Global Investing

CHAPTER 4The Global Financial Markets

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Global Financial Markets

Developments in the global economy, including trade, manifest themselves in the global financial markets. The financial markets are essentially a mathematical version of the world around us, and they are the engine that keeps our modern economy going. The world's equity and debt markets provide capital to the businesses that power the global economy that in turn creates jobs and generates wealth. Efficient stock and debt markets are therefore a vital part of a country's continuing economic development. These markets should be structured and governed in a way that allows capital to flow easily to its most productive use. Regulations must exist and be enforced that protect shareholder rights and ensure that the use of investor capital is adequately rewarded. Also, if foreign capital is needed to allow domestic businesses to flourish, the rights of foreign shareholders must be protected on par with domestic investors. Trust in a country's financial system, the rule of law, and the manner in which business is carried out, is essential for sustainable economic growth in the long run.

Economic growth and development is an aspiration: it is a mechanism to alleviate poverty, to give opportunity to those who do not yet have it, to foster equality, and to create a better society. Well-functioning exchanges enable economic growth and development by facilitating the mobilisation of financial resources—by ...