Will History Rhyme?

Abstract

History tells us that global capital markets can contract as well as expand?and a long-term view of finance suggests investors should prepare for periodic segmentation as well as integration of markets in the 21st century. Anti-capitalist ideologies have historically been the vectors of attack on the cross-border flow of capital, when the fundamental cause may really be domestic hostility toward foreign ownership and control, and the roots of the conflict between domestic interests and foreign investors may be inherent in global equilibrium models. In a frictionless capital market, foreigners will always own a higher proportion of a small economy's assets. By the same token, domestic investors in small economies will always seek to export most of their capital. This equilibrium is at odds with a stable condition of national ownership and control of assets.