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Issues in Capital Account Convertibility in Developing Countries

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  • Benu Schneider

Abstract

This article examines the pace, sequencing and preconditions of capital account liberalisation, drawing lessons from the experience of twelve countries, and focusing on the inter‐relationships between open capital and current accounts, the financial sector and the conduct of macro policies. It distinguishes between prudential limits and capital controls and discusses the effectiveness of direct and price controls. It makes a case for intermediate regimes with respect to exchange‐rate policy. It concludes that developing countries need to adopt a gradualist approach to the opening up of the capital account, outlining three strategies and highlighting that the capital account is only one aspect of a comprehensive reform package.

Suggested Citation

  • Benu Schneider, 2001. "Issues in Capital Account Convertibility in Developing Countries," Development Policy Review, Overseas Development Institute, vol. 19(1), pages 31-82, March.
    • Handle: RePEc:bla:devpol:v:19:y:2001:i:1:p:31-82
    DOI: 10.1111/1467-7679.00124
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    1. K.S. Jomo & Ilene Grabel & Gerald Epstein, 2003. "Capital Management Techniques In Developing Countries: An Assessment of Experiences From the 1990s and Lessons for the Future," Working Papers wp56, Political Economy Research Institute, University of Massachusetts at Amherst.

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