US Financial Crisis: Prospects and Perils of Globalisation of Financial Markets
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Code : ECC0033
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Region : US |
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Roots of Globalisation The roots of globalisation can be traced back to the year 1295 when Marco Polo returned to Venice after a long expedition to China with jewels and silk.11 But, the era of globalisation is said to have opened up during the late 15th century till 18th century with two major events taking place developing the interconnectivity of the continents. The first was the discovery of North America by an Italian exporter Christopher Columbus (1451–1506) and the second was between 1500 and 1799 when international trade experienced an average growth rate of 1.06% per annum. Globalisation of Financial Markets and its Effects on Various Economies The essence of financial globalisation reveals that developing countries can benefit with increase in growth rate aided by many factors such as transfer of technology, reduction of capital cost and augmentation of domestic savings from developed countries to developing countries. As a result of these, direct channels of capital flows contribute to reduction in production costs, competitiveness in industries, access to advanced technology and most importantly, improvement of domestic financial sector... |
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FIIs – Are they Useful or Harmful for a Country's Economy? The belief that FDIs are more preferable to FIIs is primarily due to the reason that FDIs are expected to remain for a longer term whereas FIIs are seen as good weather friends who would fly off when they sense a sign of trouble due to any reason. Though both forms of capital involve financial inflows, the presence of FIIs has inflated the stock markets leading to speculativemoneymarkets.
Capital Flow Regulation: Is it Impending? The overall confluence of three major shocks of growing commodity prices, burst of US housing bubble and credit crunch in financial institutions remained the core of the financial turmoil of 2008, spreading the risks all around the world. As a result, emerging economies are likely to encounter difficulties in balancing the risks between inflation and growth rate.
