A Study into Financial Globalization, Economic Growth and (In)Equality PDF
Preview A Study into Financial Globalization, Economic Growth and (In)Equality
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 LibraryofCongressControlNumber:2017933079 ©TheEditor(s)(ifapplicable)andTheAuthor(s)2017 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher,whetherthewholeorpartofthematerialisconcerned,specificallytherightsof translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval,electronicadaptation,computersoftware,orbysimilarordissimilarmethodology nowknownorhereafterdeveloped. Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthis publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesare exemptfromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformation in this book are believed to be true and accurate at the date of publication. Neither the publishernortheauthorsortheeditorsgiveawarranty,expressorimplied,withrespectto thematerialcontainedhereinorforanyerrorsoromissionsthatmayhavebeenmade.The publisherremainsneutralwithregardtojurisdictionalclaimsinpublishedmapsandinstitu- tionalaffiliations. Coverillustration:MonoCircles©JohnRawsterne/patternhead.com Printedonacid-freepaper ThisPalgraveMacmillanimprintispublishedbySpringerNature TheregisteredcompanyisSpringerInternationalPublishingAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland 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
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