What this means is that free trade has the potential to raise global welfare, but its progress could be impeded by political compulsions at the national level. Geography could then become destiny yet again. Can/Should financial globalization be shunned? There is an influential school of thought that takes a more nuanced approach to globalization – distinguishing between trade liberalization and financial liberalization.
The argument is that while increased trade between countries is positive for both trading partners, the same need not necessarily be true of financial linkages. Hasty or imprudent financial liberalization, it is contended, is the main cause behind several financial crises over the last quarter century, including notably, the Asian crisis of the late 1990s.