Globalization, Gating, and Risk Finance

Motivation

Tom Friedman’s (2005) book, The World Is Flat, has popularized the conventional wisdom that, in a global world, we are all codependent and that events occurring in one place may affect others. Globalization is a manifestation of this codependence. It underlies major economic, financial, and political trends with opportunities and risks. The purpose of this book is to outline perspectives on a gated global and risk finance, in a world where real finance is mutating into a far more complex finance, with political and social agendas, geopolitical realignments and the growth of A‐national global enterprises, altering the conventional premises of economics and finance. Increasingly, sovereign states gate their economies explicitly and implicitly (through trade controls, taxation, and regulation, for example) to maintain economic advantages or pursue sovereign agendas. In this process, it is transforming underlying theoretical and rational financial foundations and free market principles, to be far more in “markets in collision” (and thus strategic). Currency, trade, and regulatory “wars,” together with extreme economic inequality, underscore the concern that, despite its many benefits, globalization also embodies structural changes and comes with costs; further, global economic equalization is not always as “equal” as many would like. In such an environment, economic and financial exchanges are far more complex; for example, expanding from a mere exchange of goods to ...