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Why is it that political conflict between countries sometimes undermines commerce between those states, and yet at other times it seems to have little or no effect on cross-border economic flows? The question is an important one, yet, while numerous studies have considered how and to what extent international political conflict affects trade, few consider how and when economic linkages can develop despite hostile political relations. This book addresses that gap, and demonstrates that the impact of international political conflict on commerce will be muted when national leaders are accountable to internationalist economic interests—because such leaders will try to prevent political disputes with other countries from spilling over into economic arenas. The author develops this argument primarily through a detailed case study of a critically important contemporary case: the relationship between Mainland China and Taiwan. He then tests it via two shorter case studies.
- Sales Rank: #2745701 in Books
- Published on: 2009-04-14
- Original language: English
- Number of items: 1
- Dimensions: 9.00" h x .60" w x 6.00" l, .75 pounds
- Binding: Paperback
- 256 pages
Review
"Overall, Kastner's book enriches our understanding of PRC-Taiwan relations in particular and relations between political conflict and economic ties in general. The reviewer recommends it to specialists as well as general readers."—Mao Lin, Chinese Historical Review
"This book is perhaps the first one attempting to build a framework to analyze the political and economic relations between China and Taiwan during the period from President Lee Teng-hui to President Chen Shui-bian . . . I recommend this book for those who are interested in the long-term relationship between Beijing and Taipei."—Wei-Hsiu Huant, The Developing Economies
"With methodological sophistication, Kastner presents a carefully argued thesis to explain that political conflict and economic interdependence do not necessarily stand in opposition to each other. The work is addressed to a graduate-level and professional audience and provides insight into the larger theoretical issue as well as good analysis of East Asian Political and economic dynamics."—J. A. Rhodes, Choice
"Scott L, Kastner . . . provides an intriguing reading of the recent history of cross-strait relations in his attempt to address the puzzling aspects of a trend at the heart of political debates in Taiwan today."—Robert Green, Taiwan Review
"Political Conflict and Economic Interdependence Across the Taiwan Strait is arguably one of the most important works of political science theory written about the Taiwan Strait written in recent years and makes a substantial contribution to our understanding of political decision-making."—Taipei Times
"This is first rate political science, presenting a very well formulated and interesting research question—does economic interdependence mitigate inter-state conflict, particularly for the Taiwan-mainland relationship. There is no book like it on the market, and its ability to summarize Cross-Straits ties and put them within a theoretical and analytical framework is terrific."—David Zweig, Chair Professor, Division of Social Sciences, and Director, Center on Chinas Transnational Relations, Hong Kong University of Science and Technology
"This important book provides an innovative analysis of relations across the Taiwan Strait and, more generally, enhances our theoretical understanding of the political economy of national security in an era of globalization." —Thomas Christensen, Professor of Politics and International Affairs and Director of the Princeton-Harvard China and the World Program, Princeton University
"[T]his study addresses a number of important issues that relate to both cross-strait relations as well as theories of international relations."—Steven Goldstein, Pacific Affairs
About the Author
Scott L. Kastner is Assistant Professor in the Department of Government and Politics at the University of Maryland, College Park.
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4 of 4 people found the following review helpful.
Trading with the enemy: The paradox of cross-strait economic integration
By J. Michael Cole
It would be difficult to overstate the importance and timeliness of Scott Kastner's Political Conflict and Economic Interdependence Across the Taiwan Strait and Beyond, which seeks to explain why, despite hostile political relations between Taipei and Beijing, economic ties have not only persisted, but accelerated.
Kastner, an assistant professor in the department of government and politics at the University of Maryland, goes far beyond the general, albeit contested, view that increased trade between two states reduces the likelihood of armed conflict. Rather, he argues that the more important question is when conflict affects trade. His main hypothesis is that national leaderships that are more accountable to "internationalist economic interests" are less likely to act in ways that threaten economic stability.
To make his case, Kastner looks at three protracted hostile political relationships, or dyads -- Taiwan-China, India-Pakistan and South-North Korea -- with emphasis on the Taiwan Strait. What follows is a fascinating exploration of the cross-strait paradox, whereby despite serious political conflict, trade between the two sides from the 1980s on has accelerated.
