30 Globalisation

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    Globalisation

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    Globalisation

    Definition

    Financial globalization

    is defined as an amalgamation of

    domestic financial system of a particular countrywith the international organizations

    as well as financial markets.

    The integrationofnational economiesintothe international economy

    through trade, foreigndirectinvestment, capitalflows, migration, the

    spreadoftechnology, andmilitarypresence.

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    Globalisation

    Integration of global markets

    The integration of global markets by the reduction trade barriers,

    improved communication, foreign direct investment, and other

    means.

    Globalization allows a multinational corporation to make a product

    in one country and sell it in another.

    This provides jobs in one country and less expensive goods in the

    other.

    Globalization also allows for the free flow of capital between

    countries, which many believe spurs economic growth.

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    Globalisation

    Integration of global markets

    Proponents of globalization argue that it allows developingcountries to continue and hasten their levels of development, andthat it protects consumers in developed countries.

    Opponents believe that globalization serves the interests ofmultinational corporations at the expense of small businesses,which sends jobs to other countries needlessly.

    Globalization has become a household word literally since early

    1990s when Financial Globalization kicked off.

    During this period, the trade obstructions between nations werebroken apart, and the flow of capital and corporate investments

    between different countries was embarked on.

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    Globalisation

    Integration of global markets

    Massive growth have been noticed in global economy in the

    last couple of years, and in the field of technology, moreprecisely in transport and communications there was a silent

    revolution which made the globalization of finance an obvious

    choice

    IMF and World Bank were set up to endorse world tradeto keep up with the growth of Financial Globalization.

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    Globalisation

    Advantages of Financial Globalization

    Enhanced capital flow in each and every country withwhich a country may always remain prepared tocounter any financial crisis.

    Capital flows between nations increase which causeswell-organized world allocation of money

    Improved living standards of the people.

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    Globalisation

    Disadvantages of Financial Globalization

    If the economy of the country is not strong, it could beaffected by the financial shocks of a different country.

    It can cause severe disorder and cost high for stockmarket turbulence, bank failures, corporate bankruptcies,currency depreciation, etc.

    The latest example is recession. Most of the countries aremore or less affected due to financial shocks in the U.S.

    Sudden reversal of capital can also create a great economicturbulence on a large scale due to Financial Globalization.

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    Globalisation

    Will globalization be derailed

    by the recent world financial crisis?

    Inevitably, the answer is yes.

    Globalization is a highly dynamic process.

    It has produced tremendous benefits.

    In many countries,poverty levels have fallen.

    Increased trade has been transformative.

    But historically, globalization is also vulnerable to terribleand costly backlashes.

    We might think of the phenomenon as cyclical.

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