Book contents
- Frontmatter
- Contents
- List of Tables and Figures
- Introduction: Renato Boschi and Carlos Henrique Santana
- Part I Development, Macroeconomic Policies and Varieties of Capitalism
- Chapter 1 Postsocialist States in the System of Global Capitalism: A Comparative Perspective
- Chapter 2 Politics and Development: Lessons from Latin America
- Chapter 3 Managing the Faustian Bargain: Monetary Autonomy in the Pursuit of Development in Eastern Europe and Latin America
- Chapter 4 Development and Dependency, Developmentalism and Alternatives
- Part II Political Culture, Identity Politics and Political Contention
- Part III Ideas and the Role of Elites and Advocacy Networks: Translating and Legitimating the Frontiers of Institutional Reforms
- Part IV Economic Reforms, Public Policies and Development
Chapter 3 - Managing the Faustian Bargain: Monetary Autonomy in the Pursuit of Development in Eastern Europe and Latin America
from Part I - Development, Macroeconomic Policies and Varieties of Capitalism
Published online by Cambridge University Press: 05 July 2012
- Frontmatter
- Contents
- List of Tables and Figures
- Introduction: Renato Boschi and Carlos Henrique Santana
- Part I Development, Macroeconomic Policies and Varieties of Capitalism
- Chapter 1 Postsocialist States in the System of Global Capitalism: A Comparative Perspective
- Chapter 2 Politics and Development: Lessons from Latin America
- Chapter 3 Managing the Faustian Bargain: Monetary Autonomy in the Pursuit of Development in Eastern Europe and Latin America
- Chapter 4 Development and Dependency, Developmentalism and Alternatives
- Part II Political Culture, Identity Politics and Political Contention
- Part III Ideas and the Role of Elites and Advocacy Networks: Translating and Legitimating the Frontiers of Institutional Reforms
- Part IV Economic Reforms, Public Policies and Development
Summary
Globalization and economic liberalization promised developing countries improved opportunities for capital investment and, in turn, accelerated economic development. These promises helped cultivate a rush across the developing world to create favorable conditions for capital investors. Increased inward capital flows did occur but frequently retreated rapidly, helped spark systemic volatility and, for many countries, ultimately resulted in a disappointing development record (Rodrik and Subramanian 2008). By the turn of the millennium, there emerged a strong sense that the interests of capital investors and national economic development could diverge and even oppose one another. Governments increasingly saw global capital markets as a potentially destructive force and sought ways to manage the perils of modern financial capitalism.
Today's enlarged, mobile and powerful global capital markets present policymakers with a tightrope. These markets can undermine development efforts as easily as they help, but there are many means by which governments can insulate their economies from these adverse effects. This chapter focuses on how governments can manage capital markets strains with a special focus on monetary policy. Strains occur when there is a rapid or sustained flight of resources from a national economy, which can create a range of policy problems when it occurs, including currency devaluation, inflation, government insolvency and bankruptcy epidemics. When a monetary system becomes especially unstable, it can hurt economic prosperity and, in extreme cases, undermine general political-economic order.
- Type
- Chapter
- Information
- Development and Semi-PeripheryPost-Neoliberal Trajectories in South America and Central Eastern Europe, pp. 65 - 82Publisher: Anthem PressPrint publication year: 2012