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Essay / Research Paper Abstract
A 3 page paper discussing some of the ways that economic growth contribute to the emergence of intermediate financial structures including thrift institutions, insurance companies and pension funds, and how they, in turn, contribute to increased economic growth. The development of these intermediaries lends stability to the economy by providing a broader base for its operation: if one segment fails, the others provide some cushion for the economy. Bibliography lists 4 sources.
Page Count:
3 pages (~225 words per page)
File: CC6_KSfinIntlMktsG.rtf
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Unformatted sample text from the term paper:
nations actively seek foreign direct investment (FDI), which provides capital for development that otherwise would not be available to the host nation. Most capital arriving in nations in the
FDI does not enter developing nations, however. Rather, it is invested in countries where there are well-developed financial markets that have both contributed to and resulted from the growth
of financial services and the support economy growing from industrial activity. Money "and financial markets stimulate investment in productive activities, which in turn spur economic growth." The purpose
here is to examine the reasons this is true. Increased International Capital Movement Several years ago, Britains The Economist reported that in the
late 1980s, "about $190 billion passed through the hands of currency traders in New York, London and Tokyo every day. By 1995 daily turnover had reached almost $1.2 trillion" (Capital
goes global, 1997; p. 87). Private capital movement increased at much the same rate. In 1990, about $50 billion in private capital flowing into emerging markets; by 1996
that amount had increased to $336 billion (Capital goes global, 1997). That trend slowed some after the advent of the Asian currency crisis in 1997, but it slowly recovered
to begin its inexorable growth once again. Much of the capital investment made throughout the world is directed to emerging markets, but the
bulk of it is not. Despite the rush to globalization that was occurring in the mid-1990s, The Economists report places only about 28 percent of global capital investment being
directed to emerging markets. Ram and Zhang (2002) recount the World Banks report of increases in FDI flows during the 1990s. Total
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