3. Review the data presented in Figures 12-5 and Figure 12-7. From Figure 12-5, panel (b), what do you observe about the volume of financial transactions in developing countries relative to those in advanced countries and emerging markets since 1990? Drawing on the information presented in these figures, why is this the case? Do you think we can attribute these patterns to financial openness, to institutions, or both? Explain: Figure 12-5: (a) Increase in Financial Openness Index 100% (%) Advanced countries 80 Emerging markets 60 (b) Increase in Financial Transactions Foreign 700% Advanced assets and countries liabilities 600 (% of GDP) 500 400 40 300 Developing countries Developing countries 200 20 100 Emerging markets 0 1970 0 1970 1980 1990 2000 2010 1980 1990 2000 2010 Figure 12-7: (a) Institutions and Income per Capita Level Average 100,000 O income per person 1994-2011 (b) Institutions and Income per Capita Volatility Standard 20 deviation of growth rate High 1994-2011 volatility (% per year) 15 High Economics, Seo 2021 Worth Publishers (real $) Income O 10,000 O OO Pooo o o o0o O Oo 10 O o OO O O 1,000 Feenstra/Taylor, 099 2008 O Low Income Low volatility Developing o Emerging o Advanced 100 0 5 5 10 Best Worst 0 Worst 10 Best Institutional Quality Institutional Quality