Financial Globalisation and Child Wellbeing

This paper addresses the relationship between financial crises associated with foreign capital flows on the one hand and the wellbeing of children in emerging market countries on the other. The literature on child welfare in crises suggests that the level of employment and labour incomes are the key linkage, because these constitute the major component of the incomes of poor families and affect the division of labour within the household upon which child welfare depends. A simple analytical model of labour markets illustrates the linkage between corporate sector contraction under financial crisis and the incomes of the poor in the urban informal and rural sectors. This insight leads to recommendations for the reconsideration of capital controls and exchange rate management in merging markets as means of employment stabilisation (in the spirit of the original Bretton Woods objectives) and thus child wellbeing.