Global Governance versus Domestic Governance: What Roles for International Institutions?

Abstract

Since the late 1980s, emerging economies are striking by a recurrent instability of their financial system. The main lesson is that the domestic institutional infrastructure represents a critical condition necessary for successful liberalisation. This critical condition refers to what we agree to call the ‘domestic governance’ approach. The traditional answer provided in order to deal with this instability refers to the so-called ‘new international financial infrastructure’. This initiative seems insufficient because it does not take into account the degree of adaptability of the prevailing domestic institutions. The purpose of this article is to propose an analytical framework aimed at studying the relationship between ‘domestic governance’ and ‘global governance’. The challenge becomes to organise a multi-speed financial liberalisation process in which capital controls could play a decisive role.