What accounts for the surge of cross-border capital flows over the past two decades? Capital account liberalization provides a big part of the answer. But while the increase in these flows since the mid-1980s—both between industrial countries and from industrial to developing countries—has been associated with a number of benefits, it has also played a role in a number of financial crises. This raises some fundamental questions. Why have many developing countries followed the advanced economies and signed on to capital account liberalization despite the risks, and is it really the culprit that some anti-globalizers have made it out to be?