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This paper provides the first serious attempt to examine the relationship between political risk and capital flight for a large set of developing countries. The outcomes of the analysis show that in most cases political risk variables do have a statistically robust relationship to capital flight once domestic and international macroeconomic circumstances are added, at least when the robustness test as proposed by Sala-i-Martin is applied. We conclude that on the basis of the analysis in this paper we have found support for the hypothesis that political risk leads to increased capital flight.

Public saving and investment may become scarce in economies where there is a competition for scanty public funds due to a collective action problem among numerous political groups. Moreover, in the absence of a strong focal point, a bias towards opportunism and very low investment rates and savings would be imminent. Furthermore, access to borrowing and current tax income would determine current spending if this problem is not addressed. However, mitigating factors such as elections, which can be used as a monitoring mechanism in democratic countries, can help solve this problem.

Through a case study of shipping policy in Germany, Denmark and Norway this article examines the effects of increasing trade and foreign direct in vestment on policy autonomy. It suggests that the social dumping argument has merit, and draws a parallel to the Unholy Trinity model of monetary policy autonomy. In addition, classifying firm investment criteria according to whether they represent public goods, market costs, or policy costs helps determine the extent to which public policy may be affected by the competition for investment. This represents a departure from traditional models., The globalisation of the economy, characterised in part by steady growth in world trade and a rapid increase in foreign direct investment (FDI), has presented serious challenges for national policy-makers. [...]

Ton Notermans' article 'The Abdication from National Policy Autonomy' generally makes accurate observations but wrongly attributes the current woes of social democracy to authorities' changing priorities and faulty instruments. The crisis is in fact due to changes in the international economy, particularly the mobility of capital, that have rendered ineffective the traditional ways of democratically controlling the economy. Social democracies such as Sweden and Norway must seek new ways to control social investments, not least through the technology that enables capital mobility.

Capital could be made more readily available by reforming the rules governing corporations, preventing capital flight to foreign countries and legislating against the misdirection or withholding of capital for political ends. The task is to reduce the power of those who hold assets without creating a huge state apparatus. To ensure productivity in corporations owned by employees, management decisions will have to be institutionalized. Profits could then be redistributed through taxation.

The weakening of working class and popular organisations that is often attributed to the growing power of transnational corporations is an aspect of a generalised restructuring of class relations in both core and periphery. With class, rather than power or wealth, as our theoretical entry point, it appears that the state retains influence over international flows of industrial and banking capital.

If, as widely predicted, the Social Democratic Party (SPD) wins the German election in September, there will be center-left governments simultaneously in every major European nation for the first time [...]

Hegemonic stability theory has been the traditional explanation in International Political Economy for the trend from fixed to floating exchange rates which was brought about by the collapse of Bretton Woods. This approach is found to be problematic. A more powerful explanation is the postwar rise in capital mobility, which produces a trade-off between exchange rate stability and policy autonomy. Preferences for these two policies have been a function of perspectives on economic policy and the degree of central bank independence. Independent central banks prefer domestic policy autonomy to exchange rate management, as they have no socio-political incentives to produce competitive, stable exchange rates. Their interests are predominantly in achieving low domestic inflation. In addition, current perspectives hold that the best way of securing international exchange rate stability is to pursue stable macroeconomic policies at home, resulting in the predominance of floating exchange rate policies. This trend will continue into the near future despite opportunities for international cooperation presented by the rationalization of world monetary politics into a G3 following the introduction of the euro. This may have adverse effects on the global economy for three reasons. First, there is a long-term danger that triad regionalization will result in a revival of neo-mercantilist policies, in which the exchange rate could play a part. Second, a high proportion of world trade and finance will be denominated in dollars and euros, rendering the stability of the dollar/euro exchange rate a global public good. Third, dollar/euro exchange rate misalignments which harm either the U.S. or EMU will be harmful to the global economy because of the high percentage of world GDP accounted for by these two areas.

1. Introduction This article explores the two major contending perspectives on the effects of the international integration of markets for goods, services, and capital on national economic policy choices. The [...]