The Financial Silk Road: Globalisation and the Eastwards Shift of Capital

Abstract

The World economy is remorselessly shifting Eastwards. Capital is following, especially foreign direct investment (FDI). This forms part of the Financial Silk Road. The Fall of the Berlin Wall precipitated economic reforms and the privatisation of State assets in other regions, notably Latin America. Actions of German capital also evidences this Eastwards shift. More than half of German FDI holdings were located in the West in the year 2000, but this has since fallen dramatically, with Eastern Europe, Russia, Central Asia and China the beneficiaries. Germany is effectively channelling surplus funds earned from Southern Europe into these Eastern regions, and so starving her poorer EU neighbours of capital. These capital shifts will exacerbate the existing economic and social divisions between Northern and Southern Europe, further raising geopolitical tensions.