This paper discusses problems often faced by a country in the process toward a more open capital account and the policy responses to these problems. In the following sections, we begin to discuss the issues accompanied by a capital account liberalization. The discussion in each section is followed by the actual episodes of capital account liberalization which focus on six Asian developing countries : Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand. Reviewing the kinds of problems these countries have been facing and the governments' responses to the problems, we will discuss the prospects on the financial opening of developing countries including other Asian developing countries.

Contents

1. Introduction

2. Capital Account Liberalization and Capital Flows in Asian Developing Countries
2.1. Liberalization Process
2.2. Trends of Capital Flows
2.3. Other Causes for Increased Capital Movement in Asian Developing Countries
2.4. Internal / External Pressure toward Capital Account Liberalization

3. Issues of Transition
3.1. Speed and Sequencing
3.2. Macroeconomic Issues
3.3. Microeconomic Issues

4. Policy Mix

5. Conclusions

〈Appendix〉 Current Regulations on Capital Account

References