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Greater Macroeconomic Stability: Capital markets also contribute to greater macroeconomic stability as can be seen in countries where capital markets are developed. Both the US and the UK economies have GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 215 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 become much less volatile recently. While in the US business cycles have shown greater durability especially the last expansion which ended in 2001 (the longest of the post World War II period), the UK experienced the longest economic expansion in the post World War II period which lasted for nearly 12 years (Dudley and Hubbard, 2004). Moreover in periods of recession, they have tended to be milder in the US and UK. In the UK for instance, the unemployment had not risen by more than 1 percentage point for more than a decade (Dudley and Hubbard, 2004). Capital markets contribute to greater macroeconomic stability in three ways. Firstly, because capital markets make use of mark-to- market accounting, it is more difficult for problems to be deferred. Secondly, capital markets through the provision of immediate feedback to policymakers have increased the benefits of following good policies and increased cost of following bad policies. Lastly, capital markets have helped make the housing market less volatile evidence of which can be seen in the United States.
Greater Home Ownership: Capital markets by ensuring stability in the mortgage sector have increased the ability of households to purchase their own homes. This is done through the reduction in closing costs associated with obtaining a residential mortgage and less stringent terms. Evidence of this can be seen in the US where the proportion of households that own homes has increased considerably reaching 69.3 percent during the second quarter of 2004 as compared to 63.7 percent at the end of the 1980s. Greater home ownership will go a long way to help improve the living standards of the poor especially the homeless thereby contributing to reduction in poverty (Dudley and Hubbard, 2004).
The rapid growth and development of capital markets and the unique opportunities they provide makes capital markets a worthy consideration as an alternative in the fight against poverty.. By enhancing economic growth through the allocation of capital and risk, capital markets contribute to job creation which helps to reduce poverty levels in the long run. This study shows that capital markets contribute to poverty reduction by enhancing economic growth through the allocation of capital and risk and enhancing economic performances of a country. By comparing the United Kingdom (UK) and the United States (US) where capital markets are developed to other European Union (EU) where capital markets are relatively undeveloped, this study suggests that capital markets have contributed to enhance economic performances in the UK and US. Evidence of this superior economic performance can be found in five major aspects namely: greater employment opportunities, higher productivity, higher real wage growth, greater macroeconomic stability and greater homeownership. The improvements in these respects contribute significantly towards the reduction of poverty levels. It should be noted that the development of capital markets needs to be effected in conjunction with improvements in the existing infrastructure, the implementation of credible laws and regulations, and the adoption of appropriate governance and supervisory structures.
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BIOGRAPHYHasan Bulent Kantarci is an Associate Professor at the Kocaeli University, Faculty of Economics and Administrative Sciences, department of economics, in Turkey. He teaches public finance and tax law. He graduated from Uludag University, Faculty of Economics and Administrative Sciences. In 1989, he learned German at the Goethe Institute in Vienna. He researched his master's degree thesis at the University of Vienna and University of Cologne in 1990-1991. And he started his doctorate at the University of Berlin Humboldt University 1992-1993, continued at the Vienna University of Economics and Business in 1993and completed at Uludag University. For post-doctoral research, in 1997, he went to the State University of New York at Stony Brook. Then, he taught public finance and tax law at the Gaziosmanpasa University in Turkey. In 2000 and 2001, he visited St John’s University in New York. His research area was public finance and tax law. He attended many conferences in New York, in Detroit, in Orlando, in London, in Portugal, in Riyadh, in Dubai, in Biskek, in Istanbul, etc. He can be reached at Kocaeli University, Umuttepe Campus, Department of Economics, 41000 Izmit-Kocaeli / Turkey, firstname.lastname@example.org Reginald Okyere is a Ghanaian born student pursuing his Master’s Degree in Economic Policy at Kocaeli University. He pursued his undergraduate degree at the University of Ghana from 2007 to 2011 where he passed out with first class honours in Economics with Geography as his minor area of study. He is an astute and hardworking person who has the well being of his country at heart and committed to contributing his quota in fighting the numerous economic challenges especially the ones being faced in Sub Saharan Africa.
GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 219 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1
Direct foreign investment in the investee country's macro-economic variables is a very important role. To increase the amount of direct foreign investments in Turkey, to ensure political and social stability, privatization of KITs and to reduce inflation rate, ıt has been studied to reduce the budget deficit and been successful in it. After the acceleration of Turkey's accession process to the European Union foreign direct investment began to rise. In this case, Turkey's economic stability, has created positive effects on economic growth. Significant increases also occurred in Turkey's foreign trade. This article also describes the economic impact of these investments in the countries of the European Union process by considering the development of foreign direct investment in Turkey within the framework of the European Union.
JEL:E6, O1 KEYWORDS: Foreign Direct Investment, European Union, Economic Growth