Essays on The Global Financial Crisis, the Rationale of Globalization Coursework

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The paper "The Global Financial Crisis, the Rationale of Globalization" is a perfect example of finance and accounting coursework. The growth of the International financial marketplaces towards the end of the 20th century was based on the sole initiative that resources have to flow across the borders of nation-states with little or no constraints and parameters. The free will for the movement of funds, therefore, turned out to be the new convention and disagreements occurred at all, they were presupposed in opposition to the administrative capitals and in favor of market places who in this case were the imaginary holders of control (Abdelal 2007).

During this period, the International Monetary Fund (IMF) began a form of unofficial endorsement of liberalizing capital and the rules of the European Union (EU), and even those of “ the Organization for Economic Cooperation and Development (OECD)” , obligated its members, some among the thirty or so wealthiest nations to permit all cross-border streams of funds. By the 1980s, global finance was erected, and upheld by prescribed organizational establishments (Abdelal 2007). But things were not always that way. Any transaction carried out by managers, investors and even banks in the 1990s such as trading in bonds and stocks and borrowing of the fund in the form of foreign currency, for instance, had been unlawful in most nation-states for many years earlier on and in some countries up to about two years before the 1990s.

Evading such constraints was possible but complicated and costly because the rules governing global finance that had been written in the 1940s and 1950s were confining in terms of plan and dogma (Obstfeld & Rogoff 1995).

It was during that time that members of the international community in finance began to collectively voice their concerns about these issues and established a new set of beliefs on how to subvert the outcomes of the short-term tentative flow of capital or “ hot money” and the necessity for administrative nation-state sovereignty from Global fiscal market places. The prevailing convention of the time was that of regulation and categorization of capital (Mody & Antu 2005). With time, as the rules were relaxed, and an era of freedom materialized which was enjoyed by managers, and investors as they engaged in all manners of financial transactions.

Among these, a foreign exchange which had been unheard of by the year 1945 was perhaps the most symbolic as a necessity for cross-border capital flow (Eswar & Rajan 2008). By the year 1973, the standard day by day income in distant exchange was fifteen billion dollars which were by the standards of those a figure unimaginable. By the year 1998, about 1.5 trillion dollars changed hands on a daily basis in the foreign exchange markets and by the year 2004, the sum had risen to 1.9 trillion dollars. The rationale of Globalization Lowering of barriers in the flow of capital, goods and labor set in motion the globalization process in finance and business in general (Gough 2002).

The Globalization processes were brought about by the need to reduce barriers for the free movement of goods, capital and labor amongst all the countries of the world. Some countries have had their reservations about the processes and while many are for it, it is not without their own reservations either (Quinn 2003)Those that are for the globalization processes believe that lowering of trade barriers will boost growth and that growth is the fountain of wealth for everyone across the world.

The idea behind this belief is that rich countries should embrace the idea of moving towards industries where they are likely to have an advantage such as those of technology and let the developing countries to grow and export.

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