Globalization Of Capital Analysis

Within developing countries it is without a doubt that globalization has had far reaching effects within various aspects of their economies, some positive, some not. Globalization as seen through the eyes of Watson (1994) is a single global economic mechanism that has been promoted rather than evolved. "It is an intensive process that conforms to the tendencies and laws of motion of (international) capital." It "occurs in production, distribution, marketing, technology transfer, information telecommunications and other aspects of economic activity." This definition supports my claim at the very beginning stating the diverse impact globalization has had on the economies of developing countries. Subsequently, this process of globalization

It should be to no one’s surprise that liberalising of markets in developing markets has been mostly unsuccessful, even with its employment in the capital market. Recently, developing countries have been resisting requests, or as another might see, demands, by the IMF in removing controls on capital. Capital controls are regulations on capital flows that buffer from a number of risks that come with financial integration. Chief among those risks are currency risk, capital flight, financial fragility, contagion, and sovereignty. (Gallagher, 2012) The argument of these emerging markets is on the grounds that in such a fluctuating global economy, this measure is taken to help manage the volatility of exchange rates, limit speculative action and provide policy makers the ability to exercise monetary policies duties. Although the IMF, within their agreed agreements of operation, were not given the capability to control capital adjustments, they have still advanced their neoliberal agenda by often making it compulsory for developing nations, regardless of their stage of development, to implement such policies or face reprimand. By employing economic nationalism tendencies, developing countries that have implemented or maintained controls on capital to maintain stability have been called protectionists by liberalists. However, as mentioned earlier, it is the policies countries have

This has many benefits, especially for developing nations. The benefits put forward by Minford (2002) of an Economic and Monetary Union “consist of four main elements: the reduction in transactions cost of changing currency; the reduction of exchange risk leading to greater trade and foreign investment with the rest of Europe, and to a lower risk premium embodied in the cost of raising capital; increased transparency in price comparison; and the political gains of closer union and cooperation brought about the greater closeness of economic relationships within EMU.” A perfect example of this union can be found in the OECS. This monetary union has helped to buffer these countries, especially during the financial crisis. Although during this time, it exposed some of the weaknesses, without this union, the small nature of these economies standing on their own would have been crushed under the devastating impact of the financial crisis. The Eastern Dollar which is supported by a quasi-currency board arrangement has been the main source of the stability and low inflation of this grouping, not forgetting to mention that the OECS could boast about being among the world’s most highly monetised economies due to its practice of banks holding assets up to two hundred per cent of Gross Domestic Product (IMF, 2013). Moreover, with constant trade between member states of a