Blouin, Arthur, Ghosal, Sayantan and Mukand, Sharun W. (2012) Globalization and the (Mis)Governance of Nations. Working Paper. Centre for Competitive Advantage in the Global Economy, Department of Economics, University of Warwick, Coventry. (Unpublished)

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Abstract

We analyze whether or not the globalization of capital, `disciplines' governments and improves governance. We demonstrate that globalization a�ects governance, by increasing a country's vulnerability to sudden capital ight. 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 quali�ed) role for capital controls. Finally, we provide some suggestive evidence consistent with the predictions from our theoretical framework.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Series Name:	CAGE Online Working Paper Series
Publisher:	Centre for Competitive Advantage in the Global Economy, Department of Economics, University of Warwick
Place of Publication:	Coventry
Date:	January 2012
Volume:	Vol.2012
Number:	No.69
Status:	Not Peer Reviewed
Publication Status:	Unpublished
URI:	http://wrap.warwick.ac.uk/id/eprint/45534

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