• Globalisation;
  • capital flows;
  • Lucas paradox

This article compares and contrasts the two modern periods of financial globalisation, approximately a century apart. The focal point of the first period was around the turn of the twentieth century, while that of the second was around the turn of the twenty-first century. Financial globalisation in the latter era was far deeper and there was a remarkable across-the-board transformation of the global financial system. An interesting twenty-first-century phenomenon is the recent change in direction of capital flows: that is, sizeable sums of capital flowing from non-industrial countries to advanced industrial countries.