draining development.pdf - Khazar University

The Practical Political Economy of Illicit Flows 461Late 20th Century Globalization and Weak StatesI use the term globalization in its most general sense to refer to theincreasing frequency and intensity of interactions across different partsof the globe (Scholte 2000). There is broad agreement among scholarsthat a period of globalization in the late 19th and early 20th centurieswas followed by an era of retraction and nation-centricity that lastedfrom World War I until approximately the 1960s. This was succeeded bylate 20th-century globalization. Some of this globalization’s most visible,generic manifestations are the rapid expansion of international trade,fueled in part by the containerization revolution; the even more rapidgrowth of transnational capital movements; and the enormous improvementsin long-range communications consequent on the marriage oftelephony and digital technologies. The following, more specific aspectsof the globalization process are especially relevant to later sections of thechapter.Growing income inequalityThe recent rapid growth of the Chinese and other Asian economies mayherald the reversal of a long-term process of growing divergence in percapita incomes between the poorest and the richest countries in theworld. However, it has been divergence rather than convergence that hascharacterized most of the period since 1970. The OECD economies havegrown at similar rates, and their citizens have become steadily wealthierthan the populations of most of Africa and of other poor parts of theworld (Pritchett 1997). 1 Late 20th-century globalization thus took placewhen average income disparities between the richest and the poorestcountries were at the highest levels ever recorded. This inequality interactswith other factors listed below. For example, the existence of highincomemarkets in one part of the world generates large markets forcommodities that, because they are either scarce (oil, gas, many minerals,diamonds) or illegal (drugs), generate high rents for those who controlthe sourcing in poor countries.FinancializationUnderstood broadly, financialization refers to the increasing influence offinancial markets, financial actors, and financial institutions in the oper-