Effects of Financial Globalization on Developing Countries : Some Empirical Evidence

by Prasad, Eswar; Rogoff, Kenneth; Wei, Shang-Jin; Kose, M. Ayhan

• ISBN13: 9781589062214
• ISBN10: 1589062213
• Format: Paperback
• Copyright: 2003-09-01
• Publisher: Renouf Pub Co Ltd

Summary

This paper reviews recent empirical evidence, including some new research, on the effects of financial globalisation for developing countries. It focuses on three issues: whether financial globalisation promotes economic growth in developing countries; the impact on macroeconomic volatility in these countries; and factors that can help to harness the benefits of financial globalisation.

Table of Contents

Preface	vii
Summary	ix
Overview	1	(5)
Definitions and Basic Stylized Facts	2	(1)
Does Financial Globalization Promote Growth in Developing Countries?	2	(1)
What Is the Impact of Financial Globalization on Macroeconomic Volatility?	3	(1)
Role of Institutions and Governance in Effects of Globalization	4	(1)
Summary	4	(2)
Basic Stylized Facts	6	(7)
Measuring Financial Integration	6	(2)
North-South Capital Flows	8	(1)
Factors Underlying the Rise in North-South Capital Flows	9	(4)
Financial Integration and Economic Growth	13	(8)
Potential Benefits of Financial Globalization in Theory	13	(1)
Empirical Evidence	14	(3)
Synthesis	17	(4)
Financial Globalization and Macroeconomic Volatility	21	(8)
Macroeconomic Volatility	21	(3)
Crises as Special Cases of Volatility	24	(1)
Has Financial Globalization Intensified the Transmission of Volatility?	25	(2)
Some Factors That Increase Vulnerability to Risks of Globalization	27	(2)
Absorptive Capacity and Governance in the Benefits/Risks of Globalization	29	(17)
Threshold Effects and Absorptive Capacity	29	(1)
Governance as an Important Element of Absorptive Capacity	29	(2)
Domestic Governance and the Volatility of International Capital Flows	31	(1)
Summary	32	(3)
Appendixes
I The First Era of International Financial Integration, 1870--1913	35	(1)
II Estimating the Benefits of International Financial Integration on Income Levels for Developing Countries Using a Neoclassical Economic Model	36	(2)
III Calculating the Potential Welfare Gains from International Risk Sharing	38	(4)
IV Contingent Securities for International Risk Sharing	42	(1)
V Small States and Financial Globalization	43	(2)
VI Data	45	(1)
Bibliography	46