Liberalization Of Capital Flows Research Articles

International Financial Integration in the Presence of an International Duopoly

We revisit the debate on the benefits of international financial integration. We build a two-country model with an international duopoly to examine how the liberalization of international capital flows, affects the welfare of each country and their joint welfare. Our results show that international capital flows' liberalization cannot guarantee the improvement in each country's welfare and their joint welfare. Overall, we find that international financial integration has very heterogeneous effects, depending on the market size, the initial level of capital stock and the degree of product competition.

THE CONCEPT OF LOGISTICS CLUSTERS AND EFFICIENCY OF ECONOMIC ENTERPRISES

In Poland, Europe and worldwide, business strategies are implemented to ensure economic growth as a result of the impact of innovation and regional competitiveness. One of the effective and already proven methods of this strategy is building a competitive advantage based on the development of regional clusters. In their operations, clusters use the benefits of agglomeration, scale, range as well as local facilities resulting from production processes and distribution of knowledge. The concept of logistics clusters perfectly fits the aims of business clusters. The efficiency of logistics processes is perceived through the prism of cluster’s efficiency and effectiveness; the cluster philosophy can be used in logistics activities in order to seek optimization of its processes. Combining a cluster project with a logistics activity is one of the ways to improve competitiveness. Logistics clusters have the ability of a wider use of solutions developed by individual companies forming a cluster as well as solutions developed by companies from other sectors with which such enterprises cooperate. It is possible due to the development of innovative solutions in customer service, based on the experienceand cooperation of enterprises which can be considered as logistic and entities from other sectors of economy. The emergence of logistics clusters is stimulated by processes of internationalization and liberalization of material and capital flows, permanent search for new sources of competitive advantage, e. g. by optimizing logistics processes leading to cost reduction and by minimizing development disproportions of EU regions. The influence of market environment and existing trends causes that the analysis of a value chain and its network of connections as well as the course of processes should lead to a stage of selecting the most beneficial structures of this chain and the sequence of processes in this chain (Obłój, 1998, p. 215). As a consequence, logistics clusters including, for example, companies from freight-transportation-logistics (FTL) industry, will be looking for more effective ways of functioning. While examining the impact of logistics processes implemented in cluster initiatives on company’s financial results, it is necessary to determine the share of logistics costs in total costs and their impact on other areas of this company.

THE DEVELOPMENT OF THE BANKING SYSTEM IN POLAND DETERMINED BY THE PROCESSES OF ADJUSTMENT TO THE NORMATIVE AND TECHNOLOGICAL STANDARDS OF THE EUROPEAN UNION AND CONTEMPORARY PROCESSES OF ECONOMIC AND INFORMATIONAL GLOBALIZATION

The current processes of economic and information globalization are mainly related to the successively progressing integration of financial markets, the development of ICT and Internet technologies. The liberalization of capital flows, progressing since the 1970s, was determined by many economic and political factors, including the modification of the international monetary system. The main determinants of economic and information globalization include such processes as liberalization of capital flows, deregulation of international financial markets and progress in the field of ICT. These processes constituted favorable conditions for the reconstruction of the market financial system, including the banking sector in Poland in the 1990s. Since the beginning of the systemic and economic transformation that has been taking place in Poland since 1989, the banking system and capital market institutions have been rebuilt. It referred to the Warsaw Stock Exchange market institutions, taking into account the opening of the economy to foreign capital. Foreign financial corporations taking over domestic banking entities in Poland have introduced their modern transactional and teleinformation technologies and new standards for entering into financial transactions. These processes were the main determinants of economic and information globalization that has been made in Poland since the 1990s.

Evaluating the Effects of Trade and Investment Cooperation in East Asia

The authors analyze trade and investment flows within East Asian countries as a part of international production networks (IPNs) functioning in the region. The study focuses on FDI flows between ASEAN+3 countries. Liberalization of cross-border capital flows contributed to the growth of FDI flows between ASEAN+3 countries. During 2010–2016 the average annual FDI inflows to ASEAN amounted to $112.1 billion. The maximum volume was in 2014 ($133.1 billion), the minimum – in 2011 ($87.7 billion). The average annual growth rate of FDI inflows was zero. The simulation results show that due to the factors of FDI attraction East Asian countries form two groups. The first group includes ASEAN for which GDP and population of the host country don’t affect FDI inflows because these countries are mostly included in global IPNs and goods produced by TNCs on their territory aren’t consumed by local population and are exported to the source countries of investment. In this case, the main factors of FDI attraction are cheap local resources. The second group includes the “Big Three” for which the main factor of FDI attraction is the solvent population. In this case, the goods produced by TNCs are consumed by local population. Thus, the substantial dependence of ASEAN on “outward” FDI is due to the integration of these countries into global IPNs. Per-haps, with the increasing solvency of local population, ASEAN countries will change their position as China that has become the largest goods consumer and capital exporter in the region.

