New Challenges for a World in Flux
Edited by Linda Yueh
Chapter 7: How Globalisation Improves Governance
7. How globalisation improves governance Federico Bonaglia, Jorge Braga de Macedo and Maurizio Bussolo* INTRODUCTION Globalisation, governance and economic performance affect each other in very complex mutual relationships, not least because of severe measurement difficulties. We try here to establish whether there is an effect of globalisation on governance and, even more specifically, to test how openness can affect the quality of domestic institutions. To do so, we survey available theoretical explanations of causal relationships between globalisation and governance. In the last 20 years or so, economists have changed their views on these relationships more than once. At the time of the fall of the Berlin Wall and after the disillusions of the inward looking economic policies of many developing regions in the world, the shared view was that liberal democracy had triumphed worldwide, Communism was over, and the advent of true global economic progress would be brought by free markets and minimal states. A ‘Washington Consensus’ based on these ideas had emerged. A few years later, innovative and cheaply available communication possibilities and the ensuing new economy revolution reinforced the view that the market and its globalising forces would bring huge benefits for all. However, the main problem of this Washington Consensus is that, even after repeated attempts, it has not really delivered a ‘Moscow Success’, or a ‘Latin American Miracle’. Indeed, even the East Asian one, which superficially looked like a diligent application of the Washington paradigm, had to sail through stormy waters. Due to these setbacks and...
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