International Capital Flows: Pros and Cons

There are undoubtedly benefits and bad points to the large flows of capital between countries that are experienced in the modern world.

It provides the money that new and emerging markets really need in order to take that next step and mature and develop.

However during the time they are less controlled or in really uncontrolled markets this can lead to all sorts of problems.

Also when there are very large influxes of a currency to a developing country it can cause economic problems as the currency may have to rise as a result but the ordinary population can be put into chaos by such an event and so the whole economy has to be extremely carefully managed in this sort of situation.

Therefore controls are key to emerging markets and looking after and protecting them when high levels of currency flow into them, as was seen with the famous Asian crisis in the late 1990s.

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