36 Pages Posted: 9 Jun 2008
Date Written: June 2008
Cross-country regressions suggest little connection from foreign capital inflows to more rapid economic growth for developing countries and emerging markets. This suggests that the lack of domestic savings is not the primary constraint on growth in these economies, as implicitly assumed in the benchmark neoclassical framework. We explore emerging new theories on both the costs and benefits of capital account liberalization, and suggest how one might adopt a pragmatic approach to the process.
Suggested Citation: Suggested Citation
Prasad, Eswar S. and Rajan, Raghuram G., A Pragmatic Approach to Capital Account Liberalization (June 2008). NBER Working Paper No. w14051. Available at SSRN: https://ssrn.com/abstract=1142223