This study examines the major macroeconomic determinants and the structural relationships of current account variability, capital flows, saving and investment in open economies that are linked to the international financial markets. It explores the appropriateness of domestic policy responses (such as money stock growth, government spending, openness criteria, GDP growth) and the size of population or the impact of external shocks (such as exchange rate variability and the terms of trade uncertainty) for determining the domestic saving-investment comovement and capital flows worldwide. This analysis finds that even high positive correlations between national saving and investment rates could naturally arise within a perfect capital mobility framework where domestic policy variability and external shocks are likely to play a significant role for capital inflow.

Japan, South Korea, Mexico, France, and Spain once exercised significant control over the allocation of credit, and used that control to facilitate economic adjustment and industrial development. In the 1980s all that changed. Why and how these states dismantled their activist credit policies is the subject of Capital Ungoverned. The volume brings together five specialists in the economics and politics of these various states to assess the internal and global changes that prompted them to adopt financial liberalization.Comparison reveals the distinctive political and institutional logic that guided liberalization in each country--from the role of a newly dominant capitalist class in Korea to the replacement of state financing by private financing and self-financing in Japan, from the maneuvers of the banking establishment in Spain to attempts to attract foreign capital in Mexico. At the same time, these cases clarify the importance of international factors, in particular the shifts that occurred in U.S. policy as it sought to respond to the effects of uneven growth in the world economy.

"Gross stocks of foreign assets have increased rapidly relative to national outputs since 1990, and the short-run capital gains and losses on those assets can amount to significant fractions of GDP. These fluctuations in asset values render the national income and product account measure of the current account balance increasingly inadequate as a summary of the change in a country's net foreign assets. Nonetheless, unusually large current account imbalances, especially deficits, should remain high on policymakers' list of concerns, even for the richer and less credit-constrained countries. Extreme imbalances signal the need for large and perhaps abrupt real exchange rate changes in the future, changes that might have undesired political and financial consequences given the incompleteness of domestic and international asset markets. Furthermore, of the two sources of the change in net foreign assets -- the current account and the capital gain on the net foreign asset position -- the former is better understood and more amenable to policy influence. Systematic government attempts to manipulate international asset values in order to change the net foreign asset position could have a destabilizing effect on market expectations"--NBER website

Employs a geographical perspective to the study of international relations, thereby integrating the political and economic dimensions in a study of the international economy from 1800 to the present day.

Reconsiders the current account in the context of integrated world capital markets. The case of the UK receives particular emphasis with financing and competitiveness issues fully appraised.

As awareness of the process of globalization grows and the study of its effects becomes increasingly important to governments and businesses (as well as to a sizable opposition), the need for historical understanding also increases. Despite the importance of the topic, few attempts have been made to present a long-term economic analysis of the phenomenon, one that frames the issue by examining its place in the long history of international integration. This volume collects eleven papers doing exactly that and more. The first group of essays explores how the process of globalization can be measured in terms of the long-term integration of different markets-from the markets for goods and commodities to those for labor and capital, and from the sixteenth century to the present. The second set of contributions places this knowledge in a wider context, examining some of the trends and questions that have emerged as markets converge and diverge: the roles of technology and geography are both considered, along with the controversial issues of globalization's effects on inequality and social justice and the roles of political institutions in responding to them. The final group of essays addresses the international financial systems that play such a large part in guiding the process of globalization, considering the influence of exchange rate regimes, financial development, financial crises, and the architecture of the international financial system itself. This volume reveals a much larger picture of the process of globalization, one that stretches from the establishment of a global economic system during the nineteenth century through the disruptions of two world wars and the Great Depression into the present day. The keen analysis, insight, and wisdom in this volume will have something to offer a wide range of readers interested in this important issue.