Globalization and the (Mis)Governance of Nations
AbstractWe analyze whether or not the globalization of capital, ‘disciplines’ governments and improves governance. We demonstrate that globalization affects governance, by increasing a country’s vulnerability to sudden capital flight. This increased threat of capital flight can discipline governments and improve governance and welfare by placing countries in a ‘golden straitjacket’. However, globalization may also ‘overdiscipline’ governments - resulting in a perverse impact on governmental incentives that catalyzes (mis)governance. Accordingly, the paper suggests a novel (and qualified) role for capital controls. Finally, we provide some suggestive evidence consistent with the predictions from our theoretical framework.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3715.
Date of creation: 2012
Date of revision:
globalization; governance; capital flight; capital controls; discipline;
Other versions of this item:
- F55 - International Economics - - International Relations and International Political Economy - - - International Institutional Arrangements
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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