IDEAS home Printed from https://ideas.repec.org/a/taf/rripxx/v25y2018i6p854-883.html
   My bibliography  Save this article

Does democracy promote capital account liberalization?

Author

Listed:
  • David A. Steinberg
  • Stephen C. Nelson
  • Christoph Nguyen

Abstract

Conventional wisdom maintains that democracy promotes market-oriented economic reforms. This paper argues that democracy’s effect on economic liberalization hinges on international-systemic factors. To develop this argument, we focus on one important reform issue: capital account liberalization. We hypothesize that the level of financial openness abroad moderates the relationship between democracy and financial policy at home. An open global financial system increases societal support for capital account liberalization and incentivizes democratic leaders to liberalize the capital account. Analyses of country-level panel data demonstrate that democracy is only positively associated with capital account openness when proximate countries maintain open capital markets. Firm-level survey data and an illustrative case study of Argentina provide support for the mechanisms by showing that policy choices abroad influence domestic support for capital account liberalization. Our findings suggest that integrating domestic- and international-level variables in a single framework improves our understanding of the political economy of reform.

Suggested Citation

  • David A. Steinberg & Stephen C. Nelson & Christoph Nguyen, 2018. "Does democracy promote capital account liberalization?," Review of International Political Economy, Taylor & Francis Journals, vol. 25(6), pages 854-883, November.
  • Handle: RePEc:taf:rripxx:v:25:y:2018:i:6:p:854-883
    DOI: 10.1080/09692290.2018.1486725
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09692290.2018.1486725
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/09692290.2018.1486725?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sèna Kimm Gnangnon, 2022. "Export diversification and financial openness," International Economics and Economic Policy, Springer, vol. 19(4), pages 675-717, October.
    2. Joon Hyeok Lee, 2024. "Consecutive decentralization: The effect of central bank independence on capital account liberalization," Economics and Politics, Wiley Blackwell, vol. 36(2), pages 809-831, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rripxx:v:25:y:2018:i:6:p:854-883. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rrip20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.