Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35433 
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers No. 4037
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We review the large literature on various economic policies that could help developing economies effectively manage the process of financial globalization. Our central findings indicate that policies promoting financial sector development, institutional quality and trade openness appear to help developing countries derive the benefits of globalization. Similarly, sound macroeconomic policies are an important prerequisite for ensuring that financial integration is beneficial. However, our analysis also suggests that the relationship between financial integration and economic policies is a complex one and that there are unavoidable tensions inherent in evaluating the risks and benefits associated with financial globalization. In light of these tensions, structural and macroeconomic policies often need to be tailored to take into account country specific circumstances to improve the risk-benefit tradeoffs of financial integration. Ultimately, it is essential to see financial integration not just as an isolated policy goal but as part of a broader package of reforms and supportive macroeconomic policies.
Subjects: 
Financial globalization
emerging markets
capital flows
capital account liberalization
JEL: 
F02
F21
F36
F4
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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