Capital Market Liberalization: Summary and Remaining Debates

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:

Series: Initiative for Policy Dialogue Series

 Capital Market Liberalization: Summary and Remaining Debates

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This chapter examines some of the other outstanding debates on capital market liberalization (CML). In particular, it focuses on when a country is sufficiently developed to risk capital market liberalization, whether all countries should make liberalization their long-term goal, and whether capital market liberalization is reversible; even if it was a mistake in the first place, should countries that have already liberalized now stick with it? For example, proponents of liberalization often argue that the issue is not whether countries should liberalize their capital markets, but rather that liberalization should occur within the ‘proper’ sequence of reforms. Critics, however, argue that CML should not necessarily be the long run goal of all countries and that there are better ways for developing countries to integrate into the global economy. The chapter also contains a section that examines the appropriateness of different techniques of capital market liberalization for countries in various stages of development.

Keywords: sequencing; least developed countries; emerging market countries; crises; capital flows; shocks; regulatory structures; institutional framework

Chapter.  3725 words. 

Subjects: Economic Development and Growth

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