A Study into Financial Globalization, Economic Growth and (In)Equality

184 Pages·2017·3.963 MB·English

by  Fikret Čaušević (auth.)

A Study into Financial
Globalization, Economic Growth
and (In)Equality
FikretČaušević
A Study into Financial
Globalization,
Economic Growth
and (In)Equality
FikretČaušević
SchoolofEconomicsandBusiness
UniversityofSarajevo
Sarajevo,BosniaandHerzegovina
ISBN978-3-319-51402-4 ISBN978-3-319-51403-1(eBook)
DOI10.1007/978-3-319-51403-1
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C
ONTENTS
1 Introduction 1
2 FinancialGlobalizationand EconomicGrowth –Literature
Review withComments 7
3 GlobalEconomic Growth,Financial Openness,
andInequality: 1990–2014 29
4 TheFastest-Growing Economies andFinancial Openness 47
5 GlobalFinancial Openness in theAdvanced, Emerging
andDevelopingCountries: ABrief Overview 75
6 FinancialLiberalization andGlobalization: Theory
andFactsOverthe LastThreeDecades 91
7 ConcludingRemarks: FinancialOpenness, Economic
growthand(In)Equalities in the World 115
Appendix:Financial Globalization, EconomicGrowth
and(In)Equalities 121
Index 173
v
L F
IST OF IGURES
Fig.4.1 China’sinternationalinvestmentposition:2004–2014
(inbillionsofUS$) 50
Fig.4.2 FDIandportfolioequitynetcapitalflowstoChina:
2001–2014(inbillionsofUS$) 51
Fig.4.3 CompositionofChina’sGDPbyexpendituresfor2006–2010
and2011–2014(leftandrightpie,respectively)(sharesin
percentagepoints;yearlyaveragesfortheperiods) 53
Fig.4.4 TotalnetFDIinflowstoIndiaandBrazil:1980–2014
cumulativeamountsfortheperiods:1981–1990,1991–2000,
2001–2010,and2011–2014–inbillionsofcurrentUS$ 68
Fig.5.1 TOTALmeasureoffinancialopenness:(assets+liabilities)/
GDPfortheadvancedanddevelopingcountries–2001–2013
(inpercentages) 77
Fig.5.2 TheinternationalinvestmentpositionandGDPofthe
UnitedStates:1990–2014 80
Fig.6.1 RelativeeconomicperformanceoftheG-10countries:
2000–2005percentagechangeinthevalueofthegrowth
coefficientfortheG-10countriesandthethreshold
percentagechangeinthevalueofCgdistinguishingbetween
relativeandabsoluteeconomicdecline 97
Fig.6.2 RelativeeconomicperformanceoftheG-10countries:
2005–2009percentagechangeinthevalueofthegrowth
coefficientfortheG-10countriesandthethreshold
percentagechangeinthevalueofCgdistinguishingbetween
relativeandabsoluteeconomicdecline 98
vii
viii LISTOFFIGURES
Fig.6.3 RelativeeconomicperformanceoftheG-10countries:
2009–2014percentagechangeinthevalueofthegrowth
coefficientfortheG-10countriesandthethreshold
percentagechangeinthevalueofCgdistinguishingbetween
relativeandabsoluteeconomicdecline 99
L T
IST OF ABLES
Table3.1 Examplesofhowtocalculatethegrowthcoefficient(Cg)
for2000 30
Table3.2 Tenfastest-growingeconomiesintheworld:1990–2000 33
Table3.3 Twentyfastest-growingeconomiesintheworld:
2000–2014 36
Table3.4 Averagerelativeeconomicgrowthbycontinent:
1990-2000-2014 39
Table3.5 Averagenationalincomecoefficient(Cni)basedonGNIin
US$PPPbyquartileanddecile:Worldin1990 41
Table3.6 Averagenationalincomecoefficient(Cni)basedonGNIin
US$PPPbyquartileanddecile:Worldin2000 42
Table3.7 Averagenationalincomecoefficient(Cni)basedonGNIin
US$PPPbyquartilesanddeciles:Worldin2014 44
Table5.1 TheTOTALmeasureoffinancialopennessforEU
(Eurozone)countries:2001–2014 86
Table5.2 Percentagechangeinthegrowthcoefficientsandtotal
bankingsectorsassetsofEurozonecountries(including
foreignbranchesandsubsidiaries):2014/2009 87
TableA.1 Growthcoefficients–world1990topdown 121
TableA.2 Fastestgrowingeconomiesintheperiod1990–2000 126
TableA.3 Fastestgrowingeconomiesintheperiod2000–2009 130
TableA.4 Fastestgrowingeconomiesintheperiod2000–2014 135
TableA.5 Rankingbythesizeofgrowthcoefficientin2014 139
TableA.6 Fastestgrowingeconomiesintheworld:2009–2014 144
ix
x LISTOFTABLES
TableA.7 Fastestgrowingeconomiesinthe2000–2005and
2005–2009 149
TableA.8 Fastestgrowingeconomiesintheperiod1990–2014 154
TableA.9 Thenationalincomecoefficient(Cni):Worldin1990 158
TableA.10 Thenationalincomecoefficient(Cni):Worldin2000 162
TableA.11 Thenationalincomecoefficient(Cni):Worldin2014 167
CHAPTER1
Introduction
Thethesisthatfinancialliberalizationisessentiallybeneficialforeconomic
growth, particularly under conditions of increased globalization of finan-
cialmarketsandtrade,wasfirstputforwardsystematicallyinanumberof
articles in the early 1970s. Their starting point was the assumption that
financial liberalization and globalization would produce more efficient
financialmarkets, becauseprivate financialinstitutionsnecessarily outper-
formstate-orpubliclyownedones,channellingresourcesmoreeffectively
towardsprojectswithlonger-termsustainabilityandhigherratesofreturn
and so fostering economic prosperity. This thesis has never been without
itsdetractorsandseemstofitthefactsatbestonlyimperfectly.Themain
purposeof thisbookisto test it.
To take just the most glaring example, China has been one of the
five fastest-growing economies in the world for each of the last twenty-
five years. In 1978, Deng Xiaoping started the opening-up to interna-
tional flows of goods, services, and capital and by the beginning of the
current decade what had been one of the world’s poorest countries was
its second largest economy.1 As a result, the most populous country in
the world is now also one of its most important capital markets, with a
share in world market capitalization up from just 1% in 2000 to more
than 15% in early 2015. In the 2014–2015, there were four Chinese
ThisbookhasbeeneditedbyanativeEnglishspeaker,DesmondMaurer,MA,to
whomIexpressmyspecialthanks.
©TheAuthor(s)2017 1
F.Čaušević,AStudyintoFinancialGlobalization,EconomicGrowth
and(In)Equality,DOI10.1007/978-3-319-51403-1_1