As succinctly put in a staff memorandum, 'regardless of the pace, successful liberalizations have required complementary financial sector reforms'.
Against this backdrop, several national authorities have introduced or considered the use of capital controls (1) and the intellectual approach to financial liberalization is once again under serious consideration in economic and political circles alike (Subramanian and Williamson, 2009; The Economist, 2009).
The political implications of distinct economic liberalizations become crystal-clear once the social cleavages are integrated into the analysis.
Economic Liberalization and Center-Periphery Relations
2000b, "Do Stock Market Liberalizations
Cause Investment Booms?
Equity market liberalizations
give foreign investors the opportunity to invest in domestic equity securities and domestic investors the right to transact in foreign equity securities.
Henry, 2001, "Stock Market Liberalizations
and the Repricing of Systematic Risk," Stanford University, Working paper.
Given the recent currency crises and their adverse economic consequences, what is the role of financial liberalizations
and foreign capital flows in the economic welfare of developing countries?
As a result of the arbitrage opportunities generated by these liberalizations
, yen interest rates in domestic and international markets became much more tightly linked: The standard deviation of the differential between three-month Euroyen and domestic gensaki interest rates fell 88 percent between the 1975-80 period and the 1981-85 period (from 190 basis points to 23 basis points).
Those implemented under "placid" circumstances have survived nearly as well, particularly when they followed earlier successful liberalizations
That has been the question plaguing economists and governments alike for several decades now, particularly as market liberalizations
have been followed by economic crises in countries such as Mexico, South Korea, and Thailand.
In a related study, Henry found that stock market liberalizations
are followed by a surge in the growth rate of private investment.