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Capital Account Liberalization, Free Long-Term Capital Flows, Financial Crises and Economic Development

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  • Ajit Singh

    (Queens' College, University of Cambridge)

Abstract

The first part of this paper examines the theoretical and empirical case for full capital account liberalization in developing countries (DCs) and finds it unconvincing. Indeed, analysis and evidence presented here point to a strong case against it. The second part considers the liberalization of only the long-term capital account, particularly FDI--a form of inflow favored by most economists. This paper argues that a multilateral agreement on investment, which denies countries the discretion to regulate FDI, will not be in the interests of DCs.

Suggested Citation

  • Ajit Singh, 2003. "Capital Account Liberalization, Free Long-Term Capital Flows, Financial Crises and Economic Development," Eastern Economic Journal, Eastern Economic Association, vol. 29(2), pages 191-216, Spring.
    • Handle: RePEc:eej:eeconj:v:29:y:2003:i:2:p:191-216
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Capital Flow; Developing Countries; Development; Liberalization;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G2 - Financial Economics - - Financial Institutions and Services

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