Financial Sovereignty And Globalization

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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. According to Li and Zhou the three major credit rating agencies account for “95 %” (Li and Zhou, p. 178) of the stakes in that field. This massive share enables these MNCs to exert influence, for example in 2008 as a result of these credit rating agencies “…downgrading the sovereign credit ratings of Spain, Greece, and Portugal…” and issuing “…warnings …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

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