Abstract
The main objective of the proceeding is to perform a logical decomposition of the structure of external capital inflows and outflows in the Slovak republic in order to analyze the main trends in the external financial integration and its development through the period of 1994-2006. In order to fulfill our objective we observe the changes in the structure of external financial assets and liabilities in order to provide the explanation of main trends in the external capital portfolio of the Slovak republic. Finally, we explore the implications of the accumulated stock of external capital for future trade and current account balances. .
Highlights
Capital flows liberalization is one of the main determinants that formed the development of the external financial openness of the Slovak economy in the beginning of the transition process
The international financial integration provides the opportunity to the low capital country to diversify its relatively small capital base that usually reflects the natural resources availability or the national output production structure
The development of the external capital inflows and outflows in the Slovak republic is an interesting example of the potential effects of the international financial integration
Summary
Capital flows liberalization is one of the main determinants that formed the development of the external financial openness of the Slovak economy in the beginning of the transition process. The international financial integration provides the opportunity to the low capital country (in case of transition economies it is a typical situation in the beginning of the transition period) to diversify its relatively small capital base that usually reflects the natural resources availability or the national output production structure. Such a situation may result in the lowering of the overall macroeconomic volatility. The intensity of the international financial integration is expressed as a share of the selected financial assets or liabilities indicator annual change and the country’s GDP
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