turn their back to the country (no matter how undemocratic that country may be).

The reason why China where democracy is not high, but is still attractive to investors is that the government still respects rule of law. China government sets up rules of owning lands, investments, and show enough credibility in those. The investors feel secured when they invest in China and they stay.

Perhaps, democracy is not the driving force for economic growth. Some arguments address that only when economic growth happens prior to democracy, there will be stable economic growth. If democracy happens before economic growth, the result is not very optimal.

In the conclusion, there are several main point that one should consider when thinking about stable economic growth:
1) Democracy should happen after economic growth
2) Credibility in government should be enhanced
3) Property rights of investors should be secured
4) There should be agreement between government and citizens when there is conflict
5) The number of party doesn't matter as long as there are effective policies

This argument doesn't say democracy should not happen, but should happen after economic growth and should be maintained in moderate degree.