3 ms·
> The link between financial openness and economic growth is complex. Some capital inflows, such as [...] transfer of technology or human capital [...] do seem
by namuol 9y ago
> The link between financial openness and economic growth is complex. Some capital inflows, such as [...] transfer of technology or human capital [...] do seem to boost long-term growth. But the impact of other flows—such as portfolio investment and banking and especially hot, or speculative, debt inflows—seem neither to boost growth nor allow the country to better share risks with its trading partners.
I know very little about economics, but this makes a lot of sense to me. Industries playing "zero sum games" (i.e. investment banking) _can't_ result in overall growth because there must be a loser for every winner, but sharing true value-creating technology will raise the GDP for everyone.
- geezerjay 9y ago> Industries playing "zero sum games" (i.e. investment banking) _can't_ result in overall growth because there must be a loser for every winner, Actually, that's not even remotely true. Just because a seller sells high it doesn't mean that the ones doing the buying are being left out to dry. Investors seeking long-term profits or cashing in dividends may be willing to buy without many concerns regarding current short-term market trends, and investors seeking short-term profits may be cashing out their shares to generate liquidity to invest somewhere else. In the US,the Dow Jones industrial average is essentially showing constant growth for over a century, and this would not be possible if an economy was a zero-sum game. Economies do grow, and transactions can in fact be beneficial to all parties involved.