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Shrinking states? Globalization and national autonomy in the oecd

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  • Geoffrey Garrett
Abstract
This article refutes the conventional view that globalization, and most importantly the international integration of financial markets, has resulted in a policy race to the bottom among the OECD countries. I demonstrate that globalization has been associated with increasing divergence in national economic policy regimes that continue to be heavily influenced by domestic factors such as the partisan balance of political power and the strength of organized labor movements. Moreover, countries that have chosen to react to market integration by expanding their public economies have not suffered significant macroeconomic costs. Real economic performance has deteriorated substantially throughout the OECD since the 1960s, but this cannot be attributed to the costs of big government in the global economy. Governments have a critical role to play in promoting and maintaining an open international economy. By cushioning the short-term dislocations of markets, governments can increase popular support for liberalization. These are important policy lessons for the developing countries as they become increasingly exposed to global market forces.

Suggested Citation

  • Geoffrey Garrett, 1998. "Shrinking states? Globalization and national autonomy in the oecd," Oxford Development Studies, Taylor & Francis Journals, vol. 26(1), pages 71-97.
    • Handle: RePEc:taf:oxdevs:v:26:y:1998:i:1:p:71-97
    DOI: 10.1080/13600819808424146
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    References listed on IDEAS

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    1. Cummins, Jason G. & Hassett, Kevin A. & Hubbard, R. Glenn, 1996. "Tax reforms and investment: A cross-country comparison," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 237-273, October.
    2. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.
    3. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    4. Jeffrey A. Frankel, 1993. "On Exchange Rates," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061546, April.
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    6. Karpowicz Andrzej, 2014. "Why the EU-15 Maintains Higher CIT Rates than the New Member States?," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 42(1), pages 98-120, June.

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