andJeffreyG.Williamson,editors.PDFVIP

This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Globalization in Historical Perspective Volume Author/Editor: Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson, editors Volume Publisher: University of Chicago Press Volume ISBN: 0-226-06598-7 Volume URL: /books/bord03-1 Conference Date: May 3-6, 2001 Publication Date: January 2003 Title: Financial Systems, Economic Growth, and Globalization Author: Peter L. Rousseau, Richard Sylla URL: /chapters/c9594 8 Financial Systems, Economic Growth, and Globalization Peter L. Rousseau and Richard Sylla What is the relationship between a country’s ?nancial development and its economic growth? And how do a country’s ?nancial development and eco- nomic growth relate to the extent of its participation in the global economy? In particular, is there a relationship between domestic ?nancial develop- ment and participation in global capital markets? Few would doubt that countries with highly developed ?nancial systems might well export capital to other countries. But are there conditions under which having such a sys- tem might also promote imports of capital? These are the broad questions that motivate our paper. To address the questions and attempt to answer them, we draw on in- sights from two bodies of research that have developed independently of one another, but that in our view are quite related. One includes the work of economic historians on the development of ?nancial systems—especially banking systems—in various countries, and the impact of ?nancial devel- opments on economic growth within those countries. Also included in this historical work is a vast body of literature on aspects of globalization: cross- border ?nancing and capital ?ows, international banking and ?nancial crises, and the integration of the world’s money and capital markets. Among economic historians, these two