Financial Crises：Does Globalization Matter

Financial Crises：Does Globalization Matter

【Abstract】 This paper shallowly analyzes the relationship between Globalization and financial crises and reaches the conclusion that Globalization has increased the frequency and spread of financial crises, by increasing the risk of economy in developing countries and making countries more connected to each other.

【Keywords】 Globalization; Financial Crises;

1. Introduction

There are many financial crises in history and each of them has brought a great disaster to human beings. We still remember how terrible the 2008 financial crisis was where many Americans lost their job and became poor overnight. After that many people started to reflect on this disaster. Some people blamed the financial system, some people blamed the government regulation while others, especially people in other countries, blame Globalization .And I have found some evidence which proves that Globalization adds fuel to financial crises . The evidence and some analysis are as follows.

2 .Globalization increasing the frequency and spread of financial crises

Many people consider the Great geographical discoveries (from the 15th century to the 17th century) as the start of Globalization. And the first financial crisis called Tulip Bubble broke out in the 17th century.

Figure1. Average Number of Financial Crises over Decades

We observe that financial crises came into being shortly after the start of Globalization. There are only 3 serious financial crises from the 17th century to the 19th century. However, as is shown in figure 1, there are more than 7 serious financial crises in last century. At the same time, the rapid development of science and technology has greatly promoted Globalization in the past 100 years. As is shown in figure 2，the amount of goods trade in the form of GDP has been increasing over the past 50 years, which means Globalization is deepening. It is easy to find that Globalization has much to do with financial crises.

Figure2. The...