In general, it seems that the degree of internationalization is affected by the same
variables that drive the development of stock markets: higher income levels, more
macroeconomic stability, stronger legal systems, and greater financial and capital account
liberalization. Since the internationalization regressions typically have the ratio of
international to domestic activity as the dependent variable, the results imply that, as
countries develop their fundamentals, they will experience an increase in international
activity relative to domestic activity, even as domestic activity increases.