East Asia–Regional or Global Financial Integration?

The article considers the main directions of further financial integration of East Asian countries, developing deep and stable connections within the framework of global and regional economy. Currently, among the investment flows that lay ground for financial integration with other regions, the leading place is taken by funds from and to the countries of North America and Western Europe. At the same time, the growth in intraregional investment, especially in terms of assets, significantly exceeds growth from the group of developed countries, the share of participation of the latter in interregional relations is gradually decreasing. Through the development of regional integration at various levels of economic interaction, Asian countries are seeking ways to reduce vulnerability and contagion from the processes of financial globalization. While the trends in regional financial integration have certain advantages, they also involve some risks. On the one hand, the Asian region can benefit from greater financial diversification and reduce the concentration and dependence from western economies. On the other hand, this process can bring imported volatility from other countries of the region and reduce the regulatory counteraction from various types of shocks that arise in the economies of these countries and beyond. The intensity of further convergence of the financial markets and institutional arrangements of Asian countries will be largely determined by the scenarios of development of the world economy, as its slowdown and, consequently, decrease of activity in the global capital market clearly leads to strengthening of regional integration processes. The expansion of intraregional cross-border financial transactions requires a significant expansion of the regulatory framework for cooperation, the conclusion of two-and multilateral banking and investment agreements, as they directly determine the process of capital flows liberalization. As regional financial cooperation in Asia has not yet developed as in Western Europe and North America, it is important to pay attention to such essential elements as economic and financial supervision, normative harmonization of banking and securities market, strengthening of regional financial security system and maintenance of development of various segment of financial market, first of all bonds in local currency. In the process of work the basic methods of economic analysis were applied, namely basic system and statistical methods. The use of the system approach allowed to consider the movement of capital flows from an to Asia over a long period of time, the evolution of financial integration models. Calculations and comparisons, the construction of tables was carried out on the basis of statistical methods, which are applied for the study of currency and credit relations. The information base of the studies was based on reports and statistics of the World Bank (IBRD), the International Monetary Fund (IMF), the Asian Development Bank, as well as analytical materials of the Institute of World Economy and International Relations of RAS.

The Impact of Basel Standards on Financial Management: The Case of the Republic of Serbia

The traditional role of a financial manager, based on securing sources of financing and cash management for the smooth running of a business organization, has changed significantly over the last decades. To a large extent, external factors have contributed to that; such as the globalization of financial markets, the liberalization of capital flows, changes in the macroeconomic environment, and the development of new products and services. Basel standards have a special impact on the financial management in banking organizations. Basel standards, as the basis of regulatory regimes in banking systems around the world, have especially contributed to the development and improvement of risk management and financial management processes. This paper identifies the challenges in the process of financial management in banks in the Republic of Serbia, conditioned by Basel standards, especially regarding the capital requirements. Faced with extremely strong competition and a trend of declining margins in the banking market in the Republic of Serbia, finding the way to optimize available capital is an imperative. One of the ways is the application of advanced approaches for calculating capital requirements. Through the example of capital requirements for operational risk, the paper confirms that the advanced calculation of capital requirements is one of the ways to optimize capital and its further more productive use.

A Wavelet-Based Study of Systematic Risk: The Public Real Estate Markets Case

In this study, we examine the dynamics of real estate local and global betas using a novel approach - wavelet analysis on nine Asia-Pacific and the US public real estate markets from January 1995 to June 2016. Specifically, Wavelets are localized in both time and scale, and can be used to filter data up into different frequency components. We appeal to the continuous wavelet transform to estimate the two real estate betas across the usual three investment horizons (short-run, medium-term and long-run), as well analyze their dynamic causality relations in asset pricing from the time-frequency perspective. The main empirical insight is that both real estate local beta and real estate global beta coefficients have a time-scale tendency in sample real estate markets. Their joint market risk increases in the long-run at both the local and global levels. The causal relationship between the real estate local/global betas of the US and Asian real estate markets is the strongest at longer time horizons. Moreover, there is non-linear causal relationship between real estate global beta and real estate local beta in all three investment horizons, with a strong feedback relationship exists between the two real estate beta measures in the medium-term for 80% of the sample real estate markets. A better understanding regarding the implications for real estate capital market securitization and market integration at the local and international levels has become important because international financial markets have become increasingly interdependent with continuing liberalization of cross-border capital flows.

