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How Globalisation Improves Governance

  • Federico Bonaglia
  • Jorge Braga de Macedo
  • Maurizio Bussolo

Globalisation, governance and economic performance affect each other in very complex mutual relationships. In this paper, we establish a clear and well-circumscribed hypothesis: “is there an effect of globalisation on governance?” To test this hypothesis or, even more specifically, to test how openness can affect the quality of domestic institutions, we survey available theoretical explanations of causal relationships between globalisation and governance. Microeconomic theory helps us identify trade policy, competition by foreign producers and international investors, and openness-related differences in institution building costs and benefits, as three major transmission mechanisms through which openness affects a country’s corruption levels. Examining a large sample of countries covering a 20-year long period, we found robust empirical support for the fact that increases in import openness do indeed cause reductions in corruption, a crucial aspect of governance. The magnitude of ... Des relations d’interdépendance d’une grande complexité lient ensemble la globalisation, la gouvernance et les performances économiques. Ce Document technique examine une hypothèse claire et précise : « la globalisation a-t-elle un effet direct sur la gouvernance ? ». Pour tester cette hypothèse, ou plus précisément la manière dont l’ouverture joue sur la qualité des institutions nationales, les auteurs passent en revue quelques explications théoriques des relations de causalité entre globalisation et gouvernance. D’après la théorie micro-économique, la politique commerciale, la concurrence des producteurs étrangers et des investisseurs internationaux, ainsi que les différences liées au degré d’ouverture dans les coûts et avantages du développement institutionnel, sont trois des principaux mécanismes par lesquels l’ouverture exerce une influence sur le niveau de corruption d’un pays. Après examen d’un vaste échantillon de pays sur une période de 20 ans, nous trouvons des données ...

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 181.

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Date of creation: Nov 2001
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Handle: RePEc:oec:devaaa:181-en
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  1. Masters, William A & McMillan, Margaret S, 2001. " Climate and Scale in Economic Growth," Journal of Economic Growth, Springer, vol. 6(3), pages 167-86, September.
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  13. Shang-Jin Wei, 2000. "Natural openness and good government," Policy Research Working Paper Series 2411, The World Bank.
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