India: Financial Globalization, Liberal Norms, and the Ambiguities of Democracy

Abstract

Financial globalization is commonly seen to be detrimental to democracy in developing countries. Writing for an international committee of 21 social scientists, Adam Przeworski asserts that ‘modernization by internationalization’ involves ‘at least a partial surrender of national sovereignty in the political, economic and cultural realms’ which weakens nascent democratic institutions (Przeworski et al., 1995, pp. 4,10). In this volume, Tony Porter argues that financial globalization enables unaccountable international authorities to usurp control over key decisions about financial regimes from domestic authorities. Leslie Elliott Armijo expresses the concern that the shift from public to private capital flows that has accompanied globalization in the last 15 years may oblige states in developing countries to implement neoliberal policies regardless of their efficacy. Armijo contends that financial globalization will skew resources to disproportionately strengthen the political power of big business. She adds that the more liquid forms of international investment can destabilize democratic governments.

I would like to thank Gerard Alexander, Leslie Elliott Armijo, John Duffield, Elisavinda Echeverri-Gent, Charles Kromkowski, Herman Schwartz, Robert Wade, and David Waldner. I am especially grateful Aida Hozic for her important contributions to this essay first as a research assistant and then as a colleague. Any shortcomings are due to my stubborn refusal to heed the better judgment of my colleagues.