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Capital Account Openness in Low-income Developing Countries: Evidence from a New Database
Author: Mrs. Sarwat Jahan and Daili Wang
Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 252
Language:
English
Publication Date:
23 Dec 2016
DOI:
https://doi.org/10.5089/9781475563191.001
ISBN:
9781475563191
ISSN:
1018-5941
Pages:
26
Keywords:
WP; Openness; liberalization; market; Capital account openness; Capital flow management measure; Financial interconnectedness; Low-income developing countries; Capital flows; openness index; capital account; frontier economy; financial market liberalization; index exercise; exchange arrangement; transaction liberalization; Capital account; Capital controls; Foreign direct investment; Capital account liberalization; Asia and Pacific; East Asia; South Asia; Sub-Saharan Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The relevance of recording and assessing countries’ capital flow management measures is well-recognized, but very few studies have focused on low-income developing countries (LIDCs). A key constraint is the lack of an appropriate index to measure the openness of capital account and its change over time. This paper fills the gap by constructing a de jure index based on information contained in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions. It provides an aggregate index to capture the overall openness of the capital account, and also provides a breakdown of openness for various subcategories of capital flows. The new database covers 164 countries with information on 12 types of asset categories over the period 1996–2013. The index provides the largest coverage of LIDCs among all existing indices and also provides granularity on openness across asset types, direction of flows and residency. The paper examines the link between de jure capital account openness with de facto capital flows and outlines potential applications of this database.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund