Neoliberal Globalisation, the Nation-State and Financial Crises in the Semi-Periphery: A Comparative Analysis

In: Third world quarterly, Band 21, Heft 1, S. 119-139

Abstract

The process of neoliberal globalization has been associated with successive financial crises in the context of the 1990s, raising serious doubts concerning the sustainability of rapid growth in an environment of uncontrolled movements of short-term capital. The aim here is to probe into the origins of the financial crises in the semiperiphery through a structured comparison of three key recent crises in the world economy: the Mexican & Turkish crises of 1994 & the Asian crises of 1992. While the magnitude of the capital flows & the dimensions of the subsequent crises are strikingly different, there are nonetheless important elements common to all three cases studied. One involves the overdependence on short-term financial flows in a setting characterized by premature capital account liberalization in the absence of adequate regulation. It is striking that, contrary to the conventional International Monetary Fund wisdom, financial crises have occurred in spite of fiscal equilibrium & low inflation. The recent financial crises highlight a paradoxical situation: the need for effective regulation at a time when the capacity of the nation-state to undertake such regulation is severely circumscribed. Hence, the establishment of an effective regulatory framework at the global level emerges as a major requirement if successive financial crises, with significant economic & social cost, are to be avoided in the future. 2 Tables, 1 Appendix. Adapted from the source document.