The currency crises that engulfed East Asian economies in 1997 and Mexico in 1994 — and their high development costs — raise a serious concern about the net benefits for developing countries of large flows of potentially reversible short-term international capital. This book examines in depth the macroeconomic and other policy dilemmas confronting public authorities in the emerging economies as they deal with short-term capital movements, especially in the period before the outbreak of these crises. The studies are based on comparative case studies of key emerging economies. Valuable insights ... More

The currency crises that engulfed East Asian economies in 1997 and Mexico in 1994 — and their high development costs — raise a serious concern about the net benefits for developing countries of large flows of potentially reversible short-term international capital. This book examines in depth the macroeconomic and other policy dilemmas confronting public authorities in the emerging economies as they deal with short-term capital movements, especially in the period before the outbreak of these crises. The studies are based on comparative case studies of key emerging economies. Valuable insights are also derived from contrasts between the East Asian, Latin American, African, and European experiences, between the financial and real effects of financial flows, and between private and public responsibilities in managing financial markets. This book analytically identifies the weaknesses in both domestic and international capital market regimes. The recommendations derived from this analysis apply to the development of financial markets in developing countries, the monitoring and regulation of mutual funds in source countries, and the future development of international capital markets.