One of the most important developments in the world economy during the
past three decades has been the willingness of governments in emerging
markets to liberalize controls over international capital
movements—a process known as capital account liberalization. What
accounts for this trend? While existing research highlights a number of
important factors, it neglects the role played by the rise and spread of
neoliberal ideas that prioritized liberalization as a policy choice.
Extending the literature on epistemic communities, I argue one critical
mechanism shaping policy decisions is the formation of a coherent team of
neoliberal economists. Using a new data set that codes the professional
training of more than 1500 policymakers in emerging markets, I assess the
relative importance of this argument quantitatively on a sample of
twenty-nine emerging markets from 1977 to 1999. In order to assess the
independent effect of neoliberal economists, I also take into account the
endogeneity of the appointment process, assessing whether appointments are
driven by credibility concerns, political interests, or economic
conditions. I also stress that a fuller understanding of the appointment
process necessitates a focus on the social environment in which
appointments are situated.
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