Understanding financial globalization in international political economy.
In: Philips, Nicola, (ed.)
Globalizing Political Economy.
Palgrave Macmillan, Basingstoke, UK, pp. 141-164.
Understanding the nature, origins and consequences of global finance is a central task for contemporary political economy.2 This paper makes three main arguments. First, it is implausible to claim that contemporary levels of financial integration remain low by historical standards (e.g.: Waltz 2000), even if they are not absolutely as high as some believe. Although it is open to dispute as to whether certain countries are more financially integrated today than a century ago, it is indisputable that there has been a dramatic increase in the level of international financial integration since the breakdown of the Bretton Woods system in the early 1970s. Second, I argue that it is now reasonably well-established that financial globalization is not (or at least not yet) the great ‘leveling force’ implied in some of the earlier literature, where it was seen as an increasingly powerful structural constraint upon national policy autonomy in all countries (e.g.: Andrews 1994; Cerny 1995). In fact, the extent to which financial globalization constrains state policy varies considerably both across countries and by policy area, depending upon various national characteristics and institutional structures, as shown in some of the more recent empirical literature (e.g.: Garrett 1998; Quinn 1997; Kitschelt 1999). Third, I argue that it would be wrong to conclude from this somewhat Euro-centric literature that financial globalization has had little effect at all. The emergent international financial structure constrains governments, but very unequally: most of the costs and risks it entails falls largely upon developing countries. Thus, financial liberalization continues to be supported by the major industrialized countries, while there are growing concerns in much of the developing world. This rest of this paper is divided into three sections. The first briefly discusses definitional and empirical issues surrounding the nature and measurement of financial globalization. The second section turns to an assessment of three main contending approaches to understanding financial globalization: technological determinism, hegemonic power, and rationalist interest group explanations. A concluding section discusses the relative merits of the existing dominant approaches in this area and suggests avenues for future research.
||This extract is taken from the author's original manuscript and has not been reviewed or edited. The definitive version of this extract may be found in the work 'Globalizing Political Economy' edited by Nicola Philips which can be purchased from www.palgrave.com. LSE has developed LSE Research Online so that users may access research output of the School. Copyright and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (<http://eprints.lse.ac.uk>) of the LSE Research Online website.
|Library of Congress subject classification:
||J Political Science > JZ International relations
||Departments > International Relations
||26 May 2006
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