Causes of Financial Globalisation and Its Consequences on Developing Essay

Causes of Financial Globalisation and Its Consequences on Developing Countries - adjudicate ExampleAccording to Sergio (2004), in the last one hundred years, only a few countries and sectors participated in financial globalization by which capital flows tended to follow migration and was generally directed toward supporting trade flows. upper-case letter flows took the form of bonds, and the flows were of a long-term nature. International investment was henpecked by a small rate of freestanding companies, and financial intermediation was concentrated in a few family groups. The international system was dominated by the gold standard, in which gold was employ to backed national currencies. The turn around things came at the heals of the effects of the first world war and the great depression that saw governments reversed their position on financial globalization, and were now imposing capital controls in order to regain financial policy impropriety with the 1950s and 1960s witne ssing the lowest capital flows. This all happened because the Bretton Woods had dominated the international system and used a system of fixed but adjustable exchange rates, limited capital mobility, and autonomous monetary policies that seriously affected the developing counties. But the developing countries saw the light of day when the 1973 oil crisis jounce the international community and at that time, the Bretton Woods system of fixed exchange rates break overpower giving the leeway for international banks with fresh funds to invest in developing countries mainly in the areas of financing public debt in the form of syndicated loans. Developing countries at that time were able to open up new avenues for capital mobility while at the same time maintaining their autonomous monetary systems.