A Study On The Causes Of The Differences In Economic Finance In Developed Countries

Contemporary landscape of international division of labor has seen tremendous changes since 1980 s. Traditional horizontal division of labor among developed economies is fading nowadays. Some economies specialize in financial sector and related industries at the cost of impending non-existence of manufacturing industry while some other economies still have particular advantages in the high-end niche within manufacturing industry. This transition results from unbalanced waves of financialization sweeping developed economies. Huge national difference in terms of the level of financialization is confusing. It is the main task for this thesis to find out factors leading to such national difference.Firstly, after reviewing conventional wisdom, the thesis analyzes the specific mechanisms of the occurrence of financialization and their corresponding direct preconditions, in the light of neoclassical economics and Marxian economics.Secondly, five key factors influencing the level of financialization are summarized from those direct preconditions: financial monopoly, financial regulation, strength of trade unions and economic hegemony. The former four factors are related to domestic institutions and the last one is about one country’s position inside international community. One country’s performance in these five factors decide the its level of financialization and national difference among developed economies can be explicable as such.Lastly, cluster analysis and regression analysis are used to exam the previous hypothetical explanations and validate the argument proposed by the thesis.