The Current Global Financial Crisis

Tiny open economies are especially vulnerable towards dangers associated with chains of events and outcomes including those that characterize the modern-day global financial crisis. The globalization of economic, business, and financial workout supply opportunities for enhanced economic growth and development for little open economies. The same factors, however, expose modest open economies to critical risks for which this kind of economies generally are ill-prepared to counter.

A single this kind of risk is financial contagion that allows problems evolving inside a major economy to wash as a these days wave over small economies. Another this kind of risk stands out as the inability of, the unfeasibility of, and the undesirability of regulating the actions of investors based in modest open economies in relation to participation during the global marketplace. A third critical risk is associated with the behavior of financial institutions based in little open economies in their interactions with the global market (Kit & Sim, 2008; Corporation for Economic Cooperation and Development, 2008; Reddy, 2008; Stiglitz, 2001).

Root Causes on the Modern-day Global Financial Crisis

One way wherever a smaller open economy could prevent the occurrence of detrimental outcomes from future global financial crises is for these kinds of an economy to morph into a small closed economy. The conclusion drawn by this writer, however, is that such an action would be imprudent on a part with the government of a little open economy.

The justification for this conclusion is how the loss of benefit accruing from participating within the globalized environment of economics, business, and finance are as well critical to sacrifice for your sake of an objective that is attained by various methods (Kit & Sim, 2008; Corporation for Economic Cooperation and Development, 2008). The recommendation, thus, is that little open economies preserve their commitment to global economic participation within World Trade Corporation (WTO) rules and guidelines.

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