“Globalization in financial environment”

• Financial globalization has increased pressure and impact on the national

industries of developing countries. For historical reasons, the developing
countries' economic structure is fragile, their capital is scarce, technology
backward and market growth immature. They are vulnerable to impact in the
process of being merged into economic globalization, so they not only need
private investment and technological aid from the developed nations, but all the
more need the assistance of official capital.

• In fact, the developed nations' official capital flowing into developing countries in
the past 10 years has notably decreased. Many developed countries have failed
to earnestly undertake their responsibilities, falling far short of fulfilling the
internationally acknowledged target for aiding the developing countries.
• The World Bank report "1999 Global Development Fund" shows that the amount
of developed nations' official capital flowing into developing countries has fallen
from approximately US$60 billion in 1990 to less than US$45 billion at present.
• Financial globalization under the condition of economic globalization has, without
doubt, accelerated the flow of international capital, it, however, has also
increased the financial risk of the developing countries. Under the circumstance
wherein the financial system is not perfect and financial control capability is not
strong, if the developing countries blindly open their domestic financial market,
the negative influence of financial globalization will stand out. The best illustration
of this is the eruption of the Asian financial crisis in 1997.
• The negative influences brought about by the tide of economic globalization
obviously is not the development target of humanity. The developed nations
should bear certain responsibility for the emergence of these consequences. In
the world economic arena, the fact that the developed nations are both the
participants in the play and the makers of regulations on the play determines that
in the solutions of many international trade problems and the formulation of trade
regulations, the voice of the poor developing countries is weak.

• One measure of the extent of globalization is the volume of

international financial transactions, with over $1.2 trillion
flowing
through New York currency markets each day, and with the
volume
of daily international stock market transactions exceeding
this enormous amount.

“Six main forces with four main aspects of globalization

in Financial environment"
Forces:
Innovation and technological progress
Integration of economies
Information revolution
Advances in Communication
Advances in Transportation

Aspects:

Trade,
Capital movements,
Movement of people and finally
Spread of knowledge (and technology)

“Reasons of Globalization in world’s financial

Envirnoment”
 increases in worldwide trade and exchanges in an increasingly
open,
integrated, and borderless.

 people moving through international travel and migration

 integration of markets on a worldwide basis, and a movement

toward a borderless world, all of which have led to increases in
global flows.

 significantly lowered the costs of transportation and

communication and dramatically lowered the costs of data
processing and information storage and retrieval.
 A significance source of globalization has been trade
liberalization and other forms of economic liberalization that
have led to reductions in trade protection and to a more liberal
world trading system.

 Formation of multi National companies and businesses and

where these companies go their financial trades and works can
be seen easily through the head quarters of these companies.

 Return on investment (ROI) is High so businesses are globalizing not

only in financial area but also in operations ,marketing and other areas

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