Understanding the political implications of financial internationalization in emerging market countries

摘要

The author explores the impact of financial internationalization on prospects for sustainable democratic developing in non-OECD countries. Existing arguments rest on changes in relative factor scarcity drawing from neoliberal trade theory, on governments' decreasing ability to tax increasingly mobile capital, on volatility of flows and on the rising intensity of the "market as prison" phenomenon first identified by Lindblom in a domestic context. The causal logic implied in these different arguments is not consistent with evidence on the determinants of North to South financial flows. A survey of empirical literature on capital flows, organized by a simplified capital asset pricing model, suggests that to the extent international investors in developing countries act rationally, they respond to international liquidity and global interest rates more than the specific actions of host country policy makers. Investor herding and poor information also weaken the chains that supposedly bind Third World governments in an increasingly internationalized world. Financial internationalization does constrain capital-poor countries, but not in the ways alluded to in existing literature. The author concludes by stipulating several hypotheses about the causal link between financial internationalization and social democracy in emerging market countries that are consistent with empirical evidence on the determinants of North to South capital flows.