IMF Economic Review

, Volume 66, Issue 1, pp 189–222 | Cite as

The External Wealth of Nations Revisited: International Financial Integration in the Aftermath of the Global Financial Crisis

  • Philip R. Lane
  • Gian Maria Milesi-Ferretti
Research Article


This paper documents the evolution of international financial integration since the global financial crisis using an updated dataset on external assets and liabilities, covering 212 economies for the period 1970–2015. It finds that the growth in cross-border positions in relation to world GDP has come to a halt. This reflects much weaker capital flows to and from advanced economies, with diminished cross-border banking activity, and an increase in the weight of emerging economies in global GDP, as these economies have lower external assets and liabilities than advanced economies. Cross-border FDI positions have continued to expand, unlike positions in portfolio instruments and other investment. This expansion reflects primarily positions vis-à-vis financial centers, suggesting that the complexity of the corporate structure of large multinational corporations is playing an important role. The paper also explores the cross-country drivers of foreign ownership of domestic debt securities, highlighting in particular the role of the euro debt crisis in explaining its evolution.

JEL Classification

F31 F32 



We are very grateful to our discussants Linda Tesar, Anne-Laure Delatte, and Jana Riedel, and to Serkan Arslanalp, Thomas Elkjaer, Thornton Matheson, Victoria Perry, Neeltje Van Horen, two anonymous referees, participants to the IMF’s 2016 Annual Research Conference, the Jean Monnet Workshop on Financial Globalization and Its Spillovers, and seminars at the Bank of England, the Banque de France, the Bank of Italy, and France Strategie for useful comments. Menglu Cai provided excellent research assistance. The views expressed in this paper do not necessarily reflect those of the Central Bank of Ireland or the Eurosystem. Lane’s initial work on this project was supported by a grant from the Irish Research Council. The dataset used in this paper is available at the link

Supplementary material

41308_2017_48_MOESM1_ESM.xlsx (2.3 mb)
Supplementary material 1 (XLSX 2384 kb)


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Copyright information

© International Monetary Fund 2018

Authors and Affiliations

  • Philip R. Lane
    • 1
    • 2
    • 3
  • Gian Maria Milesi-Ferretti
    • 3
    • 4
  1. 1.Central Bank of IrelandDublinIreland
  2. 2.Trinity College DublinDublinIreland
  3. 3.London-based Centre for Economic Policy ResearchLondonUnited Kingdom
  4. 4.International Monetary FundWashingtonUSA

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