Center for Interdisciplinary Studies CIS 495 Senior Thesis Outline by zjv65716


									      Center for Interdisciplinary Studies

        CIS 495: Senior Thesis Outline

              December 20, 2007

            Stewart Pierce-Gardner

           Major: Political Economy

Advisers: Dr. Alexander, Dr. Appleyard, Dr. Hess
Thesis of my Thesis:

Using two US-Jordan trade agreements as focus, I will argue that the trade-for-development theory is
mitigated by Jordan’s private sector rentier economy.


Before 1989, Jordan was heavily dependent on foreign aid, regional resource grants, and labor
remittances. Following the end of the cold war the international donor community shifted and began to
place more emphasis on liberalized trade, democratization, and the private sector. I will argue that while
loosening political control to appease the international donor community and domestic constituencies
during economic adjustment, Jordan exchanged an induced rentier state based on foreign aid for a
private sector rentier system dependent on labor remittances (quasi-rents). First, I will explore rentier
theory, its meanings and implications, and then argue that Jordan is a private sector rentier economy
dependent on labor remittances. Next, I will review development and trade theory and free trade
agreements and illustrate how trade agreements are supposed to effect development and production in
lesser developed countries. I will then test this theory’s impact within the environment of Jordan’s rentier
economy with an analysis chapter containing recent trade data and interviews with policymakers. Jordan
has been under US trade agreements for more than a decade, unique among Arab states in the Middle
East. The states and economies of Middle Eastern countries gave rise to rentier analysis, and Jordan is a
perfect case-study on rentier economies under free trade agreements.

    I.   Introduction
             1. Case-study Jordan
             2. Classifying Jordan’s economy and state with Rentier Theory
             3. Trade-for-Development theory applied to Jordan with two trade agreements
             4. Intersection of Rentier and Trade-for-Development theory in Jordan
             5. Analysis of Impact
    II. Introduction to Case-Study: Jordan
             1. Snapshot of Jordan’s:
                      a. Origin
                      b. Government
                             i. Political Actors
                      c. Economy
                             i. Public-Private sector relationship
                      d. Significant, recent political and economic challenges
                             i. 1989 Financial Crisis
                             ii. IMF Restructuring
                             iii. Jordan-Israel Peace Treaty
    III. Using Rentier Theory to classify and understand P&E dynamics in Jordan
             1. Introduction to theory:
                      a. Early development and formation
                      b. What is rent?
                             i. Types of rent:
                                       a. Induced
                                       b. Locational
                                       c. Resource
                                       d. Strategic
                                       e. Remittances
                      c. What is the affect of rent on:
                        i. Economics, politics?
                d. What are the different classifications of rent-influenced states, economies?
                        i. Rentier states, economies, and private sectors
        2. Economic aspects of rentier Theory:
                a. Economic vs. rentier definitions of rent
                b. Allocative vs. productive states
                        i. Theoretical differences
                        ii. Macroeconomic measures of a rentier economy
                        iii. Jordan’s pre-1989 rentier state
                c. Private Sector Rentier Economy
                        i. What is it?
                        ii. Macroeconomic measures of a private sector rentier economy
                        iii. Labor Remittances in Jordan
                d. Rent-seeking and the impact on private economic behavior and choices
        3. Political aspects of rentier theory:
                a. What is political rent?
                b. Rent-seekers and their institutions
                c. Indicators of a rentier state
                d. Political dynamics of a classical rentier state
                e. Political impacts of a private sector rentier economy on:
                        i. Government
                        ii. Private Sector
                        iii. Individual
                 f. Jordan: Post-1989 and the shift from top-down to bottom-up rent flows
                g. Changing attitudes towards rent-seeking
IV. Using Trade-for-Development theory in the Jordanian experience
        1. Literature review of trade-related development theory
                a. What is it? What reforms does it require?
                        i. Focus on Import Substitution/Export Expansion Strategies
                                 a. East Asian Experience
                                 b. Israeli Experience
                                           i. Remittances, Resource Poor
                        ii. Strengths/Limitations
                        iii. What domestic policy changes are required?
                                 a. How does Islam influence development credit market reform?
                        iv. Exchange rate regimes
                                 a. Jordanian Policy: Exports versus remittances
                        v. Bilateral trade agreements between rich-poor countries and development
                                 a. US-Israel FTA
                                 b. US-Palestinian Authority FTA
        2. Trade Agreements
                a. 1996 US-Jordan QIZ agreement
                        i. Treaty requirements
                                 a. Value-added, point of origin
                                 b. What qualifies a qualified industrial zone?
                                 c. Jordanian-Israeli collaboration
                        ii. US, Jordanian, and Israeli perspectives (3 parties to the treaty)
                                 a. Reward for Peace Treaty and test of trade for development
                        iii. Focus on pre-treaty expectations and treaty-required structural
                b. 2000/1 US-Jordan FTA
                        i. Treaty requirements
                                a. Tariff reductions
                                b. Environmental, labor regulations
                       ii. Scope of FTA: What goods and services qualify?
                       iii. Foreign policy objectives of the US government
                                a. Post-911: Security and Development
                       iv. Pre-Treaty criticisms: Jordan and US
V. Analysis
       1. How much have the ‘export-promoting’ trade treaties improved exports?
                a. Progress Report
                        i. Quantity, Growth, and Trends
                        ii. Will Jordan’s comparative advantage in QIZ and FTA exports
                             commodities last?
                                 a. What are the implications of a new Multifiber Agreement on
                                     Jordanian textiles?
                                 b. Impact of US-Egyptian QIZ agreement (2006/7)
       2. Who are the winners and who are the losers so far?
                a. If so, which sectors of the economy is the government supporting/discouraging?
                b. Can the impact of powerful political interests be detected in policy?
       3. Has the government changed its rent-seeking policies?
       4. If so, have the reforms been meaningful?
                a. Has the government been able to move itself and its people towards increased
       5. How have the treaties changed the private-sector/public-sector relationship?
                a. Shift in rent-seeking?
       6. Has the private sector rentier economy, if it exists, negatively influenced development
            and growth?
                a. What is the nature of entrepreneurialism in Jordan?
                b. How have privatized state-owned businesses changed?
                c. How have small and medium sized enterprises changed?
                d. Which parts of the trade for development theory have been adhered to? Which
       7. If any, what have been the impediments to reform?
                a. Bureaucracy
                b. Politics (Coalition building/maintaining)
                c. Corruption
                d. Rent-seeking
                e. Technology
                f. Infrastructure
                g. Labor shortage
                h. Majority foreign ownership of QIZ assets
                 i. Knowledge/Human Capital
                j. Jordanian-Israeli collaboration
       8. Why have or have not the trade treaties increased Jordan’s development?
                a. What impact does this case study have on the trade for development and rentier
VI. Conclusion
       1. Implications
       2. Further research

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