As recent events in Southeast Asian have demonstrated, the fragility of a country’s financial sector can have severe macroeconomic consequences, affecting its ability to manufacture, import, and export. Through a combination of case studies and theoretical papers, this book addresses this vital issue by examining the interaction between trade and financial development.

Using detailed trade and firm-level financial data, the authors demonstrate, for example, that while links between finance and competitiveness are strong, they are not uniform across sectors and countries. This book examines the link between finance and competitiveness at the macro and sectoral levels in seven different countries: Argentina, Brazil, India, Indonesia, the Philippines, South Africa, and Tunisia, and investigates key international issues, such as the evidence of the impact of exchange rate variability on trade, patterns in bank lending, and trade openness and development.