The debate about the scope of feasible policy-making in an era of globalisation continues to be set within the context of an assumption that national capital markets are now perfectly integrated at the international level. However, the empirical evidence on international capital mobility contradicts such an assumption. As a consequence, a significant puzzle remains. Why is it, in a world in which the observed pattern of capital flows is indicative of a far from globalised reality, that public policy continues to be constructed in line with more extreme variants of the globalisation hypothesis? I attempt to solve this puzzle by arguing that ideas about global capital market integration have an independent causal impact on political outcomes which extends beyond that which can be attributed to the extent of their actual integration.
References
1.
BarnetR.CavanaghJ. (1994), Global Dreams: Imperial Corporations and the New World Order, New York: Simon and Schuster.
2.
BaxterM.CruciniM. (1993), ‘Explaining Saving–Investment Correlations’, American Economic Review83, pp. 416–436.
3.
BayoumiT. (1997), Financial Integration and Real Activity, Manchester: Manchester University Press.
4.
BergerS.DoreR. (eds.) (1996), National Diversity and Global Capitalism, Ithaca, NY: Cornell University Press.
5.
DaviesH. (2000), ‘The New Regulatory Framework’, 4th Maxwell Fry Global Finance Lecture, University of Birmingham, 11 October, www.fsa.org.
6.
DooleyM.FrankelJ.MathiesonD. (1987), ‘International Capital Mobility: What do Saving–Investment Correlations Tell Us?’, International Monetary Fund Staff Papers34, pp. 503–530.
7.
DornbuschR. (1991), ‘Comment’ in BernheimD.ShovenJ. (eds.), National Saving and Economic Performance, Chicago: University of Chicago Press, pp. 220–226.
8.
FeldsteinM.BacchettaP. (1991), ‘National Saving and International Investment’ in BernheimD.ShovenJ. (eds.), National Saving and Economic Performance, Chicago: University of Chicago Press, pp. 201–220.
9.
FeldsteinM.HoriokaC. (1980), ‘Domestic Saving and International Capital Flows’, Economic Journal90, pp. 314–329.
10.
FrankelJ. (1991), ‘Quantifying International Capital Mobility in the 1980s’ in BernheimD.ShovenJ. (eds.), National Saving and Economic Performance, Chicago: University of Chicago Press, pp. 227–260.
11.
FrankelJ. (1992), ‘Measuring International Capital Mobility: A Review’, American Economic Review Supplement82, pp. 197–202.
12.
GillS. (1994), ‘Knowledge, Politics, and Neo-liberal Political Economy’ in StubbsR.UnderhillG. (eds.), Political Economy and the Changing Global Order, Basingstoke: Macmillan, pp. 75–88.
13.
GlickR.RogoffK. (1995), ‘Global Versus Country-specific Productivity Shocks and the Current Account’, Journal of Monetary Economics35, pp. 159–192.
14.
HallP. (ed.) (1989), The Political Power of Economic Ideas: Keynesianism Across Nations, Princeton, NJ: Princeton University Press.
HayC.WatsonM.WincottD. (1999), ‘Globalisation, European Integration and the Persistence of European Social Models’, ESRC One Europe or Several Working Paper, 3/99, Brighton: University of Sussex.
17.
HelleinerE. (1994), ‘From Bretton Woods to Global Finance: A World Turned Upside Down’ in StubbsR.UnderhillG. (eds.), Political Economy and the Changing Global Order, Basingstoke: Macmillan, pp. 163–175.
18.
HirstP.ThompsonG. (1999), Globalization in Question (2nd edn), Cambridge: Polity.
19.
HodgsonG. (1988), Economics and Institutions: A Manifesto for a Modern Institutional Economics, Cambridge: Polity.
20.
HoffmannM. (1998), ‘Long-Run Capital Flows and the Feldstein–Horioka Puzzle: A New Measure of International Capital Mobility and Some Historical Evidence from Great Britain and the United States’, European University Institute Working Paper, ECO 98/30, Florence: EUI.
21.
KlamerA.McCloskeyD.SolowR. (eds.) (1988), The Consequences of Economic Rhetoric, Cambridge: Cambridge University Press.
22.
KobrinS. (1997), ‘Electronic Cash and the End of National Markets’, Foreign Policy107, pp. 65–77.
23.
KofmanE.YoungsG. (eds.) (1996), Globalization: Theory and Practice, London: Pinter.
24.
LevittT. (1983), ‘The Globalization of Markets’, Harvard Business School, May–June, 101.
O'BrienR. (1992), Global Financial Integration: The End of Geography, London: Pinter.
27.
ObstfeldM. (1995), ‘International Capital Mobility in the 1990s’ in KenenP. (ed.), Understanding Interdependence: The Macroeconomics of the Open Economy, Princeton, NJ: Princeton University Press, pp. 201–261.
28.
OhmaeK. (1990), The Borderless World, London: Collins.
29.
O'NeillJ. (1998), The Market: Ethics, Knowledge and Politics, London: Routledge.
30.
PivenF. (1995), ‘Is It Global Economics or Neo-laissez-faire?’, New Left Review213, pp. 107–114.
31.
PrzeworskiA.WallersteinM. (1988), ‘Structural Dependence of the State on Capital’, American Political Science Review82, pp. 11–30.
32.
ReichR. (1992), The Work of Nations, New York: Vintage Books.
33.
SachsJ.WarnerA. (1995), ‘Economic Reform and the Process of Global Integration’, Brookings Papers on Economic Activity, pp. 1–118, Washington, DC: Brookings Institute.
34.
SamuelsW. (ed.) (1990), Economics as Discourse: An Analysis of the Language of Economists, London: Kluwer Academic Publishers.
35.
SarnoL.TaylorM. (1998), ‘Savings–Investment Correlations: Transitory Versus Permanent’, The Manchester School Supplement, pp. 17–38.
36.
ScharpfF. (1991), Crisis and Choice in European Social Democracy, Ithaca, NY: Cornell University Press.
37.
StreeckW. (1991), Social Institutions and Economic Performance, London: Sage.
38.
SwankD. (1992), ‘Politics and the Structural Dependence of the State in Democratic Capitalist Nations’, American Political Science Review86, pp. 11–30.
39.
SwankD. (1998), ‘Funding the Welfare State: Globalization and the Taxation of Business in Advanced Market Economies’, Political Studies46, pp. 671–692.
40.
WatsonM. (1999), ‘Rethinking Capital Mobility, Re-regulating Financial Markets’, New Political Economy, pp. 55–75.
41.
WatsonM.HayC. (2000), ‘The Political Economy of Knowledge-based Growth in Europe: Strategic Visions and Structural Constraints’, paper presented to the ‘New Economy Workshop’, Senate House, University of London, 8–9 December.
42.
Wickham-JonesM. (1995), ‘Anticipating Social Democracy, Pre-empting Anticipations: Economic Policy-making in the British Labour Party, 1987–1992’, Politics and Society, pp. 465–494.
