Bernard, Jensen, and Schott (2006) document the tendency of trade to reduce production at low-productivity plants and to increase output at highproductivity plants in the United States, a shift that raises average productivity. 2  BIS Review 41/2007  Trade and finance are closely linked and mutually supporting, and in recent decades international financial flows have grown even more quickly than trade volumes.
The globalization of finance plays to the strengths of U.S. financial institutions and financial markets. The United States has a large surplus in trade in financial services, and U.S. firms are leaders in providing banking, investment, and insurance services to the world. Financial openness allows U.S. investors to find new opportunities abroad and makes it possible for foreigners to invest in the United States.