in any sophisticated economy there is an extensive capital market: a set of arrangements by which individuals and firms exchange money now for promises to pay in the future. the growing importance of international trade since the 1960s has been accompanies by a growth in the international capital market, which links capital markets of individual countries. thus in the 1970s oil-rich middle eastern nations placed their oil revenues in banks in london or new york, and these banks in turn lent money to government and corporations in asia and latin america. during the 1980s japan converted much of the money it earned from its booming export into investment in the united stated, including the establishment of a growing number of U.S. subsidiaries of japanese corporations.