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Countervailing monetary power: Re-regulating capital flows in Brazil and South Korea

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  • Kevin P. Gallagher

Abstract

In the wake of the global financial crisis most emerging market and developing countries experienced a surge in capital inflows that accentuated financial fragility in those countries. Unlike similar surges in the 1990s and in the five years leading to the global financial crisis in 2008, this time many emerging market and developing countries re-regulated cross-border financial flows. According to the literature such acts are seen as quite difficult, given the pervasiveness of the 'capital mobility hypothesis' which renders that the structural power of global financial markets is too much of a match for states, especially those in emerging markets. The paper traces how Brazil and South Korea were able to countervail the structural power of global capital markets and put in place regulations on cross-border finance in the wake of the crisis. The paper also outlines the contours an inductive theory regarding the conditions under which emerging market and developing nations may deviate from the 'capital mobility hypotheses' and similar literatures. This concept is referred to as 'countervailing monetary power'.

Suggested Citation

  • Kevin P. Gallagher, 2015. "Countervailing monetary power: Re-regulating capital flows in Brazil and South Korea," Review of International Political Economy, Taylor & Francis Journals, vol. 22(1), pages 77-102, February.
    • Handle: RePEc:taf:rripxx:v:22:y:2015:i:1:p:77-102
    DOI: 10.1080/09692290.2014.915577
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    1. Nicolas E. Magud & Carmen M. Reinhart & Kenneth S. Rogoff, 2018. "Capital Controls: Myth and Reality--A Portfolio Balance Approach," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 1-47, May.
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    3. Nicolas Magud & Carmen Reinhart & Kenneth Rogoff, 2005. "Capital Controls: Myth and Reality A Portfolio Balance Approach to Capital Controls," University of Oregon Economics Department Working Papers 2006-10, University of Oregon Economics Department.
    4. Blyth, Mark, 2013. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199828302.
    5. Feldman, Gerald D., 1997. "The Great Disorder: Politics, Economics, and Society in the German Inflation, 1914-1924," OUP Catalogue, Oxford University Press, number 9780195101140.
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    Cited by:

    1. Naqvi, Natalya, 2019. "Renationalizing finance for development: policy space and public economic control in Bolivia," LSE Research Online Documents on Economics 104232, London School of Economics and Political Science, LSE Library.
    2. Dafe, Florence, 2018. "Fuelled power: oil, financiers and central bank policy in Nigeria," LSE Research Online Documents on Economics 89610, London School of Economics and Political Science, LSE Library.
    3. Ilias Alami, 2019. "Post-Crisis Capital Controls in Developing and Emerging Countries: Regaining Policy Space? A Historical Materialist Engagement," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(4), pages 629-649, December.

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