ABSTRACT
At the forefront of the economic globalization trend in recent years has been a rapid expansion of international financial activity. The daily volume of trading in the world's major foreign exchange markets, for example, reached almost $1 trillion by the early 1990s, a figure close to forty times the daily value of international trade. 2 It is often assumed that the globalization of financial markets is irreversible because the process is said to have been caused primarily by technological developments which cannot easily be turned back. In this chapter, I challenge this assumption by drawing on a growing body of literature in the field of international political economy (IPE) that tells a different historical story. While not discounting technological pressures, this IPE literature demonstrates that financial globalization has also been heavily dependent on state support and encouragement. 3 I focus on one of the key aspects of this support: the decisions by advanced industrial states to abolish their capital controls over the last two decades.
