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University of Toronto St. George
Political Science
Sophia Moreau

Lecture #12 Final Review April 4 , 2011 Globalization Development & democracy is an old question; but how does globalization effect it now? o Generally, the mechanism that is driving both development and democracy is globalization operating as context and mechanism Trade, FDI and capital flows globalization o Question is is globalization producing or undermining democracy and or development? Refining the definition: Is globalization leading to development? o If development is defined as increasing exports, then yes o But if development is defined as increasing wealth and well-0being among the poorest not leading to development Globalization and the strengthening of Democracy Nita Rudra Situates argument within larger body of literature that makes the same argument Why would anyone think that it would produce democratization? o Globalization Rudra defines it as free trade and the Washington consensus Principles of liberalism and neo-liberalism o Assumption trade and financial liberalization encourages developing countries to become more democratic, why? 1. Theoretical point argument some kind of organic symmetry between free markets and democracy o Freedom in the political sphere can only be sustained if there is freedom in the economic sphere o If there is commitment into freedom, then it translates into political democracy and economic free market 2. Capital market development can unseat authoritarian governments by preventing their rent-seeking activities and increasing the bargaining power of business (bottom of p.736) o ISI close links between government and business; business leaderselites are dependent on government for preferential treatment on trade, quotes and certificates for imports, etc. o Dependency of government and business; revenue comes from this source. This system of rent-seeking behaviour of making money from transaction, which would otherwise be free if there were zero government intervention o Business is no longer dependent on government, and that source of revenue from rent-seeking dries up when capital market is developed Explains why authoritarian government will be weaker, but doesnt explain why a democratic government would be the replacement as a result of this o But, strong business sector will demand democracy and it makes sense o Business demands democracy because higher confidence rating will be assigned to countries that are democratic Globalization (increases in capital and trade flows) increases democracy (political and civil liberties) when government increase social spending (on health, education, and pensions) o Mechanism is this globalization produces elite skisms (elite with diverging interests); 1. State no longer able to control business sector interest of state and business are diverging 2. Globalization leads to social unrest and elites disagree with how to deal with this social unrest Disagree over repression or liberalization If elites can increase social spending to lower unrest
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