Chapter

Capital Market Liberalization: The Arguments For and Against

Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis and Deepak Nayyar

in Stability with Growth

Published in print August 2006 | ISBN: 9780199288144
Published online September 2006 | e-ISBN: 9780191603884 | DOI: http://dx.doi.org/10.1093/0199288143.003.0010

Series: Initiative for Policy Dialogue Series

 Capital Market Liberalization: The Arguments For and Against

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Although there is now a general recognition that capital market liberalization failed to help developing countries achieve economic growth and stability, the important question remains of why the supporters of liberalization were so wrong. The chapter begins with the ‘debate in brief’, which presents the central arguments for and against CML. The next three sections look at the impact of capital market liberalization on stability, growth, and poverty. The chapter then discusses the impact of the international policy response to instability known as ‘bail-outs’. The sixth section presents a brief discussion on the interaction of capital market liberalization, political processes, and democracy.

Keywords: capital market liberalization; East Asia crisis; International Monetary Fund; hot speculative money; short-term capital flows; macroeconomic instability; poverty; bail-outs; democracy

Chapter.  7958 words.  Illustrated.

Subjects: Economic Development and Growth

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