According to Moritz Schularick:
Emerging markets, most notably China, helped to create the macroeconomic backdrop for the current financial crisis by subsidising interest rates and consumption in the US.
Financial globalisation 2.0 started in the 1980s and lasted to 1997-1998. It was based on the idea that removing restrictions on capital account transactions would enable emerging markets to tap into the pool of global savings and import much-needed capital for development. Financial globalisation 2.0 ended painfully with the Asian crisis when it became clear that private capital flows were volatile and could seriously complicate economic management in difficult times.
What followed was financial globalisation 3.0. Emerging markets heeded Martin Feldstein’s advice and took out an insurance policy against the vagaries of financial globalisation. By running current account surpluses, intervening in foreign exchange markets and building up currency reserves, Asian and other emerging economies were sustaining export led growth and buying insurance against future financial instability.
These policies turned developing markets into net capital exporters to the developed world, mainly to the US. Between 1990 and 1998, during what I have termed financial globalisation 2.0, emerging and developing economies (according to the International Monetary Fund classification) were running an average current account deficit of about 1.7 per cent of their gross domestic product. Between 1999 and 2008, during financial globalisation 3.0, this deficit turned into a surplus of 2.5 per cent of GDP.
There is only one point I wish to differ with Prof. Schularick and that is not everyone thought this was a success or even a good idea. People, especially working America have been screaming about the hollowing out of the United States and are now really angry because still, their demands the U.S. do something about the trade deficit and thus their jobs is not happening.