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Business, Government & the International Economy

Business, Government & the International Economy

  • Faculty
  • Curriculum
  • Seminars & Conferences
  • Awards & Honors
  • Doctoral Students
Overview Faculty Curriculum Seminars & Conferences Awards & Honors Doctoral Students
    • July 2025
    • Article

    Economic Integration and the Transmission of Democracy

    By: Marco Tabellini and Giacomo Magistretti

    In this paper, we study the effects of economic integration with democratic partners on democracy. We assemble a large country-level panel dataset from 1960 to 2015, and exploit improvements in air, relative to sea, transportation to derive a time-varying instrument for economic integration. We find that economic integration with democracies increases countries’ democracy scores, whereas the impact of economic integration with non-democracies is muted. Results are stronger when democratic partners have a longer history of democracy, grow faster, spend more on public goods, are culturally closer, and export higher quality goods. The effects we document are driven by imports, rather than exports, and by integration with democratic partners that account for a larger share of a country’s trade in institutionally intensive, cultural, and consumer goods, as well as in goods that involve more face-to-face interactions and entail higher levels of bilateral trust. These patterns are consistent with economic integration favoring the transmission of democracy by signaling the (actual or perceived) desirability of democratic institutions. Alternative mechanisms—including human capital accumulation and economic growth—cannot, alone, explain our findings.

    • July 2025
    • Article

    Economic Integration and the Transmission of Democracy

    By: Marco Tabellini and Giacomo Magistretti

    In this paper, we study the effects of economic integration with democratic partners on democracy. We assemble a large country-level panel dataset from 1960 to 2015, and exploit improvements in air, relative to sea, transportation to derive a time-varying instrument for economic integration. We find that economic integration with democracies...

    • June 2025
    • Case

    That's Bananas! Art, Value and Our Capitalist way of Life

    By: Sophus A. Reinert and Rafael Di Tella

    • June 2025
    • Case

    That's Bananas! Art, Value and Our Capitalist way of Life

    By: Sophus A. Reinert and Rafael Di Tella

    • 2025
    • Working Paper

    Public Displays of Alignment: Firm Speech in Autocratic Regimes

    By: Joris Mueller, Jaya Y. Wen and Cheryl Wu

    Political speech by firms is increasingly common around the world. This paper examines the government as an important, yet understudied, audience for such speech, focusing on how Chinese firms rhetorically align with the state. We introduce novel, general, and replicable quantitative measures of rhetorical alignment, using which we establish several empirical facts: (i) rhetorical alignment is prevalent but not universal; (ii) it has increased significantly over time; (iii) it is more pronounced in state-owned and strategic sectors; and (iv) it is negatively correlated with profitability and positively correlated with performance on political and social objectives. Exploiting two natural experiments, we further show that (v) rhetorically aligned firms experience larger stock price declines following events damaging the Party’s reputation, and (vi) firms increase rhetorical alignment after regulatory inspections. Guided by these findings, we propose a conceptual framework wherein rhetorical alignment serves as a commitment device: firms commit to supporting Party interests, and the Party commits to refraining from expropriation. Additional predictions of the framework are tested and supported by the data.

    • 2025
    • Working Paper

    Public Displays of Alignment: Firm Speech in Autocratic Regimes

    By: Joris Mueller, Jaya Y. Wen and Cheryl Wu

    Political speech by firms is increasingly common around the world. This paper examines the government as an important, yet understudied, audience for such speech, focusing on how Chinese firms rhetorically align with the state. We introduce novel, general, and replicable quantitative measures of rhetorical alignment, using which we establish...

About the Unit

The BGIE Unit conducts research on, and teaches about, the economic, political, social, and legal environment in which business operates. The Unit includes scholars trained in economics, political science, and history; in its work, it draws on perspectives from all three of these disciplines.

The following demonstrates one way of classifying the approaches the Unit takes to learning and teaching.

  • The Unit examines the “rules” and policies established by government and other non-business institutions that affect business in the United States.
  • The Unit turns to history to understand the origins of today’s business environment as well as some of the alternatives that have emerged from time to time.
  • The Unit examines other countries’ business environments and their historical development.
  • The BGIE group is deeply interested in the impact of globalization and the way rules are emerging to govern international economic transactions as globalization proceeds.

