Open States In The Global Economy: The Political Economy Of Small-state Macroeconomic Management

OPEN States in the Global Economy The Political Economy of Small-State Macroeconomic Management Jonathon W. Moses OPEN States in the Global Economy Also by Jonathon W. Moses EUROPEANIZATION AND THE END OF SCANDINAVIAN SOCIAL DEMOCRACY? (editor with Robert Geyer and Christine Ingebritsen) OPEN States in the Global Economy The Political Economy of Small-State Macroeconomic Management Jonathon W. Moses Associate Professor Department of Sociology and Political Science University of Trondheim Norway First published in Great Britain 2000 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-41678-3 ISBN 978-0-333-97785-9 (eBook) DOI 10.1057/9780333977859 First published in the United States of America 2000 by ST. MARTIN’S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 978-0-312-23106-4 Library of Congress Cataloging-in-Publication Data Moses, Jonathon Wayne, 1962– OPEN states in the global economy : the political economy of small-state macroeconomic management / Jonathon W. Moses p. cm. Includes bibliographical references and index. ISBN 978-0-312-23106-4 (cloth) 1. International economic relations. 2. Norway—Commercial policy. 3. Norway—Economic policy. I. Title. HF1359 .M675 2000 338.9481—dc21 99–053014 © Jonathon W. Moses 2000 Softcover reprint of the hardcover 1st edition 2000 978-0-333-77551-6 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 3 2 1 09 08 07 06 05 04 03 02 01 00 To dad, who reminds us: if you’re going to do something, do it right. Contents List of Tables x List of Figures xi Preface xii List of Acronyms xv List of Translations xvii 1 Introduction The argument Case study The case of Norway Norway as an outlier The Norwegian record Chapter overview PART I 1 3 10 12 13 14 17 CONCEPTUAL FRAMEWORK 2 An Outside-In Framework Stylized facts Conceptual scheme An outside-in framework External balance Current account Capital account Internal balance Combined balances Closed-capital scenario Open-capital scenario Conclusion 23 24 28 31 31 33 35 36 37 39 40 44 3 Postwar International Regimes Traded goods 1948–58 1959–98 47 49 50 53 vii viii Contents Capital flows 1948–58 1958–71 1971–86 Post-1986 Four international regimes PART II 57 58 59 61 63 64 POSTWAR POLICY REGIMES 4 Direct Planning in Norway: 1948–58 Economic conditions and political ambitions External context Domestic context Policy instruments Wage policy Fiscal policy Revenues Expenditures Regulation Monetary and credit policy Conclusion 69 70 71 73 76 76 81 83 84 84 88 93 5 Indirect Steering: 1958–71 External conditions and political ambitions Policy instruments Wage policy Fiscal policy The 1958 recession Regiona