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Capital Market Liberalization and Development

Joseph Stiglitz (Editor), José Antonio Ocampo (Editor)

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Capital market liberalization has been a key battle in the debate on globalization for much of the previous two decades. Many developing countries, often at the behest of international financial institutions such as the IMF, opened their capital accounts and liberalized their domestic financial markets as part of the wave of liberalization that characterized the 1980s and 1990s and in doing so exposed their economies to increased risk and volatility.

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ISBN13: 9780199238446
ISBN10: 0199238448

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Now with even the IMF acknowledging the risks inherent in capital market liberalization, the central intellectual battle over the effects of capital market liberalization has for the most part ended. Though this new understanding of the consequences of capital market liberalization is reshaping many policy discussions among academics and international institutions, ideological and vested interests remain.

Critical policy debates also remain, such as how much government should intervene and what tools are available. Although capital market liberalization might not produce the promised benefits, many economists and policymakers still worry about the costs of intervention. Do these costs exceed the benefits? What are the best kinds of interventions, under what circumstances?

To answer these questions, we have to understand why capital market liberalization has failed to enhance growth, why it has resulted in greater instability, why the poor appear to have borne the greatest burden, and why the advocates of capital market liberalization were so wrong. Bringing together some of the leading researchers and practitioners in the field, this volume provides an analysis of both the risks associated with capital market liberalization and the alternative policy options available to enhance macroeconomic management.

About the Editors

Joseph Stiglitz
Co-President
Initiative for Policy Dialogue (IPD)

Joseph E. Stiglitz is co-President of the Initiative for Policy Dialogue, and Chairman of the Committee on Global Thought at Columbia University. He is University Professor at Columbia, teaching in its Economics Department, its Business School, and its School of International and Public Affairs. He chaired the UN Commission of Experts on Reforms of the International Monetary and Financial System, created in the aftermath of the financial crisis by the President of the General Assembly. He is former Chief Economist and Senior Vice-President of the World Bank and Chairman of President Clinton’s Council of Economic Advisors. He was awarded the Nobel Memorial Prize in Economics in 2001.

José Antonio Ocampo
Co-President
Initiative for Policy Dialogue (IPD)

Jose Antonio Ocampo is Co-President of IPD, Professor of Professional Practice in the School of International and Public Affairs, and Fellow of the Committee on Global Thought at Columbia University. Prior to his appointment at Columbia, Professor Ocampo served as the United Nations Under-Secretary-General for Economic and Social Affairs, and head of UN Department of Economic and Social Affairs (DESA), as Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), and has held a number of high-level posts in the Government of Colombia, including Minister of Finance and Public Credit, Director of the National Planning Department, and Minister of Agriculture . Professor Ocampo is author or editor of over 30 books and has published over 200 scholarly articles on macroeconomic theory and policy, international financial issues, economic development, international trade, and Colombian and Latin American economic history.

About the Authors

Benu Schneider
Research Fellow
Overseas Development Institute

Gerald Epstein
Professor of Economics
University of Massachusetts, Amherst

Andrew Charlton
Research Fellow
London School of Economics

Andrew Charlton is a Research Fellow at the London School of Economics. He has taught at Oxford University and been a consultant for the Initiative for Policy Dialogue, The United Nations Development Program and the Organization for Economic Co-operation and Development.

Randall Dodd
Director
Financial Policy Forum

Shari Spiegel
Senior Economic Affairs Officer
UN DESA

Shari Spiegel joined UN DESA as a Senior Economic Affairs Officer in May 2010. She is co-author and co-editor of several of books and articles on capital and financial markets, debt and macroeconomics. She served as Executive Director of the Initiative for Policy Dialogue (IPD). She has extensive experience at the private sector, most recently as a Principal at New Holland Capital and as head of fixed-income emerging markets at Lazard Asset Management. She also served as an advisor to the Hungarian Central Bank in the early 1990s.

Roberto Frenkel
Principal Research Associate
CEDES

Roberto Frenkel is Principal Research Associate at CEDES (from 1977) and Professor at the University of Buenos Aires (from 1984). Presently he is also Director of the Graduate Program on Capital Markets (University of Buenos Aires) and teaches graduate courses at the Di Tella and FLACSO-San Andrés Universities in Argentina. He was Professor at the University of Chile, University Católica de Chile, University Central de Venezuela and also visiting professor at the University of California (San Diego), University Católica de Rio de Janeiro and University of Pavia (Italy). He has been a consultant of several international organizations including UN, ILO, UNCTAD, UNDP, ECLAC, and he has also worked for the OECD Development Center, IDB, UNIDO and the governments of Argentina, Bolivia, Colombia, Venezuela and Uruguay. He was Undersecretary Chief of Economics Advisors to the Ministry of Finance (1985-89) and a member of the Board of Directors of the Banco de la Provincia de Buenos Aires (1999-2003) both in Argentina. He is a member of the Board of the World Institute for Development Economic Research (WIDER), United Nations University. He was a member of the UNDP Advisers Group. He published numerous books and articles in academic journals on macroeconomic theory and policy, money and finance, inflation and stabilization policies and labor market and income distribution, with special focus on Argentina and Latin America.