Recent Publications

Economic Integration and the Transmission of Democracy

By: Marco Tabellini and Giacomo Magistretti
  • July 2025 |
  • Article |
  • Review of Economic Studies
In this paper, we study the effects of economic integration with democratic partners on democracy. We assemble a large country-level panel dataset from 1960 to 2015, and exploit improvements in air, relative to sea, transportation to derive a time-varying instrument for economic integration. We find that economic integration with democracies increases countries’ democracy scores, whereas the impact of economic integration with non-democracies is muted. Results are stronger when democratic partners have a longer history of democracy, grow faster, spend more on public goods, are culturally closer, and export higher quality goods. The effects we document are driven by imports, rather than exports, and by integration with democratic partners that account for a larger share of a country’s trade in institutionally intensive, cultural, and consumer goods, as well as in goods that involve more face-to-face interactions and entail higher levels of bilateral trust. These patterns are consistent with economic integration favoring the transmission of democracy by signaling the (actual or perceived) desirability of democratic institutions. Alternative mechanisms—including human capital accumulation and economic growth—cannot, alone, explain our findings.
Keywords: Democratization; Institutional Development; Economic Integration; International Trade; Democracy; Political Preferences; Institutions; Trade; Global Range; Economics; Government and Politics
Citation
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Tabellini, Marco, and Giacomo Magistretti. "Economic Integration and the Transmission of Democracy." Review of Economic Studies 92, no. 4 (July 2025): 2765–2792. (Available also from VOX, VOXEU, Atlantico, The Economist, Domani, and Ideas for India. Longer NBER working paper version available here.)

That's Bananas! Art, Value and Our Capitalist way of Life

By: Sophus A. Reinert and Rafael Di Tella
  • June 2025 |
  • Case |
  • Faculty Research
Citation
Educators
Related
Reinert, Sophus A., and Rafael Di Tella. "That's Bananas! Art, Value and Our Capitalist way of Life." Harvard Business School Case 725-044, June 2025.

Public Displays of Alignment: Firm Speech in Autocratic Regimes

By: Joris Mueller, Jaya Y. Wen and Cheryl Wu
  • 2025 |
  • Working Paper |
  • Faculty Research
Political speech by firms is increasingly common around the world. This paper examines the government as an important, yet understudied, audience for such speech, focusing on how Chinese firms rhetorically align with the state. We introduce novel, general, and replicable quantitative measures of rhetorical alignment, using which we establish several empirical facts: (i) rhetorical alignment is prevalent but not universal; (ii) it has increased significantly over time; (iii) it is more pronounced in state-owned and strategic sectors; and (iv) it is negatively correlated with profitability and positively correlated with performance on political and social objectives. Exploiting two natural experiments, we further show that (v) rhetorically aligned firms experience larger stock price declines following events damaging the Party’s reputation, and (vi) firms increase rhetorical alignment after regulatory inspections. Guided by these findings, we propose a conceptual framework wherein rhetorical alignment serves as a commitment device: firms commit to supporting Party interests, and the Party commits to refraining from expropriation. Additional predictions of the framework are tested and supported by the data.
Keywords: Business and Government Relations; Economic Systems; Power and Influence; Government Administration; Policy; China
Citation
Read Now
Related
Mueller, Joris, Jaya Y. Wen, and Cheryl Wu. "Public Displays of Alignment: Firm Speech in Autocratic Regimes." Harvard Business School Working Paper, No. 25-064, June 2025.

Integral Outside: The Financial Curb Market, the Electric Telegraph, and the Politics of Pricing in Second Empire France

By: Charlotte Robertson
  • June 2025 |
  • Article |
  • Journal of Modern History
Financial markets in nineteenth-century France were far more complex than an analysis of the official Bourse or its state-authorized brokers would suggest. Most financial transactions occurred on an illegal yet tacitly tolerated curb market called the coulisse, which played a vital role in expanding market liquidity during the Second Empire while also attracting controversy as a site of complex speculative activity. Existing historiography attributes the 1859 suppression of the Paris coulisse to aggravated competition between state-authorized brokers and coulissiers following the market downturn of 1857–58. Based on police, ministerial, prefectoral, and judicial archives, I present an alternate account that stresses the twin roles of financial innovation and the telecommunications revolution in breaching the limits of the state’s tacit toleration for the coulisse. I emphasize the lesser known coulisse in Marseille, suppressed at the height of a bull market in 1855, to formulate an alternative explanation of the 1859 suppression of its counterpart in Paris. I conclude that the rising importance of the curb markets in both cities reflected the robust, short-term options market developing among coulissiers. Public attention given to the coulisse price lists—distributed via newly opened telegraph lines—challenged the legitimacy of official brokers as authoritative sources of price information and compromised the political interests of the Bonapartist state, which proved decisive in the crackdown.
Keywords: Financial Markets; History; Communication Technology; Knowledge Dissemination; France
Citation
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Related
Robertson, Charlotte. "Integral Outside: The Financial Curb Market, the Electric Telegraph, and the Politics of Pricing in Second Empire France." Journal of Modern History 97, no. 2 (June 2025): 307–347.

