Handbook of Key Global Financial Markets, Institutions, and Infrastructure

Chapter 14

The Political Economy of Global Financial Liberalization in Historical Perspective

R. Esteves

University of Oxford, Oxford, UK

Outline

Introduction

What Is There to Explain?

Theory

Second-Best Arguments

Political Economy

History

Prewar

Interwar

Conclusion

Acknowledgments

References

Introduction

This chapter discusses the political processes behind the first wave of financial liberalization during the nineteenth and early twentieth centuries and its demise after World War I. As we live through a renewed period of financial integration since the 1970s, the question naturally arises about its sustainability and whether we can draw lessons from history. Not everyone gained from the process of globalization – of trade, labor, and finance ...