External shocks, consumption-smoothing and capital mobility in India: evidence from an intertemporal optimization approach

ABSTRACTWe examine the solvency of India’s current account (CA) in the post-liberalization period using intertemporal optimization approach to the CA. Using quarterly data ranging from 1996Q1 to 2014Q2, we estimate a benchmark consumption-smoothing model and an extended model that incorporates external shocks. Overall, we find that the predicted optimal CA in both the models can track the actual CA movements and the extended model performs better over the benchmark model. Further, we also find that the optimal CA is more volatile than the actual CA which implies that the capital flows have been less than optimal and thus makes an interesting case for further liberalization of the capital account. Our findings suggest that policies aimed at further liberalization of capital flows will allow larger CA deficits to achieve higher economic growth since it will help agents to further smoothen their consumption without worrying about risks associated with insolvency.

(Liberalization of Capital Flows in Russia and the OECD Code)

Russian Abstract: Либерализация движения капитала является ослаблением ограничений в отношении потоков капитала через границы страны. Она способствует финансовой интеграции. В России сохраняется существенное число барьеров для движения капитала, которые не применяются в странах ОЭСР, где регулирование трансграничных потоков капитала осуществляется в соответствии с принципами Кодекса либерализации движения капитала ОЭСР. English Abstract: Liberalization of capital мovements is the elimination of restrictions on the capital flows across the country's borders. It promotes financial integration. Russia retains a number of re-strictions on the movement of capital that are not applied in OECD’s countries where the regulation of cross-border capital flows is carried out in accordance with the principles of the OECD Code of Liberalisation of Capital Movements.

Demographic Dynamics, Savings, Investment and Current Account

<p class="Default">The upturn in the world economy brought with it the renewed attention to the issues of current account imbalances. Whereas large part of it is political, the issue still attracts some economic attention. In this paper the empirical side of the current account dynamics is addressed. We enquire of the relationships between the current account and savings dynamics, with the emphasis on the role of the “high savings” demographic cohorts (the population and/or labor force between 40 and 64). With the emphasis on the EUs “large” countries, we conclude that there is a significant role of this “high saving” population group in determining the current account dynamics for the consistent “high” surpluses countries of Germany and Netherlands.</p><p class="Default">The role of this population group is, however, rejected for France, Italy and Spain. In those countries the current account dynamics is dominated by (seemingly unexpected) liberalization of capital flows and the subsequent need for stabilization policies. Similarly, the dominant role of the demographic dynamic is rejected for the comparison, floating exchange rate countries of USA and Japan.</p>

Demographic Dynamics, Savings, Investment and Current Account

<p class="Default">The upturn in the world economy brought with it the renewed attention to the issues of current account imbalances. Whereas large part of it is political, the issue still attracts some economic attention. In this paper the empirical side of the current account dynamics is addressed. We enquire of the relationships between the current account and savings dynamics, with the emphasis on the role of the “high savings” demographic cohorts (the population and/or labor force between 40 and 64). With the emphasis on the EUs “large” countries, we conclude that there is a significant role of this “high saving” population group in determining the current account dynamics for the consistent “high” surpluses countries of Germany and Netherlands.</p><p class="Default">The role of this population group is, however, rejected for France, Italy and Spain. In those countries the current account dynamics is dominated by (seemingly unexpected) liberalization of capital flows and the subsequent need for stabilization policies. Similarly, the dominant role of the demographic dynamic is rejected for the comparison, floating exchange rate countries of USA and Japan.</p>

The development of the pork market in the world in terms of globalization

The globalization of the world economy and the processes associated with the liberalization of trade, capital flows and technology produce certain effects for the development of the agricultural sector. This study is aimed at identifying determinants of the development of the pork market ona global scale. The analysis includ changes in pork production, foreign trade and the activities of the biggest leaders in the pork market. Literature studies, including reports AHDB and USDA were used in the research. The analysis shows that the increasing demand for food and the high cost of productionis a global challenge for pork producers. Increases of industrialization and concentration of production have been found allowing the use of economies of scale. The activities of transnational corporations that invest capital is becoming increasing important where highest profits are achieved. Thecompetition in international trade is growing, mainly from countries in North and South America which have a price advantage in exports.

