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Financial Globalization: Opportunities and Challenges for Developing Countries

Author: Pablo Zoido-Lobaton
Pub. Date: May 30, 2001
Full Text: Adobe Acrobat (PDF) [200 KB]

This chapter discusses the opportunities and challenges that financial globalization entail for developing countries. Financial globalization can come with crises and contagion. But financial globalization can also lead to large benefits, particularly to the development of the financial system. The net effect of financial globalization is likely positive, with risks being more prevalent right after countries liberalize. In the long run, large potential gains are expected. So far, only some countries, sectors, and firms have taken advantage of globalization. As financial systems turn global, governments lose policy instruments, so there is an increasing need for international financial policy coordination.

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