Globalisation can be described as a dynamic process that links the economy of a nation with the world economy through economic and non-economic forces. In this paper I shall confine myself to the economic forces of globalisation and in particular to cross-border capital flows. The process of globalisation has its origins in antiquity but recent innovations in information and communications technology has speeded up the process and also heated up the controversies surrounding the costs and benefits of globalisation. In this paper I propose to use some well tested simple economic models to examine in a cool manner some of the hot topics of economic globalisation. Economists have a remarkable propensity to disagree among themselves and this came to the attention of the literary icon Bernard Shaw and irked a US president demanded advice from the non-existent one-handed economist. Well economists disagree because there are many good ways to skin a cat. Economists use models to analyse complex problems and give answers that may be technically correct. But just like the answer given to the hot-air balloonists who got lost and asked directions, the answers may be technically correct but not operational ( a famous joke about economists). To make the answers operational it is necessary to interpret the answers in the light of country specifics.
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Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number
346.