The Asymmetry Of Globle Capital Flows From The Perspective Of Core And Periphery

"Core and periphery" theory is a perspective based on globe trade channels to interpret asymmetric international economic relationship.It reveals the integrity,differences and inequality between core and periphery countries.Since the 21 st century,financial globalization has become a new feature of economic globalization and capital flows become the new carrier to connect the world besides the globe trade.According to the characteristics of the global capital flows,we speculated that the "Core and periphery" theory also exists in the capital flows.The asymmetric international monetary system is its driving force,and the dollar hegemony supports the United States to be the most important core country in its framework.Based on this,this paper puts forward two propositions of global capital flow and carries on the empirical test:(1)the asymmetry of the influencing factors of global capital flow;(2)global capital flow caused by the global distribution of wealth is asymmetric.On the basis of the literature on capital flow,this paper first introduces the development of "core and periphery" theory and constructed the link between this theory and capital flows.We hypothesized that global capital flows is also asymmetric and the emerging market countries such as China are peripheral countries in a passive and weak position.This paper suggests that there are two possible ways to achieve the hypothesis.1.The core countries "apply" the effect of financial cycles to the developing periphery countries by influencing the direction and scale of capital flows.2.The core counties maintain the center of the external framework in the capital flows by the unfaire distribution of benefits between core and periphery countries.This paper begins by reviewing the theory of influencing factors of capital flows and based on the anylisis framework from Fernandez-Arias & Montiel,which describes the thrust-pulling force proposed by the core countries to influence the direction and scale of the capital flows through the financial cycle.The empirical results of 32 developed and developing countries show that the developed countries are more affected by the external thrust factors.The GVAR model established on Developing countries uses the variance decomposition method to obtain the impact of external capital flows on developing countries is significantly greater than the impact of domestic pulling.Latin America is more significant affected by external thrust than other regions in developing countries.To study whether the distribution of capital flows is fair or not,this paper draws the benefit distribution fameworek based on financial performance indicators proposed by Ding Zhijie(2016),and estimates the data from 138 countries in 2004 to 2014.In the case of capital flows,developed countries and developing countries do have an unequal distribution of benefits,and the developed countries gain more as larger debtors,while developing countries pay enormous costs as capital supplier.The unfair yield is more pronounced by the financial cycle affect.The net rate of yield difference is mainly due to the use of foreign investment in developing countries to pay too high the cost,rather than the developed countries have achieved significant high returns.The volatility difference results from the developing countries' passive position in the capital inflows,which means the asset prices and exchange rates and other factors vulnerable to external shocks.In the the financial crisis originated from the developed countries,developing countries become "flood discharge area" of surplus funds,resulting in off-balance sheet yields,which in turn led to the evaporation of net international investment positions.Next,this paper orgnizes the views of capital flow management proposed by International Monetary Fund(IMF).Several recent proposed capital flow management frameworks were sorted out.We found that,the IMF was aware of a certain degree of capital flow management played an important role to contain the stability of global financial market.However,the free flows of capital and the opening of capital account of member countries are still the main policy direction of IMF.In addition,the IMF,while recognizing the important role of the drivers in the influencing factors of capital flows,also raised concerns about the policy of countries that respond to capital flows,but did not provide effective responses.In view of the above conclusions,this paper suggests that developing countries should take the initiative to fomulate the international rules of capital flow management and capital account convertibility,normalize capital flows management,to curb the negative impact of cross-border capital flows and ensure the benefits of opening up.This paper also gives some detailed policy recommendations.