The Real Implications of Five Decades of Financial Globalization: What are the Geopolitical Risks?
What are the real implications of the last 50 years of financial globalization?
Using in part the ‘Investment Profile’ risk metric of our International Country Risk Guide (ICRG), this NBER Working Paper found that wealthier countries have become more open to foreign capital inflows, while relatively poorer countries have been more open to foreign capital outflows, suggesting striking cross-country differences in the pace and direction of financial account opening.
Moreover, this unbalanced financial globalization has worsened capital allocation, resulting in lower world GDP and lower cross-country inequality, lower wages, and a decline in return on capital in richer countries.
Have a look: https://www.nber.org/system/files/working_papers/w34121/w34121.pdf
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