Globalization and the (Mis)Governance of Nations

Arthur Blouin, Sayantan Ghosal and Sharun Mukand

No 3715, CESifo Working Paper Series from CESifo

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.

Keywords: globalization; governance; capital flight; capital controls; discipline (search for similar items in EconPapers)
JEL-codes: F36 F55 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Globalization and the (Mis)Governance of Nations (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3715

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