POLI 243 Lecture Notes - Anwar Ibrahim, Malaysian Ringgit, Arbitrage

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Malaysia and Capital Controls
The Washington Consensus
Critical turning point in what the international political economy looks like
Fukuyama refers to the end of history
Cold war ends not with great bloodshed but with a fizzle
Soviet Union has decided not to compete anymore or incapable
Either way, the consequence is the end of ideological conflict
Competition between different ways of organizing society
Centralized communist style vs liberal democracy with capitalism
“The End of History”
Systemic and ideological constraints change
Back then, playing with superpowers was how smaller states operated
How many benefits can a superpower give them
That was no longer an option
Neo-Liberals models dominate
The clear path towards economic development is more through markets
The CONSENSUS is what the proper set of policies should be
IMF and World Bank encourage
Free Trade and Open Capital Markets
Free trade was not a big deal but open capital markets was a big deal
Most countries had decided that over the years, the best thing was to have their own
set of banks
Advantages and Disadvantages
Capital inflows increase international investment grows
Economic Development means final more capital
Amass more capital and will sink into their firms
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