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Benefits and Risks of Financial Globalization

Challenges for Developing Countries - Working Paper #58

Sergio Schmuckler

Paper  213kb pdf

This paper discusses the benefits and risks that financial globalization entails for developing countries. Financial globalization can lead to large benefits, particularly to the development of the financial system. But financial globalization can also come with crises and contagion. The net effect of financial globalization is likely positive in the long run, with risks being more prevalent right after countries liberalize. So far, only some countries, sectors, and firms have taken advantage of globalization. As financial systems turn global, governments lose policy instruments, so there is an increasing scope for some form of international financial policy cooperation.    

About the Author

Sergio L. Schmuckler
Lead Economist, Development Research Group
The World Bank

Publication Information

Type Working Paper
Program Capital Market Liberalization
Posted 06/01/04
Download 213kb pdf
# Pages 24