“INTERNATIONAL” POLITICAL ECONOMY

“International” trade, investment, finance, and migration—the key elements of international political economy—manifest in US territories and Indian Country. As such, these semi-sovereign entities provide foundations for fruitful research agendas while also generating points of departure for courses on international political economy.

First, with regard to trade, US territories and Indian Country benefit from their American brand when trading with other countries—as well as with the 50 US states and the federal government—because their goods qualify as “Made in America.” At the same time, they are not necessarily constrained by US federal law. ^{Footnote 8} For example, contracts with AIAN tribes are exempt from the Obama administration’s executive order for a minimum-wage hourly increase to US$10.10 for federal contractors and subcontractors. ^{Footnote 9} Congress varies in its willingness to let US territories set their own labor regulations. Guam’s 2016 minimum wage (US$8.25) is above the federal floor (US$7.25), although the minimum wage in American Samoa is as low as US$4.60. Variations in tax law in the US territories have run afoul of the World Trade Organization (WTO). In response to a complaint by the European Communities, the WTO ruled in 2000 that preferential US tax treatment of “foreign-sales corporations” incorporated in the US Virgin Islands and Guam amounted to an illegal export subsidy. ^{Footnote 10} Of particular relevance to IR curricula, semi-sovereign entities such as the US territories and Indian Country test the limits of arguments that there is an international “race to the top” in regulatory standards rather than a “race-to-the-bottom” dynamic (Mosley and Uno Reference Mosley and Uno2007; Prakash and Potoski Reference Prakash and Potoski2006).

Second, direct investment plays a role in the political economies of semi-sovereign entities. Tribes in Indian Country have made their mark in recent years by using their special sovereign rights to grow the gaming industry, usually through tribal joint ventures or service contracts with “foreign” (i.e., non-Indian) gaming firms. Tribes also have exercised sovereignty in imposing environmental regulations on fracking and other natural-resource extraction on tribal lands—although sometimes these regulations are more lax, sometimes more strict than those in neighboring US municipalities. Puerto Rico famously built its economy in recent decades on the back of subsidies to pharmaceutical manufacturing, which combined with the territory’s attractive access to the US market. However, mirroring the experience of many developing countries (and US municipalities), Puerto Rico’s onetime incentives did not prevent the pharmaceutical industry from moving en masse to other locations. US territories and Indian Country illustrate the types of political tools that even semi-sovereignty can provide in the competition for direct investment, as well as the limitations of those tools. ^{Footnote 11}

Third, with the Puerto Rican debt crisis and the Panama Papers’ data on the role of territories (US and otherwise) in investors’ search for low-tax jurisdictions, semi-sovereign entities are shaping the future of international finance. Indian Country also has run-ins with finance. Tribal governments issue bonds as sovereigns, but to find buyers and keep prices down, they execute “waivers of sovereign immunity.” These waivers specify that in the event of a bond claim against the tribal government, proceedings will take place in a US court rather than a tribal court. ^{Footnote 12} It is interesting that tribal governments sometimes circumvent difficult and expensive market access by borrowing from one another, although these loans “fly under the radar” of traditional financial markets. Individual credit also is underprovided in Indian Country, although AIAN borrowers with recourse to US civil law—rather than tribal law—can find better off-reservation rates (Wellhausen Reference Wellhausen2016). Semi-sovereign entities can provide information for understanding the politics of economic crisis, as well as more general insights into the determinants of access to external capital.

Fourth, residents of semi-sovereign entities deal daily with the political economy of migration and remittances. Leaders in Indian Country struggle to keep tribal members living, working, and spending their income within tribal lands. Tribal members balance cultural and economic factors that pull them to stay on tribal lands or push them to look for employment in US municipalities and send money back home. Internal migrant communities in the United States that come from territories such as Puerto Rico also often retain close financial ties to home. ^{Footnote 13} However, residents of US territories and Indian Country receive some welfare benefits from US federal programs. Thus, their remittances need not substitute for otherwise absent social safety nets, as is common in remittances sent home to developing countries (Duany Reference Duany2010). This variation can inform the ongoing debate about whether remittances complement or substitute for political action in recipient states. In general, remittances to US territories and Indian Country illustrate understudied (and undertaught) aspects of the push and pull of economic globalization around migration.

