Globalization and Developing Countries

Paper Summary:

This report uncovers some of the trends in financial integration through globalization do in fact help developing nations grow faster and how financial integration affects macroeconomic volatility. The paper also suggests some benefits of financial globalization and how these scenarios could, if used properly, be fully harnessed. Through an examination of variables such as fixed and floating exchange rates, macroeconomic volatility and the roles played by governments, this report hones in on effects of financial globalization on developing countries. Includes several graphs and tables.
Introduction
Brief History of Globalization and Financial Globalization
Summary and Main Theme of the Paper
Organization of the Paper
Necessary Elements for Successful Financial Globalization
Benefits from Successful Financial Globalization
Conditions of Developing Countries for Accepting Financial Integration
Risks of Financial Globalization for Developing Countries
Does Financial Integration Help Developing Countries Grow Faster?
How Does it Affect Macroeconomic Volatility in These Countries?
How Can the Benefits of Financial Globalization be Fully Harnessed?
Conclusion

From the Paper:

"Another way to harness globalization is to have sound government operations that promote strong and positive investment inflows from the international mutual funds. This government must be fully cognizant that they may have to relinquish some internal power so as to enhance the communication with the established global powers to be. Developing countries also can not overlook the risk factors that come along with the financial globalization. "Capital controls are advocated both as a way of preventing and managing this latter type of crisis, and as a regulatory remedy to mitigate excess borrowing in the first place, when financial regulation is too weak to address the moral hazard incentives of explicit and implicit government guarantees. (Little & Olivei, 1999)
Their independent macroeconomic policies and domestic governance does affect the entire process and an overvalued exchange rate or overextended domestic lending boom could create a global crisis. Developing nations must grasp that transparency entails dealing with international investors who may destabilize a developing country's financial markets if they are allowed to run free. Thus, to best harness and derive the benefits from financial globalization, developing nations must establish a foundation that is based on the volatility of international capital flows, macroeconomic policies and a sound governmental base."

More papers on Globalization and Developing Countries:

• Analytical Essay # 150011 : "The Impact of Globalization on Developing Countries"
• Analytical Essay # 141624 : "Financial Globalization and Developing Countries"
• Analytical Essay # 72087 : "Globalization and Developing Nations"

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