The Fickle Charms of Private Global Finance
Despite all the hype, greater access to private international capital has not been much use to most emerging markets and developing countries over the past two decades. The record suggests that solutions to current macroeconomic dilemmas that still rely on net capital inflows are likely to end in tears.
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NEW DELHI – Once again, emerging markets are on the capital-flows roller coaster – one no less dizzying for being so familiar. And once again, the highs and lows of financial-market swings in these economies are mostly generated by external forces, not national policies. But the possibility that even the smallest domestic mistake could send them into a tailspin still looms large.