DEVS 310 Lecture Notes - Lecture 8: Paul Wolfowitz, Crony Capitalism, Good Governance
Document Summary
The proponents of inancial liberalizaion argue that barriers to the movement of money at a global level need to be removed. Doing so allows western inancial investors to invest in developing world stock markets without restricions. This further translates to addiional funding for developing country governments and businesses, allowing them to overcome capital shortages. As a result of the massive inlows of short-term capital, development can occur at a much faster rate in emerging markets. However, proponents of inancial liberalizaion fail to realize that opening up the inancial market of emerging countries also means greater risks of highly volaile global capital lows, which could lead to massive crises. One of the underlying issues with free global capital mobility is that the lack of government restricions allows money to leave a speciic market or country just as quickly as it could enter the market.