APPLICATION: HIERARCHY

How specifically might US territories and Indian Country be included on IR or international political economy syllabi? One point of entry is in the consideration of international hierarchy in this postcolonial and post–Cold War era. Hierarchy is a topic of renewed interest in IR that is on syllabi in various guises, such as in the study of empire, the international projection of power, and great-power dynamics. Much of the recent work on hierarchy in IR has made progress by building theory around the role of security (Lake Reference Lake2011; McCormack Reference McCormack2015; McDonald Reference McDonald2015). US territories and Indian Country can provide inroads to the political economy of hierarchy in the international system. Hierarchy allows US territories and Indian Country to be semi-sovereign with respect to their political economies, without providing for their own security.

A specific focus on US territories and Indian Country illustrates the scope of US power in today’s global economy, as well as the dynamics of political economy within a given hierarchy. Particularly in American classrooms, material on US territories and Indian Country can provide a bridge to introducing other hierarchies, in which other Westphalian states (e.g., the United Kingdom and France) allow their semi-sovereign entities to experiment with economics while relying on an external source of security.

Furthermore, a consideration of Indian Country under the guise of hierarchy in IR would draw an important link to a body of work on the political economy of indigenous peoples, whether in the United States, Canada, Australia, or elsewhere. Scholars have illustrated how economically disadvantaged indigenous groups can access national institutions (Evans Reference Evans2011a; Reference Evans2011b); how historical compromises and injustices shape indigenous opportunities today (Spirling Reference Spirling2012); and how interest-group dynamics work in indigenous communities (Hansen and Skopek Reference Hansen and Skopek2011; Wilkins and Stark Reference Wilkins and Stark2011); as well as numerous other related topics of inquiry (Evans Reference Evans2014). Considering Indian Country in IR curricula and scholarship can prevent this relevant literature from being sidelined. ^{Footnote 14}

APPLICATION: BOUNDARIES OF THE STATE

A second key point of entry for US territories and Indian Country into IR and international political economy syllabi is through the debate about the boundaries of the state under conditions of globalization. Puerto Rico’s dire economic circumstances perversely illustrate one benefit of being a traditional state or a traditional subnational unit—but not something in between. If Puerto Rico were fully sovereign, it would be able to more clearly “declare bankruptcy” and then rely on international institutions such as the IMF to smooth painful restructuring processes. If Puerto Rico were clearly treated as a US municipality, it would have access to Chapter 9 protections and could restructure in that way. ^{Footnote 15} As neither, actors on international markets that trade in Puerto Rican debt have little clarity about how Puerto Rico will become healthy again, which only exacerbates the crisis. The speed and certainty with which the US Supreme Court and Congress determine the political economic boundaries of Puerto Rico’s semi-sovereignty—now that crisis has made those boundaries salient—have real consequences for the individual welfare of Puerto Ricans.

Work on “forum shopping” in international trade or the growing phenomenon of “nationality shopping” concerning access to international investment protections also explores the boundaries of the state in the global economy (Busch Reference Busch2007; Davis Reference Davis2009; Wellhausen Reference Wellhausen2015). US territories and Indian Country are again illustrative. When firms incorporate in US territories that exist within the hierarchy of the United States, they benefit from access to US markets while still reaping benefits from being outside of traditional US jurisdiction. Such liminal cases allow scholars to hold constant certain variables—such as the effect of an American “brand”—while exploring the consequences of legal and institutional variation. Additionally, historically fraught federal–Indian relations generated complexities in property rights (e.g., “checkerboarding”) as well as civil and criminal law in Indian Country (Akee Reference Akee2009). Scholars and educators can exploit the impact of political boundaries on the behavior of firms and governments, illustrating core IR concepts without going outside of the greater United States.

Uniquely, semi-sovereign entities illustrate dynamics specific to both state and nonstate actors in the international political economy. The neither-in-nor-out status of semi-sovereign entities means that they can be conceptualized as entities being acted on in the global political economy as well as political economic actors in their own right. In which ways are the United States, Guam, the Navajo Nation, and Wal-Mart on the same spectrum? How are they different? Asking these questions in the classroom allows an educator to encourage student understanding of the meaning and consequences of sovereignty in the global economy.