The paradigm example of globalization is the global integration
of financial markets. Globalization has significant implications for
New Zealand--a small island nation far from the centers of world
capital--that flow from the particular characteristics of New
Zealand\u27s economy. In order to sustain current levels of economic
growth, the New Zealand government has adopted a liberal policy to
attractf oreign capital. In the future, a major taskf or New Zealand is
to align further the internal logic of the deregulatory process as
expressed in domestic legislation with an international environment
in which domestic economies are more globally integrated. This
article argues that the concept of globalization provides a new
analytical framework for accomplishing that task.
The article commences by identifying different meanings of
globalization and key drivers in the globalization of the financial
markets. Because globalization is an ambiguous concept, the second
half of the paper attempts to sharpen understanding of the concept by
considering concrete instances in which globalization has affected
New Zealand. Examples provided are: the crash of 1987; the
improvement of New Zealand\u27s international investment position
through a noticeable increase in foreign investment; capital shortage;
capital flight; political debate in New Zealand; New Zealand\u27s tax
treatment of foreign investors; and exemptions for foreign issuers.
Here, it is argued that as far as domestic policymakers are concerned,
globalization demands, first, a clear set ofpriorities in the particular area
(a microscopic view), and, second, a global view of the subject
matter (a macroscopic view).The article concludes by suggesting
n analyticalf rameworkf or domestic policymakers and legislators
addressing globalizationissues. Complex systems can be viewed as
the subject of macroscopic knowledge; hence, globalization can be
characterized as macroscopic knowledge since it is complex,
conceptual, and fuzzy. By contrast, domestic legislation can be
characterized as microscopic knowledge; i.e.,focused on one
domain in which there is little or no contradiction.On this view,
globalization can be used as a tool to examine the
context of any given domestic legislation, thereby enriching our
understanding of specific legislation by introducing dynamic and
predictive criteria.
The concept of globalization radiates the possibility of a new
analytical framework for policymakers. Coupled with the
macroscopic/microscopic viewpoint, it enables us to avoid the pitfall
of domestic introspection by introducing criteria of internal and
external coherence. Internal coherence asks whether a proposed
domestic policy is congruent with policy in related areas. For
example, is there regulatory symmetry between domestic legislation
in taxation, securities, and foreign investment areas? External
coherence asks the globalization question: How should domestic
legislation reflect change in the international context