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.
Inhaltsverzeichnis Einleitung 6 Die europäische Währungsintegration als Problem 6 1. Gegenstand und Ziel der Arbeit 6 2. Grundannahmen und theoretischer Ausgangspunkt 11 3. Der Aufbau der Arbeit 14 TEIL I 16 KAPITEL 1 17 Die politische Integration als Grundlage der monetären Integration 17 1.1 Überlegungen zum Integrationsbegriff 17 1.2 Die allgemeinen Integrationsprämissen 22 1.3 Die spezifisch europäischen Integrationsprämissen 27 1.4 Integrationsstrategien 31 KAPITEL 2 36 Monetäre Integrationsstufen 36 2.1 Das Modell 36 2.2 Währungsordnungen und Integrationsprämissen 40 2.3 Die Stadien im einzelnen 45 TEIL II 67 KAPITEL 3 68 Die Europäische Zahlungsunion (EZU) 68 3.1 Die Vorgeschichte 69 3.2 Die institutionelle Konstruktion 73 3.3 Die EZU als monetäres Integrationsstadium 82 3.4 Das Ende der EZU und das Auslaufen eines monetären Integrationsfadens 90 KAPITEL 4 95 Die Phase der Wechselkursordnungen 95 4.1 Das Europäische Währungsabkommen (EWA) 96 4.2 Die fragmentarische Wechselkursordnung des EWGV 101 4.3 Die fragile Wechselkursordnung des Europäischen Wechselkursverbunds (EWV) 118 4.4 Die stabile Wechselkursordnung - Das Europäische Währungssystem 123 4.5 Die Kapitalverkehrspolitik der Gemeinschaft in der Wechselkursphase (1958-1990) 158 4.6 Die Phase der Wechselkursordnungen - mühsamer Anfang, abruptes Ende 179 KAPITEL 5 182 Das Währungssystem 182 5.1 Von der Zahlungsunion zum Währungssystem - Die Diskussion um die Weiterentwicklung der EZU 183 5.2 Von der Wechselkursordnung zum Währungssystem - Die Diskussion um das EWS 184 5.3 Vom Währungssystem zur Währungsunion - Die Diskussionen um ein währungssystemisches Übergangsstadium 197 5.4 Zusammenfassung: Das Währungssystem als Integrationsschwelle 206 KAPITEL 6 212 Die Währungsunionsplanungen 212 6.1 Die Währungsunion von 1971 213 6.2 Der Währungsunionsplan von Maastricht 240 6.3 Die beiden Währungsunionspläne im Vergleich 287 TEIL III 296 KAPITEL 7 297 Die europäische Währungsintegration im Zusammenhang 297 7.1 Währungspolitische Ergebnisse 297 7.2 ...
The countries of Central and Eastern Europe went from being largely closed to being largely open to international capital flows. This paper discusses their experience with capital account liberalization and coping with large capital inflows. We start with a discussion of basic economic characteristics and the real convergence achieved so far, and then discuss the pace and sequencing of capital account liberalization and the degree of international financial integration over the past decade. We then analyze trends and patterns of capital inflows in these countries in recent years. These stylized facts are useful for understanding the macroeconomic implications and policy challenges of coping with large capital inflows, which we discuss next. Finally we conclude with policy implications for emerging Asian economies.
The Philippine Constitution contains many strong restrictions targeted against the flow of foreign capital in specific areas of economic activities. These restrictions were the same ones that were incorporated into the nationalistic provisions of the 1935 Constitution when its framers were anticipating future political independence. This paper discusses the beneficial aspects of lifting or liberalizing these restrictions on foreign capital in the Philippine context. Specifically, the restrictions relate to the prohibition of foreign individuals to engage in land ownership, in the exploitation of natural resources, and the ownership of public utilities. Corporations are allowed to participate in these activities only if they have equity ownership only to the maximum extent of 40 percent. In other words, foreign capital can only be a strict minority participation in corporate enterprises to be allowed in these economic activities. These provisions have hurt Philippine development over the years. Despite the liberalization of many aspects of the economy, including those in the area of trade, industry, and other aspects of the economy, these economic restrictions continue to hold because they are part of the Constitutional document. Some of these provisions of the Constitution could be relaxed through more liberal citizenship rules. But the basis of citizenship - jus sanguinis or blood relations- is also very restrictive. The need to improve the performance of the Philippine economy requires that these restrictions be examined and reformed. A direction of such reforms would be to place them out of the Constitutional framework - as is the case with most modernizing countries - and put them within the realm of ordinary legislation. In this way, they can be debated more openly and the policies could be suited up to changing conditions and the need for change of the economy.
We develop a model of a small open economy with credit market frictions of the Holmstrom-Tirole type to analyze the consequences of capital account liberalization. We show that financial opening facilitates the inflows of cheap foreign funds and improves production efficiency. Reforms increasing labor market flexibility can further improve such efficiency gains. However, capital account liberalization also has important distributional consequences. Specifically, it may be impossible to use public transfers to fully compensate the loss of those negatively affected by capital account liberalization. This explains why financial opening often meets fierce opposition even though it leads to efficiency gains for the economy as a whole. From a practical perspective, capital controls should be lifted gradually for a smooth transition.
The paper discusses the pros and cons of capital account liberalization. Rather than contrasting liberalization and regulation of capital flows as irreconcilable antagonisms, we argue that capital account liberalization requires institutional and regulatory safeguards. Even though the effectiveness of specific capital controls cannot be taken for granted, we reject the view that financial globalization has deprived national policymakers of the means to protect their economies against crisis. In addition to national safeguards, we assess the chances for crisis prevention and resolution on the regional level and present options to overcome institutional deficits on the global level. We conclude that reforms of the international financial architecture can help prevent illiquidity and ensure a fair burden sharing in the case of insolvency, without aggravating moral hazard behavior of the parties involved.
