The Impact of Rapid Technological Change in Information Technology on the Stability of World Trade and International Capital Flows

01-02-2000

The difficulties encountered at the new round of multilateral negotiations at the World Trade Organisation on further liberalisation of trade services and recent talks on the reform of the International Financial Architecture might be taken as examples of concerns raised by the increasing globalisation of the world economy. Developments in information technologies (IT), together with a move towards increased liberalisation, have strongly influenced the evolution of the world trade, financial services and international capital flows during the last decades. While international trade in goods has been growing significantly, the activity in the international financial markets has experienced a higher growth. This report considers the recent evolution of the international goods and financial markets, and discusses the role that the increased globalisation has played in the financial crises that have taken place during this period. Particular attention is given to the role that the Information Technologies have played. Innovation in the banking industry, and the new framework of the international financial markets are considered. The financial crises have opened up the debate on the role that national and international institutions should play in the new framework of a globalised economy. The report hints at the challenges regulators face, and discusses the main policy options available at both the European and the international levels. The following policy issues are considered: • Should controls of capital flows be established? • Should exchange rates be subject to a different regime? • What should the role of the IMF be? • Should financial transactions be subject to special taxes? And, in particular, what are the advantages of the introduction of a Tobin Tax? The main arguments in favour and against these measures are presented in the report.

The difficulties encountered at the new round of multilateral negotiations at the World Trade Organisation on further liberalisation of trade services and recent talks on the reform of the International Financial Architecture might be taken as examples of concerns raised by the increasing globalisation of the world economy. Developments in information technologies (IT), together with a move towards increased liberalisation, have strongly influenced the evolution of the world trade, financial services and international capital flows during the last decades. While international trade in goods has been growing significantly, the activity in the international financial markets has experienced a higher growth. This report considers the recent evolution of the international goods and financial markets, and discusses the role that the increased globalisation has played in the financial crises that have taken place during this period. Particular attention is given to the role that the Information Technologies have played. Innovation in the banking industry, and the new framework of the international financial markets are considered. The financial crises have opened up the debate on the role that national and international institutions should play in the new framework of a globalised economy. The report hints at the challenges regulators face, and discusses the main policy options available at both the European and the international levels. The following policy issues are considered: • Should controls of capital flows be established? • Should exchange rates be subject to a different regime? • What should the role of the IMF be? • Should financial transactions be subject to special taxes? And, in particular, what are the advantages of the introduction of a Tobin Tax? The main arguments in favour and against these measures are presented in the report.

Autor externo

Jaume Valls, Anna Arbussa and Ricard Torres (University of Girona)