Professor Adam Broder
Financial markets are constantly evolving and changing day to day thanks to many outside factors such as technology and the overall health of the global economy thanks to technology propelling globalization. These two factors have shaped the financial markets more than ever thanks to the globalization of financial markets and being dependent on the health of the entire global market more than ever. Technology has also played a large role in changing how we communicate with other across the globe as well as the powerful technology that is now available to consumers and to private entities that are shaping the financial markets and our role within.
These two factors are tied together as we move forward in financial growth across the globe as The United States has essentially become the leader in the financial industry thanks to the growth in the 20th century in the advancement of technology and the investment in the productivity of human capital. During the start of the 20th century the financial markets were mostly independent and focused on investments from domestic partners instead of attracting investors overseas due to many factors such as language barriers, the difficulty to open a line of communication, and the many markets that were difficult to enter due to different cultures. Most countries had their own stock exchange and still do but eventually they started to phase them out in favor of a more consolidated financial sectors such as the New York stock Exchange, London Stock Exchange, and the beginning of the Tokyo Stock exchange. In the book “Globalization Myths” Author Paul Bairoch who is one of the great post-war economic historians wrote about the breaking down of barriers of communication between countries. Bairoch describes it as “between 1930 and 1990, the cost of a three-minute telephone call from New York to London dropped from $245 to $3.” Technology has played a massive role in globalization of different economies across the globe and allowed corporations to reach new markets. Because of this corporations have branched into new markets and are dependent on the health of overall economy instead of just focusing in on the domestic operations. The globalization of the financial markets has been one of the most revolutionary structural changes in the world economy over the past 60 years which increased the speed, size and scope international money and business transactions.For example, when the United Kingdom held their referendum of the British exit from the European Union it had a global impact ignoring the market disruptions, global banks such as Citigroup and JPMorgan Chase began plans to shift thousands of jobs to branches in the European Union. The United States economy fluctuated as the dollar increased resulting in the Fed reconsidering any interest rate hikes in the future.