International Capital Mobility“Globalization is today's reality. Like it or not, the transition to a world economy is a fact. At some point in the 1990s the process reached critical mass and people began to sit up and take notice. Many were worried. Today, nearly all of us are aware that our lives are shaped by an interconnected global economy of cross-border flows of trade, finance and technology. In our hearts, we know that there is no turning back.” -Maria Livanos Cattaui, Secretary General of the International Chamber of Commerce. As evidenced by the quote above, any analysis of the central economic issues of our time is incomplete without a clear understanding of the growing interconnectedness between nations. Globalization and integration are two very powerful and monumental forces that are rapidly transforming not only the way individuals and governments conduct business, but the very nature of the modern world. Nations' economies interact to a degree unforeseen a century ago, consequently making isolationism no longer possible. The ties that unite countries are becoming ever closer and economic phenomena are transcending the local level to have global implications. It is therefore imperative for today's observer of economic events to be informed about the bigger picture that goes beyond the regional one. In this regard, there is no more important topic to start studying than global finance. The international financial system is a phenomenon of great importance that has demonstrated its power in fueling large amounts of economic growth. Many extol its virtues, citing the enormous productivity gains it channels. Others, however, have doubts and say… half the document… ld Economic Crisis,” New Republic, April 17, 2000.7 Paul Krugman, “Capital Control Freaks,” Slate/The Dismal Science, September 28, 2000. 1999.8 Paul Krugman , “Capital Control Freaks.”9 J. Bradford DeLong10 Robert Krol, “The Case for Open Global Capital Markets,” Cato Trade Briefing Paper: March 15, 2001.11 Robert Krol12 Robert Krol13 Robert Krol14 Robert Krol15 Robert Krol16 Robert Krol17 Lawrence H. White, “Does Asia need capital controls?” Freeman March, 1999.18 Lawrence H. White 19 Anna J. Schwartz, “International Financial Crisis: Myths and Realities” Cato Journal, Winter 1998: 251-25620 Lawrence H. White21 David F. DeRosa, In Defense of Free Capital Markets: The case Against a New International Financial Architecture, (Princeton: Bloomberg Press, 2001) xiv.22 DeRosa xiv.