Surges in capital flows and development: an overview of policy issues in the 1990s
International capital markets have grown dramatically since the mid-1960s. Although international capital movements partly reflect expanding economies, increasing world trade and the globalization of production, they also involve purely financial factors that rise notably faster. In the 1960s, the growing presence of little-regulated international offshore financial centres stimulated capital movements by evading national financial regulations, capital controls and taxes. Then, in the 1970s and 1980s, many countries began to deregulate their domestic financial sectors and to relax or abandon the regulation of foreign exchange transactions. These actions, combined with revolutionary technological advances in the handling of information and telecommunications and the emergence of increasingly sophisticated The authors are grateful for the valuable comments at seminars in the Brookings Institution, the Institute for Latin American Studies of the University of London, the IDB, the Development Centre of the OECD, the Secretariat of the United Nations in New York and ECLAC in Santiago. In particular, they are indebted to Guillermo Calvo, Sebastian Edwards, Helmut Reisen, Peter West and John Williamson. financial engineering, contributed to a boom in both national and international financial flows.
KeywordsPension Fund Capital Flow Capital Mobility Capital Inflow Nominal Exchange Rate
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