draining development.pdf - Khazar University

460 Draining Development?and political institutions may need protection from the destabilizingeffects of large flows of highly mobile capital. Arguments about capitalflows—or, indeed, any other form of international economic transaction—maymislead if they assume a population comprising only similarlyplaced high-income countries with relatively robust economicinstitutions and financial systems. What is good for those countries maynot be good for the more disadvantaged parts of the world. This emphasison the ways in which international economic inequality might challengeconventional economic wisdom has underpinned developmentstudies since it emerged as a distinct field in the 1950s. The argument Imake here is fully within that tradition and reflects the tradition’s characteristicemphasis on the interactions of polity and economy. The worldabout which I write is characterized by a relatively systemic pattern ofpolitico-economic inequality and advantage-disadvantage among countries.Until recently, economic inequality between the richest and poorestcountries had been steadily increasing over several centuries. Thequality of political and economic institutions largely mirrors averageincome levels. Poorer countries generally have less legitimate, stable, andeffective governance systems. Property rights are less secure.I depart from traditional development studies in that I do not posit afundamental distinction in the global economy between a poor ThirdWorld and a rich (capitalist, industrialized, Organisation for EconomicCo-operation and Development [OECD]) core. Neither am I entirelycomfortable with the convention of equating political jurisdictions withcountries. In particular, contemporary tax havens are highly consequentialjurisdictions in terms of their impacts on the global political economy,but often are not countries. As I explore further elsewhere below,we need a minimum of four categories of political jurisdictions tounderstand the adverse effects of illicit capital flows on the poorestcountries: the poorest parts of the world (labeled weak states), the OECDjurisdictions, tax havens, and a residual category that includes, in particular,those big, rapidly growing emergent economies that do not enjoythe questionable benefits of large reserves of point natural resources inthe form of minerals, oil, and gas, most notably Brazil, China, India, andTurkey. To understand the emergence and significance of these categoriesof political jurisdictions, we need to look more broadly at the consequencesof late 20th-century globalization.