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Reaping the Benefits of Financial Globalization

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Series:: Occasional Papers
Author(s):: Giovanni Dell'Ariccia, Paolo Mauro, Andre Faria, Jonathan Ostry, Julian Di Giovanni, Martin Schindler, Ayhan Kose, and Marco Terrones
Publisher:: INTERNATIONAL MONETARY FUND
Published Date:: December 2008
DOI:: http://dx.doi.org/10.5089/9781589067486.084
ISBN:: 9781589067486
ISSN:: 0251-6365
Page:: 52

Financial globalization has increased dramatically over the past three decades, particularly for advanced economies, while emerging market and developing countries experienced more moderate increases. Divergences across countries stem from different capital control regimes, and factors such as institutional quality and domestic financial development. Although, in principle, financial globalization should enhance international risk sharing, reduce macroeconomic volatility, and foster economic growth, in practice its effects are less clear-cut. This paper envisages a gradual and orderly sequencing of external financial liberalization and complementary reforms in macroeconomic policy framework as essential components of a successful liberalization strategy.

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Reaping the Benefits of Financial Globalization

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