Managing Portfolio Flows

摘要

Capital account liberalization has been praised as a vehicle for faster growth and rising living standards but also criticized for raising financial instability in emerging economies. Capital account liberalization benefits the financial sector directly through more competition and innovation, lowering the costs of capital and facilitating investment for the nonfinancial sector. Since this should contribute to faster growth and since the incomes of the poor tend to rise with growth, proponents of liberalization conclude that it would help alleviate poverty. However, increased capital mobility has also frequently proved to be destabilizing. Moreover, the benefits of more capital mobility have often been unevenly distributed. Subsequently, poverty reduction has been hampered with unequal growth and growing instabilities. Several institutions may foster more stable growth in developing economies. They include better civil liberties, public support for indigenous banking systems, and progressive taxation coupled with effective tax collection.