Stephany Griffith-Jones
Financial Markets Program Director
Initiative for Policy Dialogue (IPD)

Stephany Griffith-Jones is an economist specialising in international finance and development, with emphasis on reform of the international and national financial system, especially in relation to financial regulation and global governance. She is Financial Markets Director at the Initiative for Policy Dialogue, Columbia University. Previously she was Professorial Fellow at the Institute of Development Studies at Sussex University. She was Director of International Finance at the Commonwealth Secretariat and worked at UN DESA and ECLAC. She was senior consultant to governments in Eastern Europe, Latin America and Africa and many international agencies, including the World Bank, the IADB, the European Commission, UNDP and UNCTAD. She was a member of the Warwick Commission on financial regulation. She currently is theme leader on finance in the ESRC /DFID growth programme for LICs, especially African ones. She has published over 20 books and many scholarly and journalistic articles. Her books include Time for the Visible Hand, Lessons from the 2008 crisis, edited jointly with José Antonio Ocampo and Joseph Stiglitz.

Liliana Rojas-Suarez
Senior Fellow
Center for Global Development

José Antonio Ocampo
Co-President
Initiative for Policy Dialogue (IPD)

Jose Antonio Ocampo is Co-President of IPD, Professor of Professional Practice in the School of International and Public Affairs, and Fellow of the Committee on Global Thought at Columbia University. Prior to his appointment at Columbia, Professor Ocampo served as the United Nations Under-Secretary-General for Economic and Social Affairs, and head of UN Department of Economic and Social Affairs (DESA), as Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), and has held a number of high-level posts in the Government of Colombia, including Minister of Finance and Public Credit, Director of the National Planning Department, and Minister of Agriculture . Professor Ocampo is author or editor of over 30 books and has published over 200 scholarly articles on macroeconomic theory and policy, international financial issues, economic development, international trade, and Colombian and Latin American economic history.

Martin Khor
Executive Director
South Centre

Avinash Persaud
Founder and Chairman
Intelligence Capital Limited, Warwick Commission

Avinash Persaud is Executive Chairman of Intelligence Capital Limited, a financial advisory boutique; Chairman of Elara Capital PLC, an emerging market specialist; and Chairman of Paradise Beach Limited. He was formerly the managing director at State Street Bank & Trust and global head of currency and commodity research, J. P. Morgan. He is emeritus Professor, Gresham College; Senior Fellow, London Business School; Visiting Fellow, Cambridge University; Governor, London School of Economics; Member of Council, Royal Economics Society; and 2010 President of the Economics Section, British Association for the Advancement of Science. He was Chairman, Warwick Commission on Financial Regulation; Member, Pew Task Force to the US Senate Banking Committee, Member and Chairman of the Regulatory sub-committee of the UN Commission of Experts on Financial Reform and Member, International Task Force on Financial Transaction Taxes. He is a former Visiting Scholar of the IMF and ECB and Member of the UK Treasury’s Audit & Risk Committee. He is a Member of the National Council of Economic Advisors in Barbados.

Sergio L. Schmuckler
Lead Economist, Development Research Group
The World Bank

Joseph Stiglitz
Co-President
Initiative for Policy Dialogue (IPD)

Joseph E. Stiglitz is co-President of the Initiative for Policy Dialogue, and Chairman of the Committee on Global Thought at Columbia University. He is University Professor at Columbia, teaching in its Economics Department, its Business School, and its School of International and Public Affairs. He chaired the UN Commission of Experts on Reforms of the International Monetary and Financial System, created in the aftermath of the financial crisis by the President of the General Assembly. He is former Chief Economist and Senior Vice-President of the World Bank and Chairman of President Clinton’s Council of Economic Advisors. He was awarded the Nobel Memorial Prize in Economics in 2001.

Gabriel Palma
University Lecturer
University of Cambridge

Jomo Kwame Sundaram
Assistant Secretary General for Economic Development
United Nations

Jomo Kwame Sundaram has been Assistant Director General and Coordinator for Economic and Social Development (ADG-ES), Food and Agriculture Organization of the United Nations since 2012. He was Assistant Secretary General for Economic Development in the UN Department of Economic and Social Affairs (DESA) from 2005 until 2012, and Research Coordinator for the G24 Intergovernmental Group on International Monetary Affairs and Development from 2006 until 2012. He has received several honours and awards for his work including the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

Ilene Grabel
Professor of Global Finance
University of Denver

1

Capital Market Liberalization and Development

1

2

The Benefits and Risks of Financial Globalization

48

3

Capital Market Liberalization, Globalization, and the IMF

76

4

From the Boom in Capital Inflows to Financial Traps

101

5

Capital Market Liberalization and Poverty

121

6

Capital Management Techniques in Developing Countries: Managing Capital Flows in Malaysia, India, and China

139

7

The Role of Preventative Capital Account Regulations

170

8

The Malaysian Experience in Financial-Economic Crisis Management: An Alternative to the IMF-Style Approach

205

9

Domestic Financial Regulations in Developing Countries: Can They Effectively Limit the Impact of Capital Account Volatility?

230

10

The Pro-Cyclical Impact of Basel II on Emerging Markets and its Political Economy

262

11

Consequences of Liberalizing Derivatives Markets

288

12

Do Global Standards and Codes Prevent Financial Crises?

319

Publication Information

Type Book
Program Capital Market Liberalization
Posted 06/01/08
Download Not Available
# Pages 384
Publisher Oxford University Press
Year 2008