The goal of the thesis is to analyze theoretically as to how the financial globalization and the distribution of world income may be related. Does the financial market globalization exert an equalizing force? Or is it responsible for the economic stagnation of some countries in the world? These questions will be investigated in more detail with special attention on the interactions of economies. From a technical point of view we will treat the world economy as a dynamical system in which two countries interact in a single global financial market. The economic agents in the two countries are homogenous and each economy has an identical structure and an identical law of evolution. The purpose of this simplification is to identify the mechanism of the global financial market instead of searching for country specific reasons why a country might be relatively poor or rich.

There are two main aspects of the mechanism in the global market today that we will study in detail. The first aspect is related to the size of population within countries. The second aspect is the role of nominal assets in allocating savings for production.