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For the past decades, issues concerning the impact of economic integration on financial integration, especially exchange rate integration, has been criticized among several regions such as ASEAN. This chapter intends to: (i) test for the exchange rate integration among the ASEAN-5, including Indonesia, Philippines, Malaysia, Singapore, and Thailand, using panel data techniques; and (ii) determine the impact of economic integration on the level of exchange rate integration among the ASEAN-5 countries. The purchasing power parity (PPP) is tested using panel unit root tests on monthly data. The results confirm the PPP among the ASEAN-5 countries due to lower transaction costs from ASEAN agreements. The chapter applies Multivariate GARCH (M-GARCH) models using daily data to determine the level of exchange rate integration among the ASEAN-3, including Malaysia, Singapore, and Thailand. The results of panel cointegration tests using quarterly data of economic integration and exchange rate integration confirm the impact of international trade openness on exchange rate integration. With free trade agreements leading to lower trade barriers, lower transaction costs, and low transportation costs, the economic integration among ASEAN countries practically leads to a higher degree of exchange rate integration. The findings imply that trade liberalization has the strongest effect on the real exchange rate. As such, regulators of ASEAN countries should pay more attention to the exchange rate policies of each other because of the interdependence of their exchange rates.

The aim of this paper is to examine the relationship between relative population growth and purchasing power parity (PPP) exchange rate for a panel of 80 countries.

Panel unit root and panel cointegration tests have been used to investigate the above relationship over the period of 1951‐2000.

The empirical results show that there is stable relationship between PPP exchange rate and relative population growth in these selected countries in the long run. The results also show that this long‐run relationship remains valid when the sample is divided on the basis of their stage of development.

These empirical findings suggest that population growth has an important role in exchange rate determination through PPP.

Thus, relative population growth could invalidate the PPP hypothesis in the long run. PPP is the main edifice of most of the monetary exchange rate models. Hence, the role of relative population growth should be taken into account in dealing with issues in international macroeconomics and renewed attention should be given in the theory of exchange rate determination in terms of relative population growth instead of relative price level.

This paper aims to examine the impact of the components of human capital on the extent of poverty and income distribution in developing countries.

Data for all variables are from the World Development Report, 2006 and 2007. The least‐squares estimation technique in a multivariate linear regression is applied. It is noted that the introduction of interaction terms between income and the components of human capital yields better statistical results, as pointed out in the economic development literature.

Based on data from the World Bank and using a sample of 40 developing economies, it is found that the fraction of the population below the poverty line is linearly dependent upon gender parity ratio in primary and secondary schools, the prevalence of child malnutrition, per capita purchasing power parity gross national income, the maternal mortality rate, and the percentage of births attended by skilled health staff. Using another sample of 35 developing countries, it is found that income inequality linearly depends on the same explanatory variables plus the infant mortality rate and the primary school completion rate.

Statistical results of such empirical examination will assist governments in those countries identify areas that need to be improved upon in order to alleviate poverty and improve the distribution of income.

This paper provides useful information on the impact of the components of human capital on the extent of poverty and income distribution in developing countries.

Since the widespread introduction of floating exchange rate regimes amongst the major currencies in the early 1970s, the problem of correctly anticipating exchange rate fluctuations is one that corporate treasurers of companies having any international dealings have had to face in order to manage successfully the exchange risk inherent in international contracts.

The purpose of this paper is to introduce a methodology to evaluate sovereign risk. Hereby, a value-based approach using different market measures is introduced.

This study’s approach aims to provide a value-based assessment of sovereign risk, combining market measures from government bond, credit derivatives and other markets as well as economic indicators.

The study finds that the assessment of sovereign risk is only possible when using information from different markets and adjusting according to the information included in these measures. Combining both market-based and economic information leads to a value-based evaluation of sovereign risk.

The practical implications are given for any institution with sovereign risk on their asset side. In fact, part of this research was done for the German Actuarial Foundation which uses the recommendations of this paper for the insurance industry.

The study’s approach is novel because it is the first to include several market-based and economic measures of a sovereign and combines it into a value-based assessment.

Banking and finance during the past several decades have become “re‐internationalized,” not simply “internationalized.” This becomes clear when we compare the institutional features of banking and finance today with those in the early part of this century, the last period in which both had a substantial international dimension. It is further apparent in historical data that are analyzed in the paper: cross‐country spreads between real interest rates over the long period 1835 to 1990, and figures for gross foreign assets available for a number of major countries at key points in time from 1885 to 1994. The paper concludes by discussing the factors responsible for the changes that have occurred in banking and finance during the past several decades.

The main purpose of this paper is to analyze whether sufficient conditions can be met for Turkey and the Balkan and Caucasian Republics to achieve future integration within Europe because Turkey's accession to the European Union (EU) would provide opportunities for further enlargement of the Union toward the East. The paper is developed through three steps: In the first place we will select a group of countries belonging to the Southeastern Europe, Transcaucasia, and the Near-East, which could fulfill at medium term the requirements established by the European Councils of Copenhagen (1993), Madrid (1995), and Helsinki (1999) to be members of the EU in a future. Second, starting from the period 2000–2010, we estimate the possible existence of economic convergence in terms of real per capita income between these countries and the current EU at 27 members. Finally, we analyze whether the entrance of some of those countries in the EU could help to solve some local existing conflicts in the area, especially in the Middle-East.

For the above-mentioned purposes, first, we have selected potential candidates for a future adhesion to EU among the current official candidates, other countries that have already demanded the adhesion, and those other countries in the area for which the EU applies the neighborhood policy. We have selected these countries by using a multicriteria analysis. Second, following Quah (1996), we test the possible existence of several steady states in the EU at 27 members, and hence the possibility of Clubs Convergence in Europe. Also by using the Barro (1991) and Mankiw, Romer, and Weil (1992) models, we test Absolute and Conditional Economic Convergence among all EU-27 countries and between each potential candidate, weighted by surface and population, with the EU-27, during the period 2000–2010.

The obtained results indicate the existence of Clubs Convergence in EU-27 because at least there are two steady states. Multicriteria analysis indicates that the following countries fulfill the requirements of the EU at medium term: Macedonia, Albania, Serbia, Turkey, Armenia, Azerbaijan, Georgia, and Lebanon. The convergence analysis indicates Conditional Convergence between the selected countries and the EU.

The research limitations are that this paper only considers countries belonging to this area. The EU expansion could solve conflicts in the European–Asian border, like Cyprus, Nagorno-Karabakh, Kurdish, and other Middle East conflicts. Lebanon is a country that clearly belongs to Asia, but notwithstanding it appears as a possible candidate to enter in the EU considering our multicriteria analysis.