Does Competition for Capital Discipline Governme

Abstract: Does competition to attract mobile capital discipline governments? Two bodies of literature contend that it does? Two bodies of literature contend that it does. The first sees such discipline as harmful. Scholars argue that the fear of capital outflows restricts governments from providing welfare services, environmental regulations, and nonproductive public goods that citizens value. Capital mobility prompts a "race to the bottom" in social and environmental policy, both among subnational governments within decentralized states and among countries competing in world markets. By contrast, the second body of literature views such discipline as salutary. The competition for capital motivates governments to reduce their corruption wast, and inefficiency, and to provide more growth-promoting infrastruture.

Keywords: competition, capital discipline

Does Competition for Capital Discipline Governments-Decentralization, Globalization, and Public Policy.pdf