Amit Bhaduri's chapter is really two papers in one: first, a comparison of globalization “then” (in the pre-World War I period) and “now” (in the late 20th century); and second, a Keynesian model of the macroeconomic effects of foreign capital inflows into developing countries in the latter period. The two parts are connected by one overarching theme: the dominance of internationally mobile financial capital in the contemporary process of globalization. It is difficult to cover so much ground in such a short space, and Bhaduri does a good job of surveying such a vast field without yielding to the temptation of oversimplifying or making excessively sweeping generalizations.

In the historical comparisons, Bhaduri is certainly right to emphasize the extraordinary degree of mobility of portfolio capital as the most striking and unique feature of the current global economy. Indeed, the liberalization of financial markets since the 1970s has meant that one of the key theoretical conditions for “perfect capital mobility” – covered interest parity, in which a country's interest rate premium equals the forward discount on its currency – is now empirically fulfilled in most industrialized countries and in a growing group of developing countries (see Frankel 1991, 1993). The recent financial crises in Mexico (1994) and East Asia (1997) have dramatically illustrated the power of financial capital movements to destabilize entire national economies as well as the degree of interlinkage between financial centers across the globe.