Concluding Remarks: Financial Openness, Economic growth and (In)Equalities in the World

Abstract

The author ends his book with concluding remarks about the causal links between financial openness and economic growth. The three main conclusions are as follows. First, the 20 fastest-growing economies during the first fourteen years of the century were mostly developing or poor countries (eighteen of twenty). Their financial systems and the degree of financial openness differed considerably. Most of them, however, achieved rapid economic growth by attracting capital from abroad through FDI. Second, a moderate relative economic decline, measured in percentage change in the growth coefficient, would not in itself be evidence of negative links between the degree of development of the financial system and the rate of economic growth. But a significant relative decline, and especially relative decline accompanied by an absolute decline, does demonstrate that the problems which brought on the global financial crisis in 2008 have roots in fundamental aspects and complexity of the advanced countries’ financial systems. The third conclusion is that even though the 20 fastest-growing economies included eighteen developing countries data on changes in gross national income suggests that the differences between countries generally, particularly the top 10% and the lowest 10%, have not in fact been reducing, but have continued increasing over the past twenty five years.