Financial openness, financial fragility and policies for economic stability: a comparative analysis across regions of the developing world

Abstract

This book presents a comparative analysis of the policy responses of developing countries in Africa, Asia and Latin America and the Caribbean to the challenges that greater external financial openness and price and exchange-rate flexibility pose to economic stability. Greater external openness has significantly narrowed developing economies’ policy space, while at the same time increasing the potential for financial fragility and instability. These challenges, which have come to the fore since the global financial crisis of 2008–2009, are also manifest in the profound impact of the COVID-19 pandemic and will shape the post-pandemic recovery. The book examines how different countries have used capital controls and macroprudential tools and highlights key lessons learned.