Relationship Between Globalization, International Capital Inflows and Financial Crisis in Emerging Countries and Alternative Fiscal Policies
Globalization which started to improve since 1980’s, has caused many beneficial and harmful effects and unexpected changes both in the world economy and in economical structures of countries. Globalization affected not only economical structures but also social life, politics, and even cultures. On the other hand, while globalization was presenting “opportunities” to emerging countries, it also brought heavy risks and severe problems to them. Parallel to those improvements, globalization gave rise to international capital inflows. Emerging countries which have poor economical conditions, found international capital as “life ring” since the capital was their greatest problem for the development of their economies. Unfortunately, in a short time, the dream turned into a “nightmare” and finally financial crises came true back to back and they spread all over the world with the domino effect. In this article, relationship between the globalization, international capital inflows and the financial crises which increased a lot parallel to improvement of globalization will be discussed. Beside the destructive effects of financial crises on economies, some financial policies to protect from the crises will be suggested.