FROM WORLDWIDE CAPITAL MOBILITY TO INTERNATIONAL FINANCIAL INTEGRATION - A REVIEW-ESSAY

To be useful to economists, the definition of worldwide financial inte gration must refer to its welfare-relevant functions or consequences. What ultimately matters is its contribution to the equalization of cur rent and intertemporal trading opportunities, represented by the cost of financial services, at maximum efficiency levels. Analyzing imperfe ct financial integration implies identifying the obstacles that preven t such equalization, with a lack of perfect capital mobility being onl y one of the possible impediments. Focusing on how to achieve internat ional equalization, at least cost, of a broad range of financial servi ces is a necessary change for a literature that has tended to rely on single stock, flow, or price correlations to gauge the degree of finan cial integration, without viewing it as a continuing microeconomic tas k with many facets.