Democratization, Financial Crises and Global Governance

Abstract

In the last two decades, one of the most contested disputes in the fields of comparative politics and international relations has been about the impact of globalization on national policies. Within this debate, the most far- reaching arguments predict an increasing convergence of national economic policies as a result of the trend towards free trade and free finance. In a nutshell, these arguments are deduced from theories of international trade and interjurisdictional contestation, assuming that the increasing mobility of goods and capital leaves national policy makers with few choices but to accommodate their policies to the interests of those who own the most mobile production factors. While it may be too early to finally judge the empirical robustness of those explanations, since the empirical effects only show up more clearly in the long run, the underlying assumption is that policy makers already adopt similar strategies in the course of increasing economic globalization. However, there is increasing empirical evidence for ‘open economy politics’ (Bates 1997) in the sense that national policy responses to economic globalization diverge in important policy fields at least in the short and medium term.1 More cautious variations of the convergence argument therefore tend to stress the point that even if the trend towards free trade and free finance poses similar challenges to national policy makers, concrete policy designs and their economic impact still strongly respond to specific configurations of domestic actors and institutions.2