THE HISTORY OF CAPITAL ACCOUNT MANAGEMENT IN DEVELOPING COUNTRIES

摘要

Capital account, covering foreign capital inflow and outflow, is an important account in balance of payment of each country. Right after World War Two, many developing countries attached great importance to industrialization, which was thought to be a quick way to catch up with developed countries and could be done by import-substitution strategy. Under import-substitution strategy, governments had to make capital control in order to prevent capital from outflow. So developing countries had a strict capital account period from World War Two to 1960's. Since the late of 1960's, some Asian and Latin American countries gave up the import-substitution strategy and took export-oriented strategy instead. The change of the economic strategy, accompanied by New Liberalism thought and Financial Deepening Theory, resulted in the change of management on capital account. More countries relaxed the control on capital inflow so that more foreign capital inflow could come into help developing export industry and increase national income. The result is stimulating with some developing countries having got rid of poverty. But too many capital inflows caused debt crisis in 1982 that made Latin American countries suffer a lot. In 1990's, there is a trend of globalization. Under this circumstance, some developing countries open their account totally and foreign capital can be flowed freely in or out of the country. However, the Asian financial crisis show that it is very dangerous to open the capital account when there is weak financial system at home.