Özet:

Emerging market countries need capital inflows to finance their current account deficits because they are short in domestic savings. Foreign direct investment is the desired form of capital inflows. Indirect capital inflows can also boost growth if used wisely. If a country has weak fundamentals and institutional structures or there exits an external shock, speculative foreign capital can easily and rapidly fly away with a financial crisis left behind. In this study, we outline the theoretical framework of sudden stops, and then investigate inflow control mechanisms to minimize the volatility of capital movements.

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