Chwieroth, Jeffrey. (2007). "Neoliberal Economists and Capital Account Liberalization in Emerging Markets". International Organization, 61(2), 443-463. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=25008468&site=ehost-live
This paper focuses on the rise of finance capital mobility and one aspect of ideational drivers that can account for this movement away from capital controls. “What this view overlooks [the view that the implementation of capital controls from a policy perspective is indeterminate] is that capital mobility—as with all material trends—must be socially mediated and interpreted by policymakers” (444). Chwieroth then attempts to map out the movement, increase and influence of groups of neoliberal economists as they are placed in positions of policy control in different countries and how this effects the relevance of capital controls. “When these economists form a coherent policy making team, capital account policy is more likely to be liberalized” (445).
The first stage of his methodology explores the drivers of job appointments. Here he finds, “that both credibility concerns and political interests matter” (445). The second stage of this methodology, “indicate[s] that formation of a coherent policymaking team of neoliberal economists significantly influenced the decision to liberalize” (445).
In explaining “epistemic communities and policy reforms”, Chwieroth highlights the beneficial process of orthodoxy in promoting policy: “In the absence of competing ideas to guide policy, coherence ensures consistent advice and increases the likelihood that the chief of government and other politicians will view the interpretations these economists offer as ‘correct’,” (447). “Coherence also increases the insulation of policymakers from societal demands by shielding the decision-making process from alternative views” (447).
There is then a brief sketch of the movement from a Keynesian approach which highlighted the possible necessity of capital controls and their historic benefit on developing countries to a neoliberal emphasis on the freedom of the restraint of capital controls. “Despite ambiguous empirical basis for capital account liberalization in emerging markets, neoliberal economists also often present their recommendations as the only ‘credible’ policy available to appease market sentiment” (450).
Chwieroth then goes on to test this hypothesis using mainly indicators of capital account openness as well as degree of neoliberalness in policy advocation. The methodology seems solid, though I skimmed over it mostly. The conclusion was that, basically, his hypothesis stood on solid ground. More neoclassical economists created a need for the appointment of more neoclassical economists and thus more neoliberal economic policy.
He concludes that, “the results suggest that existing explanations of capital account liberalization are incomplete” and that, “the results suggest the conclusion that economists are an important conduit through which ideas diffuse and are implemented into policy” (459).
