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Globalization and the (Mis)Governance of Nations

Author

Listed:
  • Arthur Blouin
  • Sayantan Ghosal
  • Sharun Mukand
Abstract
We 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.

Suggested Citation

  • Arthur Blouin & Sayantan Ghosal & Sharun Mukand, 2012. "Globalization and the (Mis)Governance of Nations," CESifo Working Paper Series 3715, CESifo.
    • Handle: RePEc:ces:ceswps:_3715
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    References listed on IDEAS

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    Cited by:

    1. Khalid, Usman & Shafiullah, Muhammad, 2021. "Financial development and governance: A panel data analysis incorporating cross-sectional dependence," Economic Systems, Elsevier, vol. 45(2).
    2. Mitchener, Kris James & Wandschneider, Kirsten, 2013. "Capital Controls and Recovery from the Financial Crisis of the 1930s," CAGE Online Working Paper Series 132, Competitive Advantage in the Global Economy (CAGE).
    3. Nadeem, Muhammad & Hayat, Muhammad Azmat & Nazir, Rabia, 2014. "Exploring Interlinks between Globalization and Governance: A Panel Data Evidence," MPRA Paper 61337, University Library of Munich, Germany.
    4. Mitchener, Kris James & Wandschneider, Kirsten, 2015. "Capital controls and recovery from the financial crisis of the 1930s," Journal of International Economics, Elsevier, vol. 95(2), pages 188-201.

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    More about this item

    Keywords

    globalization; governance; capital flight; capital controls; discipline;
    All these keywords.

    JEL classification:

    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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