Capital Folws, capital account liberalisation and the southern Mediterranean countries

Abstract

This paper examines questions related to possible capital account liberalisation in theMediterranean countries. First, we provide an overview of the extent to which thesecountries have capital controls along with their exchange rate regimes and some basicmacroeconomic aggregates. Second, we examine the case for capital accountliberalisation, along with the prerequisites for successful liberalisation. Here weconsider issues such as sequencing and possible benefits of synchronisation. Finally,we examine the experience with capital flows – both FDI and other capital flows. Weexplain these flows and use the past experience of these countries to draw someconclusions for the successful opening up of the capital account.

Keywords

• capital account liberalisation
• Mediterranean countries
• capital flows