Joseph Stiglitz

Capital Market Liberalization, Globalization, and the IMF


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One of the most controversial aspects of globalization is capital-market liberalization - not so much the liberalization of rules governing foreign direct inveestment, but those affecting short-term capital flows, speculative hot capital that can come into and out of the country. In the 1980s and 1990s, the IMF and the U.S. Treasury tired to push capital-market liberalization around the world, encountering enormous opposition, not only from developing countries, but from economists who were less enamoured of the doctrines of free and unfettered markets, of market fundamentalism, that were at that time being preached by the international economic institutions. The economic crises of the late 1990s and early years of the new millennium, which were partly, or even largely, attributable to capital-market liberalization, reinforced those reservations. This paper takes as its point of departure a recent IMF paper, to provide insights both into how the IMF could have gone so wrong in its advocacy of capital-market liberalization and into why capital-market liberalization has so often led to increased economic instability, not to economic growth.

Source: Oxford Review of Economic Policy
Exact Citation:
Stiglitz, Joseph. "Capital Market Liberalization, Globalization, and the IMF." Oxford Review of Economic Policy 20, no. 1 (Spring 2004): 57-71.
Volume: 20
Number: 1
Pages: 57-71
Date: Spring 2004