Table of Contents

Institutions, Globalisation and Empowerment

Institutions, Globalisation and Empowerment

Edited by Kartik Roy and Jörn Sideras

This book argues that the capacity of a country to develop, and the levels of economic and social development achieved, depend more on the institutional parameters within which the development policies are implemented than on the policies themselves. It contends that forces of globalisation influence individual countries’ economic and social institutions.

Chapter 4: Globalisation, Democracy and Citizens’ Sovereignty: Can Competition Among Governments Enhance Democracy?

Viktor Vanberg

Subjects: economics and finance, institutional economics, international economics

Extract

1 Viktor Vanberg2 INTRODUCTION The expansion of markets known as globalisation creates new options; new avenues for trade in goods and services, as well as new opportunities for capital investment and the allocation of mobile resources. It is a common and uncontested claim that globalisation and the resulting competition among jurisdictions impose restrictions on the freedom of action of national governments.3 Competition is always a matter of accessibility of alternative options, and to the same degree that the globalisation of markets creates additional options for citizens and for those whom one may call ‘jurisdiction-users’,4 competition among jurisdictions restricts the power governments can exercise over them. Governments cannot with impunity ignore the greater scope for choice that globalisation offers to their citizens and to jurisdiction-users. The point at issue is how this restriction of the power of governments should be evaluated. The argument that competition among jurisdictions can serve common interests of citizens, and is from their standpoint a welcome development, is stressed by authors like Geoffrey Brennan and James M. Buchanan (1988), who see the vulnerability to privilege-seeking or rent-seeking as a fundamental weakness of the political decision-making process. In their view competition between governments can provide a potential remedy by limiting government’s scope for granting privileges, thereby reducing the incentives for rent-seeking. The counter-argument, that competition among jurisdictions obstructs or can even prevent the realisation of the collective interests of citizens, is stressed by authors like Fritz W. Scharpf (1998) or Hans-Werner Sinn (1994; 1997a). They...

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