Social costs of illicit financial flows in low- and middle-income countries: the case of infant vaccination coverage

The liberalization of capital flows is generally associated with prospects of higher growth. However, in developing countries, opening the capital account may also facilitate the flow of capital out of the country through illicit financial flows (IFFs). Given that IFFs drain the scarce public resources available to finance the provision of public goods and services, the extent of illicit capital flows from developing countries is serious cause for concern. In this context, as a first step in analysing the social costs of IFFs in developing countries, this article studied the relationship between IFFs and infant immunization coverage rates. Data for 56 low- and middle-income countries for the period 2002-13 were used in the empirical analysis. The main result was that the relative level of IFFs to total trade negatively impacted vaccination coverage but only in the case of countries with very high levels of perceived corruption. In this case, the total effect of an annual 1 p.p. increase in the ratio of IFFs to total trade was to reduce the level of vaccination coverage rates over the coming years by 0.19 p.p. Given that there was an annual average of 18 million infants in this cluster of 25 countries, this result suggests that at least 34000 children may not receive this basic health care intervention in the future as a consequence of this increase in IFFs in any particular year.

For a political economy of financialization: theory and evidence

Abstract The end of the Bretton Woods agreement led not only to changes in the international economic relations, but also in the very way in which capitalism functions. The liberalization of capital flows and deregulation and integration of financial markets under US leadership gave rise to a new systemic pattern of wealth, financialization, in which operations with financial assets received increased importance in the management of wealth by households and enterprises, and not only by banks and the other financial market institutions. Unlike most recent interpretations of this phenomenon, this one does not indicate a tendency of the system towards stagnation, but rather an increase in the instability that characterizes it, reinforcing the moments of expansion, contraction, as well as leading to crises. In fact, with the generalization and the dominance of finance, borrowing and spending decisions by enterprises and households are now increasingly responsible for current and expected fluctuations in the stock of wealth, which in turn are responsive to current and expected fluctuations in the prices of financial assets. This implies a transformation in the relationship between the state and the market, with central banks and national treasures becoming hostage to the need to prevent private losses and the perverse effects they may exercise over output, income and employment levels of the economy.

Mode 4 trade in services: promoting temporary labour mobility via the trade détour?

A comprehensive process of the liberalisation of trade and capital flows notwithstanding, neoliberal globalisation has not been equally successful in freeing the international movement of labour. With the General Agreement on Trade in Services, (GATS), the WTO set up a novel legal framework within the domain of trade politics that includes the cross-border movement of natural persons to deliver services, labelled Mode 4, thus aiming at the promotion of temporary labour mobility. This article seeks to explain the emergence of Mode 4 and its subsequent development as the outcome of a particular politics of scale motivated by the interests of transnational capital as well as the strategic selectivity of specific institutional terrains. The result has been a compromise that restricts Mode 4 liberalisation to highly qualified personnel only.

Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies

Capital flows can deliver substantial benefits for countries, but also have the potential to contribute to a buildup of systemic financial risk. Benefits, such as enhanced investment and consumption smoothing, tend to be greater for countries whose financial and institutional development enables them to intermediate capital flows safely. Post-crisis reforms, including the development of macroprudential policies (MPPs), are helping to strengthen the resilience of financial systems including to shocks from capital flows. The Basel III process has improved the quality and level of capital, reduced leverage, and increased liquid asset holdings in financial systems. Drawing on and complementing such international reforms at the national level, robust macroprudential policy frameworks focused on mitigating systemic risk can improve the capacity of a financial system to safely intermediate cross-border flows. Macroprudential frameworks can play an important role over the capital flow cycle, and help members harness the benefits of capital flows. Introducing macroprudential measures (MPMs) preemptively can increase the resilience of the financial system to aggregate shocks, including those arising from capital inflows, and can contain the build-up of systemic vulnerabilities over time, even when such measures are not designed to limit capital flows. While the risks from capital outflows should be handled primarily by macroeconomic policies, a relaxation of MPMs may assist, as long as buffers are in place, in countering financial stresses from outflows. Capital flow liberalization should be supported by broad efforts to strengthen prudential regulation and supervision, including macroprudential policy frameworks. The Fund has two frameworks to help ensure that its advice on MPPs and policies related to capital flows is consistent and tailored to country circumstances. The frameworks (the Macroprudential framework and the Institutional View on capital flows) are consistent in terms of key principles, including avoiding using MPMs and capital flow management measures (CFMs) as a substitute for necessary macroeconomic adjustment. The appropriate classification of measures is important to ensure targeted advice consistent with the two frameworks. The conceptual framework for the assessment of measures laid out in this paper will assist staff in properly identifying MPMs and measures that are designed to limit capital flows and to reduce systemic financial risk stemming from such flows (CFM/MPMs), and thereby ensure the appropriate application of the Fund’s frameworks, so that staff policy advice is consistent and well targeted. The Fund will continue to develop and share expertise in using MPMs, and integrate these findings into its surveillance and technical assistance, which should contribute to building international understanding and experience on these issues.

