Chapter 1 International Financial Markets: Basic Concepts

Chapter 1 International Financial Markets: Basic ConceptsIn daily life, we find ourselves in constant contact with internationally traded goods. If youenjoy music, you may play a manufactured CD of music by a Polish composer througha Japanese amplifier and British speakers. You may be wearing clothing made in China oreating fruit from Chile. As you drive to work, you will see cars manufactured in half a dozendifferent countries on the visible in daily life is the International trade in Financial assets, but its dollar volumeis much greater. This trade takes place in the International Financial markets. When inter-national trade in Financial assets is easy and reliable due to low transactions costs in liquidmarkets we say International Financial markets are characterized byhigh capital capital was highly mobile in the nineteenth century. The early twentieth cen-tury brought two world wars and the Great Depression. Many governments implementedcontrols on International capital flows, which fragmented the International Financial marketsand reduced capital mobility.

ows to emerging markets in the 1990s.3 Private capital responded to the e orts of many Latin American countries to liberalize, privatize, open markets, and enhance macroeconomic stability. Countries in Central and Eastern Europe began a transition to-ward market economies, and rapid growth in a group of economies in East Asia had caught

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  International, Capital, Market, Emerging, Economies, To emerging, Market economies

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