Chapter 2: Globalization and domestic governance
Globalization brought with it new types of pressure on the state and the domestic economy. Economic liberalization exposed domestic companies to global competition while domestic institutions were urged by international political and institutional actors to implement policies of trade liberalization and market deregulation. These two drivers of policy change merged into an overarching reassessment of the capabilities and roles of the state in governance, of macroeconomic policy, and of state–market relations. The change in discourse of macroeconomic policy in the industrialized world from that of Keynesianism, Bretton Woods, and the “strong societies” of the 1950s and 1960s to the monetarism, IMF, and the “enabling state” model of the 1990s and 2000s could not have been more profound. This chapter will investigate the relationship between globalization and domestic governance by analysing the political and economic pressures on domestic governance that globalization entails and the domestic processes through which those processes are accommodated. In the previous chapter we briefly touched on the different linkages between global economic forces and domestic politics.
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