Liz Truss and the Thatcher Legacy: Markets and Fiscal Dominance in the United Kingdom

By: Rafael Di Tella
  • May 2025 |
  • Teaching Note |
  • Faculty Research
Citation
Purchase
Related
Di Tella, Rafael. "Liz Truss and the Thatcher Legacy: Markets and Fiscal Dominance in the United Kingdom." Harvard Business School Teaching Note 725-041, May 2025.

The Global Strategic Maple Syrup Reserve

By: Sophus A. Reinert, Mattias Fibiger and Sue Jia
  • May 2025 |
  • Case |
  • Faculty Research
Citation
Educators
Related
Reinert, Sophus A., Mattias Fibiger, and Sue Jia. "The Global Strategic Maple Syrup Reserve." Harvard Business School Case 725-035, May 2025.

Argentina’s Disinflation: An International and Historical Perspective

By: Rafael Di Tella, Franco Nuñez and Pablo Ottonello
  • May 2025 |
  • Article |
  • Quarterly Review - Federal Reserve Bank of Minneapolis
Keywords: Inflation and Deflation; Economy; Argentina
Citation
Read Now
Related
Di Tella, Rafael, Franco Nuñez, and Pablo Ottonello. "Argentina’s Disinflation: An International and Historical Perspective." Quarterly Review - Federal Reserve Bank of Minneapolis 45, no. 1 (May 2025).

Brazil's Messias? The Lava Jato Corruption Scandal, the Recession, and the Rise of Bolsonaro

By: Rafael Di Tella and Jose Liberti
  • May 2025 |
  • Teaching Note |
  • Faculty Research
Teaching Note for HBS Case 719-069.
Citation
Purchase
Related
Di Tella, Rafael, and Jose Liberti. "Brazil's Messias? The Lava Jato Corruption Scandal, the Recession, and the Rise of Bolsonaro." Harvard Business School Teaching Note 725-033, May 2025.
More Publications

In the News

    • 17 Jul 2025
    • HBS Working Knowledge

    Mapping the Salt Tax That Helped Shatter a Monarchy

    Re: Marco Tabellini
    • 16 Jul 2025
    • New York Times

    The Economy Seems Healthy. Were the Warnings About Tariffs Overblown?

    Re: Alberto Cavallo
    • 09 Jul 2025
    • Business Insider

    Pricing Data Shows Trump’s Tariffs Are Making Some Us-Made Products More Expensive

    Re: Alberto Cavallo
→More Faculty News

HBS Working Knowledge

    • 28 Oct 2024

    Latino Voters Have Grown More Politically Divided. That’s Not Surprising.

    Re: Vincent Pons & Jesse M. Shapiro
    • 24 Oct 2024

    Charting the US-China Trade War: What Does 'Made in Vietnam' Mean?

    Re: Ebehi Iyoha & Jaya Y. Wen
    • 07 Oct 2024

    Election 2024: Why Demographics Won't Predict the Next President

    Re: Vincent Pons & Jesse M. Shapiro
→More Working Knowledge Articles

Harvard Business Publishing

    • February 13, 2025
    • Article

    Research: The Costs of Circumventing Tariffs

    By: Jaya Y. Wen, Ebehi Iyoha, Edmund Malesky and Sung-Ju Wu
    • January 2025
    • Case

    Barilla: Feeding the Future

    By: Sophus A. Reinert, Forest L. Reinhardt, Dante Roscini and Carlota Moniz
    • 2025
    • Book

    Space to Grow: Unlocking the Final Economic Frontier

    By: Matthew Weinzierl and Brendan Rosseau
→More Harvard Business Publishing

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Faculty Positions

Harvard Business School seeks candidates in all fields for full time positions. Candidates with outstanding records in PhD or DBA programs are encouraged to apply.
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Contact Information

Business, Government & the International Economy Unit
Harvard Business School
Morgan Hall
Soldiers Field
Boston, MA 02163
BGIE@hbs.edu

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