First Question Professora Cristiane Lucena: Axel, tell us a little about your background and about your choice/trajectory to become an international political economist.
Axel Dreher: I don’t think that was really a choice. As I am an economist by training, but my supervisor was a political economist. He worked on the IMF, and pretty early on I stumbled into political scientists, like James Vreeland and Nathan Jensen. I started to work with them shortly after the end of my PhD, and that influenced the way I continued to work and the conferences I went to. And that same year, right after the end of my PhD — I had just started as a lecturer at Exeter — I got a rejection from a political science journal, after which it wasn’t clear to me where else I could submit that paper, which was on the political economy of the International Monetary Fund. Then I thought about founding a new journal, that would address this perceived gap in the market — which was the Review of International Organizations (RIO). I first thought about doing that for economics only, but it turned out that the market would be pretty small, so I asked political scientists and economists to join the editorial board. Soon after, Katharina Michaelowa and I started a conference on the Political Economy of International Organizations, where quite a number of people who are now widely known participated, such as Michael Tierney, Stephanie Rickard, Eric Werker, Thomas Koenig and many others. We decided to make this a permanent event, on a yearly basis, and this laid the foundation for a group of political economy people to meet regularly.
Professora Cristiane Lucena: What the power of a rejection!
Professora Cristiane Lucena: If you were asked to summarize the field of International Political Economy in one paragraph, how would you describe it?
Axel Dreher: I think different people have different perceptions of it. Conventionally it is a subfield of international relations, a term that economists would not use. It investigates the intersection between politics and economics with an international aspect. So, if you would come to an international political economy society conference, you would mainly encounter topics such as trade, foreign investment, foreign aid, all with some aspects of politics in it. In my own perception it is mainly the intersection between research done by (political) economists and political scientists. If you attend the Political Economy of International Organizations (PEIO) or the International Political Economy Society (IPES) conferences, it is sometimes very difficult to tell the difference between an economist and a political scientist. The fields have somehow converged in terms of methods and topics, and you could publish many of these papers either in an economics journal or a political science journal. The writing would have to be different, as in economics the emphasis would be more on identification strategies, with long appendices testing robustness of results and explaining instrumental variables, while in political science the writing would be more heavy upfront, discussing more theory – which economists would not typically consider unless it involves formal models. In econ, you would directly jump into data and methods right after the introduction. But the questions and the data are often the same. And with a bit of re-writing you could publish it either in journals in political science that publish works by economists and the other way around. As it happens, many of my papers are co-authored with political scientists — James Vreeland, Peter Rosendorff, Mike Tierney and others. In the area of international organizations, a group has evolved that is very open to both disciplines.
Professora Cristiane Lucena: “Banking on Beijing” is a fascinating book! How does the book project fit with your long and prolific trajectory as a leading scholar in the field of International Political Economy?
Axel Dreher: Thank you. That came quite naturally. I had worked with other economists on foreign aid projects, and at the same time Mike Tierney and Dan Nielsen started the AidData project. I met the two of them at conferences like PEIO and we realized that we were working on very similar questions. So, when they published their data on new donors’ aid, I was one of the many people they invited to use these data as input in a research paper and present it at a conference in Oxford that they organized. These data did not include data on China however. One of my PhD students, Andreas Fuchs, who is now a professor at the University of Göttingen, discovered a book by a historian, that had data on Chinese aid projects. We worked together on the allocation of Chinese aid. Based on this Mike asked me if I would like to join their project on quantifying the amount of aid given by China, and Andrea and I joined the team. We started with a paper on project-level data from China given to African countries – with many research assistants working on this project. We then geocoded the data and wrote a paper using those. Then we did the same covering the whole world rather than just Africa. It came then quite naturally that we should write a book about it. It took many years from starting the book to publishing it, but is it a natural consequence of that large amount of work that we had done over a decade, publishing various articles on the location and effects of Chinese foreign aid.
Professora Cristiane Lucena: The book suggests that domestic institutions within aid-receiving countries do play a role, when it comes to reconciling growth, development and accountability. What do you see as the main lesson of this finding for environmental protection policies?
Axel Dreher: This is the result of a study that we discuss in the book, rather than one of our own results. Work by Brad Parks and co-authors on Cambodia and Tanzania, where they find that the domestic environmental laws and the investors and resource sectors in those countries determined the effects of Chinese infrastructure projects on deforestation. The broader answer, based on results in “Banking on Beijing”, is that the evidence is mixed. We compare Chinese aid to the World Bank aid, which include very different types of safeguards. The Bank typically requests donors to assess the environmental consequences of a project. Before they support a project, they would consider potential environmental damages, and are pretty strict with that. China, to the contrary, gives substantial leeway to the recipient government. One of the principles in giving aid is to stay out of domestic politics, so to the extent that they give aid to a government that cares less about environmental consequences, the damages are obviously going to be larger as compared to when Chinese aid is given to a government that cares more. In the longer run, we know from others’ work, that the demand for environmental protection increases with income; that means, to the extent that the aid induces development and promotes growth, it will in the long run also increase demand for environmental protection. But, of course, there are trade-offs. In the short run, growth can certainly have nasty environmental consequences, deforestation, for example, or pollution. When that production is increased as a consequence of aid, that can also increase pollution in countries where environmental protection is not at the far front of politics. It is a mixed bag, I think.