Many prominent critics regard the international financial system as the dark side of globalization, threatening disadvantaged nations near and far. But in The Next Great Globalization, eminent economist Frederic Mishkin argues the opposite: that financial globalization today is essential for poor nations to become rich. Mishkin argues that an effectively managed financial globalization promises benefits on the scale of the hugely successful trade and information globalizations of the nineteenth and twentieth centuries. This financial revolution can lift developing nations out of squalor and increase the wealth and stability of emerging and industrialized nations alike. By presenting an unprecedented picture of the potential benefits of financial globalization, and by showing in clear and hard-headed terms how these gains can be realized, Mishkin provides a hopeful vision of the next phase of globalization.
Mishkin draws on historical examples to caution that mismanagement of financial globalization, often aided and abetted by rich elites, can wreak havoc in developing countries, but he uses these examples to demonstrate how better policies can help poor nations to open up their economies to the benefits of global investment. According to Mishkin, the international community must provide incentives for developing countries to establish effective property rights, banking regulations, accounting practices, and corporate governance—the institutions necessary to attract and manage global investment. And the West must be a partner in integrating the financial systems of rich and poor countries—to the benefit of both.
The Next Great Globalization makes the case that finance will be a driving force in the twenty-first-century economy, and demonstrates how this force can and should be shaped to the benefit of all, especially the disadvantaged nations most in need of growth and prosperity.
"This is an excellent, easy-to-understand and well-written exposition of the benefits of financial globalization, persuasively setting out the case for financial liberalization in developing countries—against the tidal wave of much current academic thinking on the matter."—Nigel Grimwade, Times Higher Education Supplement
"Frederic Mishkin . . . argues in an important new book, foreign capital can bring big gains at the microeconomic level: more competition, new technology and modern managerial know-how. Inflows of foreign direct investment into the financial system itself are particularly valuable to an emerging country."—Financial Times
"Frederic S. Mishkin . . . argues that when handled with proper safeguards, financial openness can confer many benefits that are often overlooked, like reducing corruption and busting up local monopolies and business oligarchies."—Paul Blustein, Washington Post
"The next great globalization, according to Frederic Mishkin's new book . . . will be financial in character: the flow of foreign money into stocks, bonds and banking in emerging economies. . . . Mr. Mishkin makes a clear and compact case for cosmopolitan capital; and his footnotes . . . weigh and tally a wealth of economic research."—The Economist
"In this economic equivalent of tough love, Mishkin seldom uses a qualifying phrase. The premise is crystal clear: choose the path of globalization that leads to economic development, higher income levels, and general prosperity, or choose the path of globalization that leads to stagnation, stasis, and lower living standards. . . . Advocates of free trade will nod their heads in agreement, and opponents will find plenty of food for thought."—Choice
"The Next Great Globalization is a compelling read for anyone with an interest in the real-life complexities of economic development, and its focus on the often overlooked or maligned role of financial institutions is very welcome."—Diane Coyle, International Affairs
"Offers a plan for reform of developing nations' banking systems. . . . Valuable—and achievable—recommendations for change. . . . The Next Great Globalization describes the failings of the International Monetary Fund well, in part a result of Mishkin's experience as an outside evaluator of the organization."—BusinessWeek
"This book addresses an important global problem: the low state of development experienced by much of the world's population, and it makes a valuable contribution to the development literature by focusing on domestic institutions. Moreover, while most economic discussion about institutions is highly abstract, Mishkin focuses on financial institutions."—Eva Marikova Leeds, Eastern Economic Journal
"This book by a prominent economist and Fed Governor provides invaluable insights into the financial development process, drawing on theoretical research and country experiences to distill the lessons for policymakers. It explains how globalization—both real and financial—can bring prosperity, stability, and wealth to emerging market countries that put in place the necessary institutional reforms when liberalizing their financial systems. The Next Great Globalization is intended not just for economists but also for broader audiences with an interest in financial issues."—Miranda Xafa, World Economics
"This is a workmanlike book written in plain English about an important but currently controversial subject: financial globalization. Its judgements are, by and large, sound. . . . [I]t is . . . worthwhile to have the traditional virtues of financial globalization set out simply and clearly."—Deepak Lal, International History Review
"This book's arguments are backed by sound economic research, and there are important policy lessons to be learned. The material will be valuable for economists and policymakers across the world, but particularly to those working in developing countries and at international financial institutions."—José R. Sánchez-Fung, Economic Change and Restructuring
"The Next Great Globalization offers real understanding of both the causes of recent financial crises around the world and the dramatic opportunities we have in future development in world financial architecture. Mishkin's thoroughness and at the same time his grasp of the big picture come through beautifully in this book."—Robert J. Shiller, author of Irrational Exuberance and The New Financial Order
"At long last a book that stares the financial sector firmly in the eye, shows its serious faults, identifies the factors that lie behind them, and proposes constructive solutions for developing economies. This highly readable book is rooted in state-of-the-art research on recent developments in emerging market economies. It convincingly posits a central and controversial proposition: namely, that private financiers, given the right set of incentives, can open the doors to progress, while their absence will likely perpetuate inefficiency and cronyism. Mishkin has thrown down his gauntlet to the antiglobalizers for whom the financial sector is a bête noire. Readers will enjoy this book, and engaging in the debate that will certainly follow."—Guillermo Calvo, University of Maryland, former chief economist at the Inter-American Development Bank
"This is a fabulous book, and I can hardly endorse it strongly enough. It is simply the best single thing I have ever read on financial globalization, and I felt tremendously educated, entertained, and motivated after reading it. It is a great blend of technically accurate and careful argumentation with accessible exposition that will appeal to a wide audience. Indeed, Mishkin's clear, jargon-free, concise writing, combined with his technical expertise and reputation, puts this book far above the vast majority of writings by economists for broader audiences."—William Easterly, author of The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
"The past six decades have seen a steady forward march in the interdependence of national economies. While many aspects of this globalization process have proved controversial, none has been as potentially explosive as financial globalization-the international integration of national financial markets. Mishkin carefully reviews the factors that have caused financial meltdowns in past emerging-market globalization episodes, and lays out a blueprint for avoiding such crises in the future without cutting off access to foreign finance. Compelling, comprehensive, and accessible, this book makes the case that developing countries can safely embrace financial globalization, and should."—Maurice Obstfeld, University of California, Berkeley
"Eschewing sharp rhetoric in favor of cogent analysis, Mishkin calmly and convincingly explains why developing countries that get financial globalization right will ultimately far outperform those that try to shut it out. Even China will be no exception."—Kenneth Rogoff, Harvard University, former chief economist and director of research, International Monetary Fund
"This is the first book to make a comprehensive and compelling argument for financial globalization. It makes a powerful case that financial globalization is a necessary part of policy reforms to promote economic growth among stagnating countries and provides guidance on how to proceed while avoiding the crises that are sometimes associated with reform. Mishkin has an extraordinary ability to write for a broad audience without sacrificing intellectual rigor. This book should be read by everyone interested in economic development, as well as those focused on financial sector issues."—Ross Levine, Brown University
