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Recent studies conclude that the ongoing global financial integration may have had little or no value in advancing economic growth, especially in poor countries. Capital is often found to flow "uphill" from poor to rich countries. And, when it does flow into the less developed economies, it is negatively correlated with growth, calling into question the desirability of foreign capital. In this paper we report that Europe-including the new member states of the European Union-provides a counterexample to these global anomalies. With increasing financial integration, capital in Europe has traveled "downhill" from rich to poor countries, and has done so with gathering strength. These inflows have been associated with significant acceleration of income convergence.

Balance of payments -- European Union countries -- Econometric models. --- Balance of payments -- European Union countries. --- Convergence (Economics) -- European Union countries -- Econometric models. --- Convergence (Economics) -- European Union countries. --- Exports and Imports --- Finance: General --- Macroeconomics --- Current Account Adjustment --- Short-term Capital Movements --- General Financial Markets: General (includes Measurement and Data) --- Personal Income, Wealth, and Their Distributions --- International economics --- Finance --- Financial integration --- Current account deficits --- Personal income --- Current account --- Current account balance --- Balance of payments --- International finance --- Income --- United States --- International finance.