A key factor of sovereignty lies in the status of its external recognition; according to Li and Zhou: financial sovereignty is a component of sovereignty itself and therefore is “…composed of financial sovereign status, financial sovereign authority, and financial sovereign capability.”(Li and Zhou, p. 178). Sovereign status, being based on the recognition and consent of other states, should not be affected by globalization of financial capitalism, leaving the other two components from Li and Zhou: financial authority and capability to be impacted. Status aside, a state’s ability to manage its own monetary policies are crucial for maintenance of its economic policy. MNCs play a large role with regards to affecting a developing nation’s standing.
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180). This was an example of sovereign states’ political processes being influenced by globalization and in turn affecting their capability as sovereign states. Li and Zhou found that Steve Kamin, a director of the Board of Governors of the Federal Reserve System, thoroughly researched the issue at hand and concluded “…that financial globalization has made domestic financial conditions more vulnerable to a wide range of external shocks…” (Li and Zhou, p. 180). He points out an above referenced issue of financial regulatory and monetary policy being removed from the hands of the states: “In many countries, short-term interest rates that are traditionally set by monetary policymakers are responding to foreign financial conditions to a greater extent than ever before…” (Li and Zhou, p. 180). The influence brought on by external markets is certainly present but it could be argued that developing countries do indeed benefit from these influences. There is no doubt that FDI has provided vast amounts of capital to new and developing markets; creating large demands and even competition for MNCs’ business, however as Sheng …show more content…
Up until this point, positive effects in developing countries have mostly been either neglected or outweighed by the detriment discussed. In the majority of these post-colonial developing countries, such as the previously mentioned Nigeria, we see very little benefit of the FDI going towards the betterment and wellbeing of the people. According to an article from CNN, over “…$21 billion of foreign direct investment…” (As cited Egan, 2014) flowed into Nigeria during 2013. Meanwhile, Nigeria has had a bad reputation of being considered somewhat corrupt; being the largest oil producer in Africa, “…the vast majority of its 166 million inhabitants live on less than $2 a day.”(BBC, 2014). Nigeria’s latest regimes is somewhat
180). This was an example of sovereign states’ political processes being influenced by globalization and in turn affecting their capability as sovereign states. Li and Zhou found that Steve Kamin, a director of the Board of Governors of the Federal Reserve System, thoroughly researched the issue at hand and concluded “…that financial globalization has made domestic financial conditions more vulnerable to a wide range of external shocks…” (Li and Zhou, p. 180). He points out an above referenced issue of financial regulatory and monetary policy being removed from the hands of the states: “In many countries, short-term interest rates that are traditionally set by monetary policymakers are responding to foreign financial conditions to a greater extent than ever before…” (Li and Zhou, p. 180). The influence brought on by external markets is certainly present but it could be argued that developing countries do indeed benefit from these influences. There is no doubt that FDI has provided vast amounts of capital to new and developing markets; creating large demands and even competition for MNCs’ business, however as Sheng …show more content…
Up until this point, positive effects in developing countries have mostly been either neglected or outweighed by the detriment discussed. In the majority of these post-colonial developing countries, such as the previously mentioned Nigeria, we see very little benefit of the FDI going towards the betterment and wellbeing of the people. According to an article from CNN, over “…$21 billion of foreign direct investment…” (As cited Egan, 2014) flowed into Nigeria during 2013. Meanwhile, Nigeria has had a bad reputation of being considered somewhat corrupt; being the largest oil producer in Africa, “…the vast majority of its 166 million inhabitants live on less than $2 a day.”(BBC, 2014). Nigeria’s latest regimes is somewhat