We study the determinants of stock market development and the growing migration of capital raising, listing, and trading activity to international exchanges. Economies with
better fundamentals have larger and more liquid markets. As fundamentals improve, however, the degree of migration to international exchanges also increases. This leads to gains for corporations in the form of lower costs and more liquidly-traded shares. Fullyfledged local stock exchanges are thus becoming less necessary for many economies. Furthermore, migration can leave too little domestic activity to sustain a local exchange. Therefore, the functions and forms of stock exchanges in many economies need rethinking.