Likewise, the experiences from the emerging market crises of the late 1990s and the global financial crisis suggest that well-functioning international capital markets require strong financial regulation, both domestically and across borders. In addition to this traditional role of the state, governments also need to ensure that the gains from trade are shared within societies.
And in fact, countries with higher trade openness tend to have larger, not smaller, public sectors. 14 Governments have acted to mitigate the distributional consequences of globalisation, although they now face issues to which I will turn later. Before turning to the economic fallacies about globalisation I would therefore conclude that global markets need to be underpinned by strong states and firm governance.