"John Williamson's book provides a first-rate analysis of the causes and effects of volatile capital flows to emerging markets."
Finance and Development
Curbing the Boom-Bust Cycle: Stabilizing Capital Flows to Emerging Markets
Policy Analyses in International Economics 75
by John Williamson
144 pp. ISBN paper 978-0-88132-330-6 $22.95
International investors poured vast sums of money into East Asian and Latin American countries
during the mid-1990s, when the emerging market boom was at its peak. Then Thailand stumbled and
panic seized the markets, and boom gave way to bust. Investors suffered large financial losses, while
Asian countries suddenly experienced large capital outflows and the macroeconomic pressures these
wrought plunged countries that had been growing rapidly ("miraculously") into crisis. Much the same
had happened in Latin America when the debt crisis broke in 1982. This book investigates what can
be done to make the international capital market a constructive force in promoting development in
emerging markets. The author concludes that the problem of cyclicality that has undermined the
value of international borrowing cannot be tackled just, or even mainly, from the supply side, but will
require actions on the part of both creditors and debtors.
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Selected chapters and sections are provided for preview only.
1. Introduction [pdf]
2. The Problem of the Boom-Bust Cycle
3. The Case for Capital Mobility
4. Forms of Capital Flow
5. The Asset Management Industry
6. What Creditors Could Do [pdf]
7. What Debtors Could Do
8. An Action Program [pdf]