The Political Economy of Intermediate Capital Account Regimes: a Fuzzy-Set Qualitative Comparative Analysis

Abstract

Contrary to expectations, the global push for liberalizing reforms during the 1980s and 1990s did not abolish policy diversity in regard to capital flow management. Even though many countries fully opened their capital accounts, there remain several examples of divergence, which go from the maintenance of high levels of capital controls to partial liberalization. Against this background, relying on data from 84 countries between 1995 and 2017, this article uses fuzzy-set qualitative comparative analysis (fsQCA) to shed light on the conditions underlying different capital account regimes. In line with the Polanyian theoretical framework, findings reveal that two kinds of causal paths paved the way for intermediate regimes: the statist path was followed by right-leaning authoritarian regimes that attempted to combine the integration into global markets with the maintenance of control over the domestic private sector; the pluralist path was observed where either manufacturing industries or popular sectors were strong enough to motivate the reregulation of capital flows. Conversely, findings show that extreme regimes such as open and closed ones were associated with homogenous conditions like, respectively, leftist authoritarian regimes and rich democracies with stable economies.