Document Type


Publication Date

Spring 1996

Publication Citation

3 Indiana Journal of Global Legal Studies 375 (1996)


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's 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's international investment position

through a noticeable increase in foreign investment; capital shortage;

capital flight; political debate in New Zealand; New Zealand's 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?