Capital Market Liberalization And Development (initiative For Policy Dialogue Series C)
by Joseph E. Stiglitz /
2008 / English / PDF
4.2 MB Download
Capital market liberalization has been a key battle in the debate
on globalization for much of the previous two decades. Many
developing countries, often at the behest of international
financial institutions such as the I.M.F., opened their capital
accounts and liberalized their domestic financial markets as part
of the wave of liberalization that characterized the 1980s and
1990s and in doing so exposed their economies to increased risk and
volatility. Now with even the I.M.F. acknowledging the risks
inherent in capital market liberalization, the central intellectual
battle over the effects of capital market liberalization has for
the most part ended. Though this new understanding of the
consequences of capital market liberalization is reshaping many
policy discussions among academics and international institutions,
ideological and vested interests remain. Critical policy debates
also remain, such as how much government should intervene and what
tools are available. Although capital market liberalization might
not produce the promised benefits, many economists and policymakers
still worry about the costs of intervention. Do these costs exceed
the benefits? What are the best kinds of interventions, under what
circumstances? To answer these questions, we have to understand why
capital market liberalization has failed to enhance growth, why it
has resulted in greater instability, why the poor appear to have
borne the greatest burden, and why the advocates of capital market
liberalization were so wrong. Bringing together some of the leading
researchers and practitioners in the field, this volume provides an
analysis of both the risks associated with capital market
liberalization and the alternative policy options available to
enhance macroeconomic management.
Capital market liberalization has been a key battle in the debate
on globalization for much of the previous two decades. Many
developing countries, often at the behest of international
financial institutions such as the I.M.F., opened their capital
accounts and liberalized their domestic financial markets as part
of the wave of liberalization that characterized the 1980s and
1990s and in doing so exposed their economies to increased risk and
volatility. Now with even the I.M.F. acknowledging the risks
inherent in capital market liberalization, the central intellectual
battle over the effects of capital market liberalization has for
the most part ended. Though this new understanding of the
consequences of capital market liberalization is reshaping many
policy discussions among academics and international institutions,
ideological and vested interests remain. Critical policy debates
also remain, such as how much government should intervene and what
tools are available. Although capital market liberalization might
not produce the promised benefits, many economists and policymakers
still worry about the costs of intervention. Do these costs exceed
the benefits? What are the best kinds of interventions, under what
circumstances? To answer these questions, we have to understand why
capital market liberalization has failed to enhance growth, why it
has resulted in greater instability, why the poor appear to have
borne the greatest burden, and why the advocates of capital market
liberalization were so wrong. Bringing together some of the leading
researchers and practitioners in the field, this volume provides an
analysis of both the risks associated with capital market
liberalization and the alternative policy options available to
enhance macroeconomic management.
