chapter  VI
The Limits of Policy Autonomy
ByRobert B. Packer
Pages 27

This chapter focuses the state's relation to transnational capital. It reveals the dynamic relationships among state actions in the global political economy, the political and economic activities of non-state financial market operators, and developments in global financial markets. International financial markets are likewise shaped by politics and economics: the basic laws of economics push relentlessly toward market integration and worldwide global economy, while the political process practiced by governments and other interest groups is expressed by constant jockeying for special economic privileges. Financial market operators—both large institutions as well as individual investors— have the option to switch to other tax jurisdictions. The market for finance capital is also driven by a political economy linking the structure of government to decisions about services, taxes, and regulation. The decisions of both state policymakers and non-state actors, as well as exogenous factors outside immediate government control combine to create international structures and set the parameters of state and non-state actor autonomy.