At head of title: Institut universitaire de hautes eÌ tudes internationales. Includes bibliographies and index.

This paper examines country experiences with the use and liberalization of capital controls to develop a deeper understanding of the role of capital controls in coping with volatile capital flows, as well as the issues surrounding their liberalization. Detailed analyses of country cases aim to shed light on the motivations to limit capital flows; the role the controls may have played in coping with particular situations, including in financial crises and in limiting short-term inflows; the nature and design of the controls; and their effectivenes and potential costs. The paper also examines the link between prudential policies and capital controls and illstrates the ways in which better prudential practices and accelerated financial reforms could address the risks in cross-border capital transactions.

Study of a few issues raised by international capital flow, with particular reference to experience of the UK and the USA in their efforts to control the export of capital during the 1960's and early 1970's through foreign exchange controls - analyzes the effects of exchange rate strategy on overseas private investment and the balance of payments, and includes financial policy implications of foreign investment. Bibliography pp 101 to 104, references and statistical tables.

This paper investigates why controls on capital inflows have a bad name, and evoke such visceral opposition, by tracing how capital controls have been used and perceived, since the late nineteenth century. While advanced countries often employed capital controls to tame speculative inflows during the last century, we conjecture that several factors undermined their subsequent use as prudential tools. First, it appears that inflow controls became inextricably linked with outflow controls. The latter have typically been more pervasive, more stringent, and more linked to autocratic regimes, failed macroeconomic policies, and financial crisis—inflow controls are thus damned by this “guilt by association.” Second, capital account restrictions often tend to be associated with current account restrictions. As countries aspired to achieve greater trade integration, capital controls came to be viewed as incompatible with free trade. Third, as policy activism of the 1970s gave way to the free market ideology of the 1980s and 1990s, the use of capital controls, even on inflows and for prudential purposes, fell into disrepute.

Free capital movements played an important part in the economic integration and globalisation of the nineteenth century. This work analyses historical experience with capital controls, in Britain and elsewhere, and reviews the theory. It concludes that such controls are damaging and that there is no case for reviving them.