Pattern of Global Finance and the Real Economy

Sunanda Sen

Chapter 3 in Global Finance at Risk, 2003, pp 110-155 from Palgrave Macmillan

Abstract: Abstract We dwell further, in this chapter, on the de-linking of the real and the financial sphere of activities in the world economy. Some aspects of above have already been discussed in Chapter 1. This chapter seeks to look into the reality of such discrepancies, which has been apparent with the surges as have taken place in global finance and with its failure to regenerate real output; not only in the recipient countries, but also in the capital-exporting regions. The fact that financial flows do not necessarily succeed in generating output either in the donor or in the recipient countries demands further analysis, both with theoretical explanations and the observed realities. Problems as above are compounded by the asymmetry in terms of the deleterious consequences of a downswing in the financial flows which inevitably contracts the real sector activities.

Keywords: Host Country; Home Country; Capital Flow; Trade Balance; Real Economy (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-4039-4380-4_3

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DOI: 10.1057/9781403943804_3

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