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Globalization and Financial Blow-ups in the Semi-Periphery: Perspectives on Turkey's Financial Crisis Of 1994

Published online by Cambridge University Press:  21 July 2015

Ziya Öniş
Ziya Öniş*
Affiliation:
Department of Economics, Boğaziçi University, Istanbul
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Extract

Globalization versus the nation state has emerged as one of the central areas of controversy and debate in the field of international political economy in the context of the 1990s. The pace of technological change, the speeding up of communications and the extent of international economic integration have brought into question the effectiveness of many traditional national economic instruments. A number of investigators point towards the erosion of economic sovereignty and question the nation state as the main building block of governance. It is undoubtedly the case that the nation state is under pressure; yet it is also the case that the process of globalization is much more in evidence in some areas than others. Whilst we observe significant increases in the volume of trade and foreign direct investment over the past decade, the process of globalization has arguably proceeded further than anywhere else in the sphere of financial capital. Computerization, advanced telecommunications, and associated pressures for financial deregulation have resulted in a major increase in both the scale and mobility of financial capital across national boundaries. Capital is now so mobile that markets will ensure that holders of financial assets receive broadly the same risk adjusted real return anywhere. Any country that offers significantly lower returns will experience capital outflows and a rapidly depreciating exchange rate. It is now virtually impossible for countries to return to exchange controls as an instrument of economic regulation.

Type
Articles
Information
New Perspectives on Turkey , Volume 15 , Fall 1996 , pp. 1 - 23
Copyright
Copyright © New Perspectives on Turkey 1996

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