When Mexico's peso crisis occurred in December 1994, all of Latin America experienced the 'tequila effect'. In January 1998, after seven months of financial turmoil in East Asia, Alan Greenspan, the usually reticent Chairman of the US Federal Reserve Bank, noted that such 'vicious cycles...may, in fact, be a defining characteristic of the new high-tech international financial system'. This book examines the impact of the new, highly liquid portfolio capital flows on governments, opposition, politicians, business and the workforce in such emerging market countries as Mexico, Brazil, Russia, Indonesia, Vietnam, Thailand and Indonesia. Hailed as 'exemplary and innovative', 'fine-grained and accessible' and 'a must read', this collection of original essays in newly available in paperback.
For a century, economists have driven forward the cause of globalization in financial institutions, labour markets, and trade. Yet there have been consistent warning signs that a global economy and free trade might not always be advantageous. Where are the pressure points? What could be done about them? Dani Rodrik examines the back-story from its seventeenth-century origins through the milestones of the gold standard, the Bretton Woods Agreement, and the Washington Consensus, to the present day. Although economic globalization has enabled unprecedented levels of prosperity in advanced countries and has been a boon to hundreds of millions of poor workers in China and elsewhere in Asia, it is a concept that rests on shaky pillars, he contends. Its long-term sustainability is not a given. The heart of Rodrik’s argument is a fundamental 'trilemma': that we cannot simultaneously pursue democracy, national self-determination, and economic globalization. Give too much power to governments, and you have protectionism. Give markets too much freedom, and you have an unstable world economy with little social and political support from those it is supposed to help. Rodrik argues for smart globalization, not maximum globalization.
Over the 1980s Latin America made great strides in democratization, while East Asia led the world in economic growth. Are the two converging toward a model that combines economic and political liberalization? This text examines increased scope for mutual support among aspiring democratic forces.
In the past, foreign shocks arrived to national economies mainly through trade channels, and transmissions of such shocks took time to come into effect. However, after capital globalization, shocks spread to markets almost immediately. Despite the increasing macroeconomic dangers that the situation generated at emerging markets in the South, nobody at the North was ready to acknowledge the pro-cyclicality of the financial system and the inner weakness of “decontrolled” financial innovations because they were enjoying from the “great moderation.” Monetary policy was primarily centered on price stability objectives, without considering the mounting credit and asset price booms being generated by market liquidity and the problems generated by this glut. Mainstream economists, in turn, were not majorly attracted in integrating financial factors in their models. External pressures on emerging market economies (EMEs) were not eliminated after 2008, but even increased as international capital flows augmented in relevance thereafter. Initially economic authorities accurately responded to the challenge, but unconventional monetary policies in the US began to create important spillovers in EMEs. Furthermore, in contrast to a previous surge in liquidity, funds were now transmitted to EMEs throughout the bond market. The perspective of an increase in US interest rates by the FED is generating a reversal of expectations and a sudden flight to quality. Emerging countries’ currencies began to experience higher volatility levels, and depreciation movements against a newly strong US dollar are also increasingly observed. Consequently, there are increasing doubts that the “unexpected” favorable outcome observed in most EMEs at the aftermath of the Global Financial Crisis (GFC) would remain.
In an age of financial globalization, are markets and democracy compatible? For developing countries, the dramatic internationalization of financial markets over the last two decades deepens tensions between politics and markets. Notwithstanding the rise of left-leaning governments in regions like Latin America, macroeconomic policies often have a neoliberal appearance. When is austerity imposed externally and when is it a domestic political choice? By combining statistical tests with extensive field research across Latin America, this book examines the effect of financial globalization on economic policymaking. Kaplan argues that a country's structural composition of international borrowing and its individual technocratic understanding of past economic crises combine to produce dramatically different outcomes in national policy choices. Incorporating these factors into an electoral politics framework, the book then challenges the conventional wisdom that political business cycles are prevalent in newly democratizing regions. This book is accessible to a broad audience and scholars with an interest in the political economy of finance, development and democracy, and Latin American politics.
