Central and Eastern Europe under the Globalization of the International Financial Market
Central and Eastern Europe under the Globalization of the International Financial Market

Author(s): Akira Uegaki
Subject(s): Politics, Supranational / Global Economy, Economic policy, Financial Markets, Globalization
Published by: Research Center of the Slovak Foreign Policy Association (RC SFPA)
Keywords: international relations; financial market; globalization; Central Europe; Eastern Europe;
Summary/Abstract: The purpose of this paper is to present a clear picture of the status of Central and Eastern Europe in the international financial market. The emphasis will be on the quantitative structure of the market. For example, recently, the amount of Japan’s current account surplus has been about USD 100 billion per year, whereas the USA’s current account deficit is close to USD 400 billion per year. From a macroeconomic point of view, the current account surplus of a country indicates the net outflow of financial resources from the country, and the deficit indicates the net inflow of financial resources into the country. Therefore, these figures suggest a bold, financial stream from Japan to the USA.194 In fact, American treasury bills are purchased by Japanese institutional investors on a massive scale. Apart of the current account deficit of the USA is supported by the Japanese surplus from the point of view of a net basis, although the USA is also a big capital provider on a gross basis. As for Eastern Asia, including mainland China, it is one of the most active capital-receiving areas in the world. For example, the annual average of FDI (Foreign Direct Investment) for mainland China was about USD 43 billion (on a gross basis).195 In Central and Eastern Europe, on the other hand, there are not such big flows of financial resources. For example, in 2000, the total current account deficit of six Central and Eastern European countries196 was only USD 18.3 billion. As for Germany, which is a key player in the financial movement in Europe, the current account was in deficit from 1991 through 2000. Until the late 1990s, Germany was a receiver of capital instead of a provider, although it was and still remains a large capital provider on a gross basis.

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