For citation:
Romanchuk, E. S. (2022). Theories of State Collapse and Disintegration of Currency Zones. AlterEconomics, 19(2), 351-373. https://doi.org/10.31063/AlterEconomics/2022.19-2.8
Abstract:
Due to the limitations inherent in economics and political science, each of these two domains taken separately is unable to explain in what cases and why a state collapses or to describe comprehensively the reasons behind the fragmentation of economic space (including single currency zones) that happens despite the clear benefits of maintaining such unions. Another interesting issue is the motivations behind keeping a currency union even when it is economically infeasible. These are the questions that this article seeks to address through the analysis of intra-state processes from the perspective of post-non-classical rationality by applying the political economy analysis toolkit. It is shown that it is predominantly the exacerbation of internal problems to be tackled on the economic front that results in a situation verging on implosion. A collapse of the state and the ensuing disintegration of the common economic space require the presence of political will inside the country (or a group of countries) and support on the part of international actors. The study emphasizes the fact that the state leaders involved in strategic decision-making regarding economic disintegration are guided by political rationality and tend to ignore economic feasibility. Economic analysis and evaluation are usually conducted to support the political decision that has already been made. The results of this theoretical study point to the need for a more in-depth research on the ongoing disintegration processes in the post-Soviet space, European Union, and other such projects.
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