We as policy-makers have to be aware of these linkages because they can be a very powerful and fast transmission mechanism for shocks. The benefits of this integration are obvious - a greater variety of goods and downward pressure on prices benefiting consumers and households. But the benefits are even more substantial, as production requires both human and financial capital.
A skilled workforce cannot unleash its full potential without financial capital. Europe’s impressive economic recovery after World War II would have been inconceivable without its integration into the global economy and its concentration on highquality exports. Today, many Asian economies are benefiting from global economic integration. Investment in the appropriate technologies enables these countries to compete on the world market and increase welfare substantially.