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Postscript to Financial Globalization and Economic Policies

Author

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

Abstract

The global financial crisis serves as a reminder of the risks of financial globalization. After grappling with surges of capital inflows earlier in this decade, many emerging market and developing economies experienced a sharp reversal of those inflows in late 2008 as a result of the crisis. Moreover, international financial linkages clearly served as a channel transmitting the financial turmoil from advanced countries to the shores of emerging markets. These developments will re-ignite the fierce debate about the merits of financial globalization and its effects on growth and stability, especially for emerging market and developing countries. As the crisis is still unfolding, it is premature to undertake a detailed analysis of its implications for the debate on financial globalization. Nevertheless, there are two preliminary observations that are pertinent. First, the differential effects of the crisis across countries confirm that it is not just financial openness, but a country's structural features and its precrisis policy choices that have determined the crisis' overall impact on a country. Second, the crisis has not led to a resurgence of capital controls in emerging market economies. Recent research further emphasizes the important role of the composition of capital inflows in determining the extent of pain caused by the crisis on nonfinancial firms

Suggested Citation

  • Kose, M. Ayhan & Prasad, Eswar & Rogoff, Kenneth & Wei, Shang-Jin, 2010. "Postscript to Financial Globalization and Economic Policies," Handbook of Development Economics, Elsevier.
  • Handle: RePEc:eee:devchp:v:5:y:2010:i:c:p:4360-4362
    DOI: 10.1016/B978-0-444-52944-2.00022-7
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    Citations

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    Cited by:

    1. Charles W. Calomiris & Mauricio Larrain & Sergio L. Schmukler, 2018. "Capital Inflows, Equity Issuance Activity, and Corporate Investment," NBER Working Papers 24433, National Bureau of Economic Research, Inc.
    2. Bumann, Silke & Lensink, Robert, 2016. "Capital account liberalization and income inequality," Journal of International Money and Finance, Elsevier, vol. 61(C), pages 143-162.
    3. Asaf Akat & Ege Yazgan, 2013. "Observations on Turkey’s Recent Economic Performance," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 41(1), pages 1-27, March.
    4. Kim, Woochan & Sung, Taeyoon & Wei, Shang-Jin, 2017. "The diffusion of corporate governance to emerging markets: Evaluating two dimensions of investor heterogeneity," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 406-432.
    5. Samargandi, Nahla & Kutan, Ali M., 2016. "Private credit spillovers and economic growth: Evidence from BRICS countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 56-84.
    6. Sionfou Seydou Coulibaly & Lewis Landry Gakpa, 2017. "The Role of Property Rights in the Relationship between Openness to International Capital Flows and Economic Growth in Sub-Saharan Africa Countries: An Estimate from Non-Stationary Panel Data," Research Papers RP_320, African Economic Research Consortium.
    7. Bumann, Silke & Hermes, Niels & Lensink, Robert, 2013. "Financial liberalization and economic growth: A meta-analysis," Journal of International Money and Finance, Elsevier, vol. 33(C), pages 255-281.
    8. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.

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