In the Vanguard of Globalization: The OECD and capital liberalization

David Howarth

Research output: Contribution to journalArticlepeer-review


A survey of the literature on the political economy of global financial liberalization shows how little has been written on the role of the OECD, and how
the Principal-Agent (PA) theory, complemented by Constructivist tools, can
be applied helpfully to analyse this process.We show that the OECD’s Committee
on Capital Movements and Invisible Transactions (CMIT) played an
entrepreneurial role in encouraging the liberalization of capital flows. In particular, we argue that the CMIT slipped by acting beyond its core delegation
roles and against the preferences of the OECD member states’ governments.
This was done by discussing and seeking to expand the list of issue areas
on which controls should be lifted to include short-term capital movements
and the right of establishment, to adopt an extended understanding of reciprocity, and to eliminate a range of additional discriminatory measures on
capital flows. Acting as institutional entrepreneurs, the CMIT members took
advantage of the overlap among the networks in which they were engaged
to spread their ideas to the member states. The CMIT’s work affected the
member states’ willingness to make irrevocable, multilateral commitments
through a combination of peer pressure and vertical institutional interconnectedness. Through the work of the CMIT, the OECD was an important
actor in capital liberalization, in addition to the role played by other international
Original languageEnglish
Pages (from-to)622-645
Number of pages24
JournalReview of International Political Economy
Issue number5
Publication statusPublished - Dec 2011


  • International Organizations
  • Globalization
  • Capital Liberalization
  • Principal Agent Theory
  • OECD
  • constructivism


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