| Abstract: | This article argues that the democratization processes taking place in South Africa and elsewhere in emerging market economies cannot be separated from the global economic context within which these processes are taking place. The article illustrates that the mainstream political economy literature has not paid sufficient attention to the issue of the limits and constraints placed upon these newly emerging democracies by the new financial architecture, particularly the derivatives market, which now determines the value and price of emerging market currencies. The article concludes that the workings of this market not only heavily favour the interests of developed countries but that they deeply question the accountability of politicians in those emerging markets and thereby endanger the legitimacy of the democratic project in large parts of the post-colonial world. The article is divided into three sections: first, a critique of some of the leading political economy analyses and their position on the relationship between open-economy policies and democracy; second, an account of the development of the derivatives market since 1973 and a theorization of its implications for currency movements, particularly monetary volatility, of emerging market currencies; third, an illustration by way of the South African and Brazilian cases of the policy implications of currency volatility for creating improved social and economic conditions. |
