How Does Global Finance Discipline Governments That Pursue Heterodox Economic Policies?
How Does Global Finance Discipline Governments That Pursue Heterodox Economic Policies? Global finance—the interconnected system of banks, investment funds, bond markets, credit rating agencies, and international financial institutions—exerts significant influence over national economic policy. While formal sovereignty allows governments to design fiscal and monetary strategies, the reality of global financial integration means that countries attempting heterodox economic policies —policies deviating from mainstream liberal or neoliberal prescriptions—often face pressures and constraints. These pressures, sometimes described as financial disciplining mechanisms , shape policy decisions, limit autonomy, and create incentives for governments to conform to global norms. Heterodox policies may include expansive fiscal spending, capital controls, monetary easing to finance domestic priorities, industrial policy, or protectionist measures intended to stimulate development. While ...