Global Financial Openness in the Advanced, Emerging and Developing Countries: A Brief Overview

Abstract

The fifth chapter opens with an analysis of de facto financial openness amongst the developed and developing countries. The measure of de facto financial openness used is the TOTAL, which is the ratio of the sum of financial assets and financial liabilities to GDP. The analysis shows that global financial flows continue to be unduly concentrated within the group of advanced countries, in spite of the fact that their contribution to world GDP creation has been significantly reduced. The difference between the average TOTAL between advanced and developing countries increased from 227:83 in 2001 to 509:130 in 2013. The author demonstrates that the rates of economic growth in the advanced economies do not correspond to the increase in the concentration of capital flows in these countries. With the exception of Germany, the leading countries actually saw significant relative drop, while countries like Italy, Greece, and Portugal even experienced both relative and absolute economic decline. The research results presented the constantly declining efficiency in the deployment of financial resources for each percentage point of GDP growth in developed countries.