When Mexico's peso crisis occurred in December 1994, all of Latin America experienced the 'tequila effect'. In January 1998, after seven months of financial turmoil in East Asia, Alan Greenspan, the normally reticent Chairman of the US Federal Reserve Bank, noted that such 'vicious cycles ... may, in fact, be a defining characteristic of the new high-tech international financial system'. This book examines the impact of the new, highly liquid, portfolio capital flows on governments, opposition politicians, business and the work-force in such emerging market countries as Mexico, Brazil, Russia, India, Vietnam, Thailand and Indonesia. The contributors lament the economic and political strains on often fragile governments forced by global markets to reduce expenditures and employment drastically in order to defend their currencies. Possible silver linings of financial globalization include the discrediting of incumbent authoritarian regimes and external reinforcement for sound macroeconomicpolicies.
Between 1974 and 1990 more than thirty countries in southern Europe, Latin America, East Asia, and Eastern Europe shifted from authoritarian to democratic systems of government. This global democratic revolution is probably the most important political trend in the late twentieth century. In The Third Wave, Samuel P. Huntington analyzes the causes and nature of these democratic transitions, evaluates the prospects for stability of the new democracies, and explores the possibility of more countries becoming democratic. The recent transitions, he argues, are the third major wave of democratization in the modem world. Each of the two previous waves was followed by a reverse wave in which some countries shifted back to authoritarian government. Using concrete examples, empirical evidence, and insightful analysis, Huntington provides neither a theory nor a history of the third wave, but an explanation of why and how it occurred. Factors responsible for the democratic trend include the legitimacy dilemmas of authoritarian regimes; economic and social development; the changed role of the Catholic Church; the impact of the United States, the European Community, and the Soviet Union; and the "snowballing" phenomenon: change in one country stimulating change in others. Five key elite groups within and outside the nondemocratic regime played roles in shaping the various ways democratization occurred. Compromise was key to all democratizations, and elections and nonviolent tactics also were central. New democracies must deal with the "torturer problem" and the "praetorian problem" and attempt to develop democratic values and processes. Disillusionment with democracy, Huntington argues, is necessary to consolidating democracy. He concludes the book with an analysis of the political, economic, and cultural factors that will decide whether or not the third wave continues. Several "Guidelines for Democratizers" offer specific, practical suggestions for initiating and carrying out reform. Huntington's emphasis on practical application makes this book a valuable tool for anyone engaged in the democratization process. At this volatile time in history, Huntington's assessment of the processes of democratization is indispensable to understanding the future of democracy in the world.
This book analyses key elements of the trade performance of the so-called BRIICS: Brazil, Russia, India, Indonesia, China and South Africa, in relation to the rest of the world, focusing on trade and other policies influencing that performance. It also presents a separate chapter for each country.
“Democracy is no longer writing the rules for capitalism; instead it is the other way around. With his deep insight and wide learning, Kuttner is among our best guides for understanding how we reached this point and what’s at stake if we stay on our current path.”—Heather McGhee, president of Demos With a new Afterword In the past few decades, the wages of most workers have stagnated, even as productivity increased. Social supports have been cut, while corporations have achieved record profits. What is going on? According to Robert Kuttner, global capitalism is to blame. By limiting workers’ rights, liberating bankers, and allowing corporations to evade taxation, raw capitalism strikes at the very foundation of a healthy democracy. Capitalism should serve democracy and not the other way around. One result of this misunderstanding is the large number of disillusioned voters who supported the faux populism of Donald Trump. Charting a plan for bold action based on political precedent, Can Democracy Survive Global Capitalism? is essential reading for anyone eager to reverse the decline of democracy in the West.
This book develops a framework for analyzing the creation and consolidation of democracy. Different social groups prefer different political institutions because of the way they allocate political power and resources. Thus democracy is preferred by the majority of citizens, but opposed by elites. Dictatorship nevertheless is not stable when citizens can threaten social disorder and revolution. In response, when the costs of repression are sufficiently high and promises of concessions are not credible, elites may be forced to create democracy. By democratizing, elites credibly transfer political power to the citizens, ensuring social stability. Democracy consolidates when elites do not have strong incentive to overthrow it. These processes depend on (1) the strength of civil society, (2) the structure of political institutions, (3) the nature of political and economic crises, (4) the level of economic inequality, (5) the structure of the economy, and (6) the form and extent of globalization.
