ABSTRACT
This chapter presents international portfolio flows, bank capital flows, foreign direct investment flows, and other private sector capital flows of 121 countries for the period of 1980-1990 and draws flow, portfolio and monetary theories into a single framework. It aims to investigate causes of the globalization of international financial markets. The chapter examines consequences of this globalization for international capital flows. It explores interactions among all private capital flows in the globalized financial markets. The most significant development in the world economy is the increasing globalization of economic activities. The capitalist system should be understood as global rather than national since the major forces that are restructuring both domestic and international economic systems are globalization processes. As a result of the globalization process in financial markets, global transactions of total private capital tripled during 1980-1990. The integration of global financial markets has been primarily promoted by increased financial market activities as well as multinational enterprises.
