In the late eighties, many developing countries followed the example of the most advanced countries and opened their capital account (K.A.) in an attempt to reap new gains from increased integration with the world economy. This paper points to some risks that might be associated with undifferentiated deregulation of international movement of capital in connection with developing economies. It argues in favor of proper sequencing: liberalization should proceed in parallel with progress when it comes to macroeconomic stability, building market competition and the creation of a sound, internal financial system. A separate section analyzes this issue in the special context of transition economies.
DAIANU, D. and VRANCEANU, R. (2003). Opening the Capital Account of Developing Countries: Some Policy Issues. Acta Oeconomica, pp. 245-270.