FIIs Investment and Economic Growth: A Case Study of Indian Economy

A major feature of economic reforms in India since 1991 has been a progressive liberalisation of external capital flows, especially non debt creating ones like Foreign Direct investment (FDI) and Foreign Institutional Investment (FII).This opened a new door for the foreign investors to invest in India due to which a large number of foreign institutional investors (FIIs) flocked towards India. In this paper, we make an effort to study cause and effect relationship between FIIs' inflows and economic growth in India. The study covers the period from 1994 to 2016. The pragmatic relationship between FII inflows and economic growth has been examined by applying Engle- Granger Co-integration test, Granger Causality test and further VAR model. The results of the study have given no backing to the speculation that FII inflows have the capability of impacting the process of economic growth in India. Further, we have also found that economic growth is not a substantial determinant of FII inflows in India.

Rynek onshore i offshore juana chińskiego

Juan chiński jest instrumentem finansowym o rosnącym znaczeniu w skali regionalnej oraz światowej. Powolna liberalizacja przepływów kapitałowych w odniesieniu do juana przyczyniła się do zwiększenia jego wykorzystania w obrotach handlowych oraz rozliczeniach finansowych, zwłaszcza dokonywanych poza krajem macierzystym. W artykule sformułowana została hipoteza, że najważniejsze znaczenie dla umiędzynarodowienia juana ma funkcjonowanie i dynamiczny rozwój rynku offshore w ramach centrum finansowego w Hongkongu. W celu weryfikacji przyjętej hipotezy analizie poddano cechy rynku offshore w Hongkongu, determinanty kształtowania się kursu juana i znaczenie juana w obrotach walutowych oraz porównano rynek onshore i offshore renminbi. Na podstawie danych uzyskanych z serwisu Thomson Reuters przeanalizowano zmiany kursu walutowego juana CNY/USD i CNH/USD w latach 2010–2014 na rynku spot, a także dokonano szczegółowej analizy dotyczącej kształtowania się spreadu pomiędzy tymi jednostkami rozliczeniowymi.

Capital Flows - Review of Experience with the Institutional View

Capital flows are an important aspect of the international monetary system. They provide significant benefits, both direct and indirect. At the same time, they also carry risks, and a key challenge for countries is how to harness the benefits while managing the risks. The institutional view on the liberalization and management of capital flows provides the Fund with a basis for consistent advice on policies related to capital flows. This paper reviews countries’ experiences with handling capital flows in the period since the adoption of the IMF’s institutional view in 2012. Based on the experience, it identifies a few areas in which the view would benefit from further clarification or elaboration.

International Experience of Capital Flows Liberalization

In this research we concentrate on such instruments of regulatory policy as restrictions for capital flow and currency regulation. The study highlights the international experience of managing capital flows, considers the consequences of policies to manage capital flows and currency regulation in the world, and summarizes the recommendations of international financial institutions in this regard. Given the globalization of economic processes and the high level of openness in the Ukrainian economy, a strategic goal of currency regulation reform in the country has to be the gradual liberalization of capital flows. This is particularly observed in the Association Agreement with the EU and other documents. In order to take full advantage of liberalization and minimize the risks associated with volatile capital flows, it is necessary to implement a series of measures aimed at improving institutional capacity to manage the effects of both the inflow and outflow of capital in the intermediate stages of liberalization. The approach generally corresponds to the Comprehensive Program for Financial Sector Development in Ukraine Until 2020, the IMF, and the Memorandum of Association Agreement between Ukraine and the EU.