Financial Globalization
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Understanding the nature, origins and consequences of global finance is a central task of contemporary political economy. As a result of the rapid increase in telecommunications and computer-based technologies and products, a dramatic expansion in cross-border financial flows and within countries has emerged. The pace has become truly remarkable. These technology-based developments have so expanded the breadth and depth of markets that governments, even reluctant ones, increasingly have felt they have had title alternative but to deregulate and free up internal credit and financial markets.
In recent years, global finance integration has accelerated on a multitude of fronts. While trade liberalization, which has been ongoing for a longer period, has continued, more dramatic changes have occurred in the financial sphere.
World financial markets undoubtedly are far more efficient today that ever before. Changes in communications and information technology, and the instruments and risk-management techniques they have made possible, enable and ever wider range of financial and nonfinancial firms today to manage their financial risks more effectively. As a consequence, they can now concentrate on managing the economic risks associated wit their primary business.
The solid profitability of new financial products in the face of their huge proliferation attests to the increasing effectiveness of financial markets in facilitating the flow of trade and direct investment, which are so patently contributing to ever-higher standers of living around the world...