While prior to the mid-1980s economic interaction between Taiwan and China was extremely limited, democratization in Taiwan, added to a revaluation of the New Taiwan dollar that made domestic manufacturing less competitive, brought gradual changes in Taipei's policies on investment in China. Democratization meant that the authorities became more accountable to the people and could no longer ignore business associations, or the "internationalist economic interests," which gained clout as the size of the businesses investing in China grew. As liberalization intensified, the cost to the national leadership of ignoring those interests, or of preventing their expansion, increased.
This process went relatively smoothly, until the nature of the commercial links began having what Kastner calls "negative security externalities" for Taiwan. Arguments for caution included fears that investment in China helped it modernize, or that Taiwanese operating in China could be used for blackmail by Beijing, or held hostage. Furthermore, as trade intensified, Taiwan became increasingly dependent on China, which by the early 2000s surpassed the US as Taiwan's primary trade partner.
Those security externalities forced the Taiwanese leadership to perform a balancing act between safeguarding political interests (e.g., sovereignty) and remaining accountable to business interests that not only called for further cross-strait trade liberalization, but also increasingly clamored for stability in the Taiwan Strait.
Taipei was therefore compelled to adopt a two-track approach to economic ties with China, one that clearly separated trade from politics. For Beijing, however, the growing cross-strait economic relationship had few negative externalities; it realized, in fact, that economic integration could be a crucial component of its ambition to annex Taiwan. To this end, in times of crisis it has sought to reassure Taiwanese businesses operating in China -- including, with a few exceptions, "green" ones -- that their interests are safe. As it stands to gain economically and politically from cross-strait economic integration, Beijing has refined the signals it sends to Taipei to express displeasure when the Taiwanese leadership appears to threaten the "status quo" so that Taiwanese business will not be scared off. Still, given the authoritarian nature of its government, in extreme cases Beijing is at greater liberty to act, even when its decisions risk undermining local governments that benefit from Taiwanese investment.
Kastner nevertheless shows that despite becoming increasingly beholden to business interests, Taiwanese leaders can slow the pace of integration when the domestic political conditions are right. As such, both Lee Teng-hui during his second term and Chen Shui-bian during the 2004 elections were able to tap into sovereignty and protectionist constituencies to retain their grip on power, which had a cooling effect on cross-strait liberalization.
Still, one conclusion that can be drawn from Kastner's book is that even when pro-independence administrations are in power, and even in times of high political tension across the Taiwan Strait, liberalization will proceed. Furthermore, as Kastner rightly points out, leaders and their coalitions can have very different interpretations of the negative security externalities involved in trading with China, as President Ma Ying-jeou has shown.
The author remains ambivalent about the impact of trade on conflict, concluding that its constraining (higher costs of war making it less likely) and transformative (reconciliation through increased contact) effects appear to have been marginal. Despite two decades of economic integration, for example, Taiwanese support for the "status quo" has remained constant. Ironically, international economic interests and China's dependence on global markets may also have limited its ability to send threatening signals to Taipei, as doing so risks alarming international investors. Taipei, Kastner writes, may have been aware of this, which could account for risk-taking on the question of sovereignty. One constraining factor that Kastner oddly leaves out, however, is the security guarantees the US has extended to Taiwan.
Kastner concludes on a note of cautious optimism about the pacifying potential of economic liberalization in the Taiwan Strait. Still, he argues that if economic integration continues to accelerate -- which the proposed economic cooperation framework agreement (ECFA), added to growing Chinese investment in Taiwan, would certainly do -- future Taiwanese presidents may be less inclined, or able, to undermine stability for political reasons. This would indicate that we can expect more "centrist" government coalitions that are more accountable to business internationalists to be voted into office. The ramifications for the future of Taiwan as a distinct political entity, while serious, are not addressed by Kastner, who throughout his book remains commendably neutral, if not clinical, about his political preferences regarding the question of Taiwanese independence.
Given the idiosyncratic nature of the Taiwan Strait conflict, added to the unique nature of the political systems in Taipei and Beijing, it would be imprudent to generalize the findings by applying them to other conflicts (something Kastner admits himself). This said, Political Conflict and Economic Interdependence Across the Taiwan Strait is arguably one of the most important works of political science theory written about the Taiwan Strait in recent years and makes a substantial contribution to our understanding of political decision-making.
(Originally published in the Taipei Times, August 9, 2009, page 14.)
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