Front Matter

Front Matter

Giovanni Dell'Ariccia, Paolo Mauro, Andre Faria, Jonathan Ostry, Julian Di Giovanni, Martin Schindler, Ayhan Kose, and Marco Terrones
Published Date:
December 2008
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© 2008 International Monetary Fund

Production: IMF Multimedia Services Division

Typesetting: Choon Lee

Figures: Andrew Sylvester

Cataloging-in-Publication Data

Reaping the benefits of financial globalization / Giovanni Dell' Ariccia … [et al.] — Washington, D.C. : International Monetary Fund. 2008

p. cm. — (Occasional paper ; 0251-6365 ; 264)

Includes bibliographical references.

ISBN 1-58906-748-6

1. International finance. 2. Globalization. 3. Economic policy. I. Dell' Ariccia, Giovanni. II. International Monetary Fund. III. Occasional paper (International Monetary Fund) ; 264

HC3881.R437 2008

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The following conventions are used in this publication:

  • In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
  • An en dash (–) between years or months (for example, 2006-08 or January-June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2007/08) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2008).
  • “Billion” means a thousand million; “trillion” means a thousand billion.
  • “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.


Financial globalization has increased dramatically over the past three decades, particularly for advanced economies, while emerging market and developing countries experienced more moderate increases. Divergences across countries stem from different capital control regimes, as well as from a range of persistent factors, including different degrees of institutional quality and domestic financial development. While, in principle, financial globalization should enhance international risk sharing, reduce macroeconomic volatility, and foster economic growth, in practice its effects are less clear-cut. Countries gain or lose from financial integration depending on their domestic economic and institutional conditions. The results in this Occasional Paper are broadly supportive of an approach envisaging a gradual and orderly sequencing of external financial liberalization and emphasizing the desirability of complementary reforms in macroeconomic policy framework and the domestic financial system as essential components of a successful liberalization strategy.

This paper was prepared by a staff team from the Research Department, under the direction of Jonathan D. Ostry, Deputy Director, and led by Paolo Mauro, chief of the Strategic Issues Division, and comprising Giovanni Dell'Ariccia, Julian di Giovanni, André Faria, Ayhan Kose, Martin Schindler, and Marco Terrones. The authors are grateful to Dionysios Kaltis and Mary Yang for excellent research assistance, and to Usha David for editorial assistance. Esha Ray of the External Relations Department coordinated the production and publication of the paper.

The opinions expressed in the paper are solely those of the authors and do not necessarily reflect the views of the International Monetary Fund or its Executive Directors.

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