About capital market liberalization, Mishkin explains the phenomenon that capital flows primarily move between rich countries to diversify their portfolios. He also accentuates the importance of financial system, to allocate capital to most productive uses. Then he talks about the benefits brought by financial globalization to emerging-markets: lower cost of capital, foreign capital and financial institutions can improve the allocation of capital and globalization promotes the development of better property rights and institutions. Though he acknowledges that the benefits of financial globalization is controversial. Some argues that it facilitates financial crises and others argue that emerging-markets is not constrained in finance. But he argues that the point of globalization is to optimize the allocation of capital. Strong property rights is crucial in improving economic efficiency. To make globalization good for emerging countries, they have to improve their financial systems through a good institution that allocate capital efficiently. A way to improve efficiency is to promote export sector so that there is right incentive to improve efficiency through institutional reform. Stiglitz, on the other hand, thinks that liberalization is harming the economy because there are several conditions for globalization to be beneficial to emerging countries such as perfect information, perfect capital markets and perfect competition. Globalization impairs the ability of government to intervene the macro-economy, the investors are not actually rational and even good governance cannot guarantee elimination of irrational pessimism due to imperfect information. Owing to the pro-cyclical movement of capital flow, globalization actually amplifies volatility of consumption and economy. If there is greater volatility, then the increased risk premium will discourage investment and