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Financial Globalization as a Barrier to Democratic Consolidation: a North-South Model with Public Goods

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  • Porcile Gabriel

    (DPPM – Economic Commission for Latin America and the Caribbean, UN-ECLAC, Dag Hammarskjold 3477, Vitacura, RM, Santiago de Chile, 7630412, Chile and Department of Economics, Federal University of Parana (UFPR), Brazil)

Abstract

This paper modifies the Acemoglu–Robinson model of the economic basis of democracy to discuss the impact of the international regime regulating capital flows on the consolidation and quality of democracy. Two regimes of capital mobility are considered, Bretton Woods and Rodrik’s hyperglobalization, in an international economy formed by an advanced North and a developing South. The model shows that hyperglobalization compromises the stability of democracy in the South by limiting the ability of the citizens to tax the elite and provide public goods which are critical for technical change and income distribution. At variance with the mainstream results, it is argued that financial globalization is a barrier to democratic consolidation. The model is consistent with key findings of the empirical literature on globalization and democracy, as well as with evidence from the economic history of Latin America.

Suggested Citation

  • Porcile Gabriel, 2020. "Financial Globalization as a Barrier to Democratic Consolidation: a North-South Model with Public Goods," Journal of Globalization and Development, De Gruyter, vol. 11(2), pages 1-36, December.
    • Handle: RePEc:bpj:globdv:v:11:y:2020:i:2:p:36:n:1
    DOI: 10.1515/jgd-2019-0009
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