Financial Globalization and Instability in the Early 21st Century

This article provides the figures of the volatility of economic growth in poor and rich countries and analyzes it. The conclusion is that while volatility has declined almost everywhere in advanced countries, the picture is much more mixed in developing countries. This article then examines the case of India, where GDP volatility has been declining for the last twenty years. The figures show that by moving away from an agricultural economy, the Indian economy has stabilized. Increased financial depth and the favorable evolution of the terms of trade had a similar effect. Finally, this article examines the relationship between economic instability and insecurity at the global level.