Global Finance and Policy Autonomy in Africa: Newly Shackled or Set Free?

Abstract

The growing amounts of cross-border flows and the enhanced mobility of capital in recent years have raised alarm bells in many places. To a certain degree, open financial systems encourage competition between states to attract capital, increasing the leverage of investors and at times altering national priorities. Many observers believe this has a severely negative impact on the social aspects of state policies. More worryingly, some have claimed that poor and weak developing states are those least able to resist the power of the global market and thus also most at risk. In this view, the poorest countries face the heaviest policy constraints imposed by the emerging global financial system. It has even been argued that the demands of capital are not only distorting policymaking and destroying social services provision, but also undermining the viability of the state.