ARHIVELE OLTENIEI - Universitatea din Craiova

THE LIBERALIZATION CAPITAL ACCOUNT AND ITSIMPLICATIONSGHEORGHE PÎRVU, RAMONA GRUESCU1. Theoretical basisIn recent years the studies of phenomena linked to the balance of cashpayment and especially of capital account have grown seriously both inacademic domain and inside international organizations such as InternationalMonetary Capital, OECD, European Commission. I have also seen that althoughnumerous studies on liberalization of capital account have been pursued, there isstill controversy regarding the advantages and the means of staging of thisoperation.From the theoretical point of view the necessity of the liberalization ofcapital account is based on the fact that the free circulation of the capitalpromotes an efficient sharing of the economies at the global level and a betterdiversification of the financial risks. Thus, the liberalization of the capitalaccount can bring a major contribution to the process of economical growth andsocial welfare.In the scientific literature numerous models have been published ofcompetitiveness and financial market highlighted the fact that the opening ofcapital account can make the process of economical growth more rapidespecially through free capital circulation but opposed points of view haveemphasized some risks of an open capital account. Thus we have highlighted thefact that due to the existence of an informational asymmetry on the capitalmarket, the liberalization of capital account doesn’t necessarily lead to a betterresource sharing, especially when the respective markets are characterized bymajor distortions.In economists circle they spread the opinion according to witch anemergent economy shouldn’t liberalize the capital account which can lead to anincrease of concentration on the market and the market power of some firms butcan generate conditions of economical instability growth, when the periods ofenthusiasm and accelerated development are followed by strong crises andstagnation.Thus, it results that a country should not proceed to completelyliberalize the capital account if the country can’t:- Keep the inflation under control, equilibrate the exchange course andobtain enough external economical credibility;ARHIVELE OLTENIEI, Serie nouă, nr. 21, 2007, p. 349–356