Financial Integration and Growth in the Global Economy‪.‬

Abstract This paper analyzes the growth dynamics in the developed world and its relationship to the financial structure. The new entrepreneurial economy of creativity and innovation is identified as the main growth area today. However, such an economy needs financial structure capable of coping with the higher risk inherent in the new economy. To provide such a financial structure, the financial markets must be broad, deep, and liquid. Today, only the U.S. financial markets are large enough to provide this financial structure. Hence, financial integration became the imperative for other countries--especially the European Union (EU) and Japan--in order to achieve the level of economic growth as that of the U.S. (JEL F02, F43)