The Pros And Cons Of Globalization Of Financial Markets
Globalization is the concept that describes the process of interaction and integration of people, markets, economies and governments around the world through international trade network, communication, and immigration and information technology. (Financial Times, 2016) “In the more recent past, globalization was often primarily focused on the economic side of the world, such as trade, foreign direct investment and international capital flows, more recently the term has been expanded to include a broader range of areas and activities such as culture, media, technology, socio-cultural, political, and even biological factors, e.g. climate change.”
In the last three decades, the global financial market has experienced exponential growth in size; structure and sophistication, as the value of financial assets traded in these markets have grown by over 140 percent. Many countries have realized that the growth and performance of their local financial markets; which is a market that provides the platform for buyers and sellers to trade securities, currencies, bonds, derivatives and other financial assets is considered as a measure of economic growth and relevance in the international community. Therefore, over the years many countries have opened up their borders to
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Countries that have opened up their borders to international trades and capital movements become more vulnerable to the volatility in prices, interest and foreign exchange rate fluctuations in the international markets. Consequently macroeconomic turbulence from one part of the world gets rapidly translated into systemic shocks other parts of the world, therefore countries have to find a balance to maximize the benefits of globalization as well as minimize their risk of exposure to the volatility global financial
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765 Words | 4 PagesThus, this results in more access to capital, technology, cheaper imports and larger exports markets. This globalization opens access for local business to international production networks and supply chains which are the main channels of trade, therefore this result in an increase in GDP and employment. However, globalization many have a negative impact along with its positive impact as global companies main focus is to maximize profits without regarding the development needs of developing countries. Globalization also results in loss if cultural uniqueness in favor of a universal culture which is drawn heavily from American culture. Developing countries have weak financial institutions therefore due to globalization the volume of capital flows increase which increases the risk of banking and currency
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472 Words | 2 PagesA global economy also means that those interdependences concern more and more countries, in particular EMC’s countries, that turned away from isolation and opened to internationalisation in the last decades. Regarding IMF, even if FDI flows to emerging market countries (EMCs) have decline owing largely to falling investment in Latin America, they increase rapidly since the 1990’s and have become by far the single largest component of their net capital inflows. This last example shows how countries are now more than ever tie together.
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838 Words | 4 Pages1. How can globalization and international economic integration be measured? Globalization or international economic integration can be measured by four main factors which are “trade flows, capital flows, people flows and the similarity of prices in separate markets.” Trade flows basically refer to movements of products or outputs as exports or imports across national borders, whereas capital flows and people flows together make up a general category known as factor movements and refer to flows of production inputs, rather than the products themselves, such as capital and labor to the international markets. The similarity of prices factor can be thought of as the effect of globalization or global economic integration on prices in local or national markets as they converge with those of the international ones despite some differences due to transportation costs. The more globalized the countries are, the more similar or less differentiable the prices of their goods or services will be.
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2258 Words | 10 PagesThe Effect of Globalization on Labor Movement Introduction Today, globalization is a phenomenon which affects all aspects of our life. In a broad sense, globalization is the process or processes that increase the movement of people, culture, technology, ideologies and information across the world. Economists describe the term to refer to international integration in commodity, capital and labor markets. If we look at the integration in these markets as the benchmark, it is clear that globalization is not a new phenomenon. The aim of this paper is explaining the impact of globalization on specific area, international labor movement which is a type of the migration.
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954 Words | 4 PagesThe exceptionally notoriety of the word 'globalization’ signals a require for caution. The word was barely utilized some time recently the late 1980s, indeed in scholarly circles, but nowadays you can barely open a daily paper without experiencing the term. It might effortlessly show up to is an elegant name utilized to assign wonders around which one has as it were the vaguest thoughts. However to dispose of the concept of globalization, and the huge consideration agreed the marvels it envelops, on such grounds, would be silly. There is a genuine require for a common, non-specific term to portray the complex, multi sided ways in which the world is inter-connected, and progressively so.
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1006 Words | 5 PagesGlobalization is a process of linking the world through many aspects, from the economic to the culture, the political. in different nations. This process uses to describe the changes in society and in the world economy, by creating a linkage and increasing exchange between individuals, organizations or nations in cultural perspective, economics on global scale (Globalization 101, n.d.). A process of creating many opportunities but also causes many challenges for all the nations in the world, particularly for developing countries. There are so many advantages that globalization brings to developing countries like free trade, technology transfer and reducing unemployment.
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