1.2.2. Liberalisation of capital markets

International financial markets have been growing at an unprecedented pace since the beginning of the 1970s. Various measures have been used as a proxy for this growth: the outstanding volume of treasury bills as well as that of bonds negotiated by private corporations are two possible indicators, the amount of currency trade is another. These changes have been made possible by structural changes in the financial markets such as the development of new financial instruments, the emergence of new intermediaries, and fierce and often global competition among various suppliers of financial services. But these changes would have been impossible had there not been a liberalisation of capital market and currency constraints. In 1970, only 35 countries had accepted the IMF standards of capital convertibility, in 1994 it was 90, and today 106 countries have accepted these standards (IMF 2004).

For the individual company, these developments mean substantially lower costs for financing equity, but also for taking up venture capital. It has often been argued that large firms have advantages in financing new activities. Increased competition in capital markets means that this advantage has decreased if not vanished entirely. It has even been argued that convincing product- and export strategies are highly welcomed and can be a source of advantages in financing quite independent from the size of the respective company.