Professional Documents
Culture Documents
Thulani Sithole
27528872
November 2008
© University of Pretoria
ABSTRACT
notion but the results from causal studies lack consistency, especially when
economic performance.
1
DECLARATION
Pretoria. It has not been submitted before for any degree or examination in
any other university. I further declare that I have obtained the necessary
2
ACKNOWLEDGEMENTS
Leanne Kinghorn, who edited this report and made it look good.
The Director, Prof. Nick Binedell, and the staff of GIBS who have
experience.
3
TABLE OF CONTENTS
ABSTRACT ......................................................................................................................................... 1
DECLARATION ................................................................................................................................ 2
ACKNOWLEDGEMENTS ............................................................................................................... 3
TABLE OF CONTENTS .................................................................................................................... 4
TABLE OF FIGURES ......................................................................................................................... 8
1. INTRODUCTION TO THE RESEARCH PROBLEM ...................................................... 10
1.1.3. CONCLUSION .............................................................................................................. 16
4
2.7. SOUTH AFRICA’S FOREIGN EXCHANGE CONTROLS ........................................... 33
2.8.3. CONCLUSION .............................................................................................................. 44
4.1. POPULATION ....................................................................................................................... 50
5. RESULTS .................................................................................................................................. 58
.................................................................................................................................................. 58
5.1.1. AFRICA ........................................................................................................................... 59
5.1.2. AMERICA ....................................................................................................................... 61
5.1.3. ASIA ................................................................................................................................. 63
GROWTH ............................................................................................................................... 69
5.2.1. AFRICA ........................................................................................................................... 69
5.2.2. AMERICA ....................................................................................................................... 72
5.2.3. ASIA ................................................................................................................................. 74
6
5.2.4. ALL EMERGING ECONOMIES ................................................................................ 76
ECONOMIES ........................................................................................................................ 80
6.1.1. AFRICA ........................................................................................................................... 80
6.1.2. AMERICA ....................................................................................................................... 83
6.1.3. ASIA ................................................................................................................................. 84
GROWTH ............................................................................................................................... 88
7. CONCLUSIONS ................................................................................................................... 94
7.1. BACKGROUND ................................................................................................................... 94
7.2. FINDINGS .............................................................................................................................. 95
7.3. SUMMARY ............................................................................................................................ 97
7.4. RECOMMENDATIONS ...................................................................................................... 98
7
7.5. FUTURE RESEARCH IDEAS ................................................................................................ 99
REFERENCES ............................................................................................................................... 101
APPENDICES .................................................................................................................................... 0
TABLE OF FIGURES
TABLE OF TABLES
.............................................................................................................................. 73
Table 10: Correlation study (Pace of eliminating exchange controls in all emerging
Table 11: Correlation study (Pace of eliminating exchange controls in South Africa)
.............................................................................................................................. 79
9
1. INTRODUCTION TO THE RESEARCH PROBLEM
services, and capital. It has affected all countries with different economic
10
countries should rely on exchange controls to control their balance of
capital flows. The other reason could be that in a country with a fragile
also use capital controls to steer the composition of inflows toward more
Unlike Asiedu and Lien (2004), Kose and Prasad (2004) argue that access to
consumption levels are relatively less volatile. Since good and bad times
are not synchronized across countries, capital flows can, to some extent,
11
However, these restrictions distort trade and domestic resource allocation
1990).
12
domestic and foreign investors, who could suddenly take capital out of the
economic growth.
financial crisis, which inflicted large human and financial costs. The most
therefore lose out on the many benefits such flows could provide.
13
The consequences and desirability of capital account liberalization among
foreseeable future. People on one side of this debate will maintain those
countries that open up to financial flows will set the stage for more rapid
their own making when their governments relinquish control over the inflow
The first research problem presented by the arguments above is how the
their policies in order to benefit from globalisation. This study will monitor
payments.
14
Edison, Klein, Ricci and Sloek (2002) quote from the report of the Managing
capital account issues, the Executive Board has emphasized the substantial
Visser (2002) however argues that easing of exchange control is noble, but
15
The second research problem raised by the arguments above is about the
pace of relaxation of capital controls, and this shall also be further explored
by this research.
1.1.3. CONCLUSION
Zagha and Nankani (2006) claim that the financial liberalization that took
place in developing countries in the late 1980s and the 1990s was sparked
and content across countries. It often involved giving central banks more
controls, but there are mixed results – especially when studying emerging
the pace of relaxing capital controls. This research provides more insights
big-bang approach.
Gwartney and Lawson (2007) provide the Economic Freedom of the World
(EFW) indices and specifically the international market capital controls that
developing markets are often the most active and important asset in
17
developing and transition economies, yet little research on the subject
the argument on the relaxation of foreign exchange controls and the pace
Edison, Klein, Ricci and Sloek (2002) point out that while industrial countries
have largely liberalized their capital accounts, and there has been some
18
Figure 1: Capital inflows to emerging economies
Dorsey (2008) state that the increased flows shown by Figure 1, are being
In support of performing this study, Berggren (2003) states that Adam Smith
Even though he (Adam Smith) realized that free markets are not perfect, he
understood that, generally speaking, they, more than any alternatives, are
able to advance wealth and welfare. The question is: Should the emerging
pragmatism is required?
19
Berggren (2003) states that research on economic freedom is still at an early
stage and calls for more carefully designed causality studies; studies of
Kose and Prasad (2004) provide support that the evidence is not quite as
have liberalized their capital accounts typically have had higher growth
rates, on average, than those that have not, this association does not imply
a causal relationship.
data collected from a reliable source – the IMF – and performed over a
20
1.4. WHY SOUTH AFRICA IN PARTICULAR?
Arora and Vamvakidis (2005) state that South Africa is often described as
investors are willing to lend to them in good times but tend to pull back in
its economic reforms and use the international financial markets effectively
to benefit the country and the continent. It is believed that the literature
gathered and the outcomes of the study will be used for future MBA class
Africa.
21
2. LITERATURE REVIEW
should relax exchange controls; and if they do, the second question is what
performance. The topics below assess literature from other research work
done on this topic and seek to provide clarity and define all components of
the study.
transfers.
22
Capital account in a country’s balance of payments covers a variety of
stock market), and bank borrowing which have in common the acquisition
Countries favour FDI (as shown by Figure 2), among other reasons, because
it usually involves flows that are relatively long term and not subject to rapid
like Chile, have also used selective capital controls to try to induce a shift
inflows reversed within less than a year (Kose and Prasad, 2004).
23
Figure 2: FDI to emerging economies
exchange rate volatility following different types of shocks, but, at the same
time, two additional effects occur. First, since the tax leads to a new steady
that the domestic interest rates rises and the incentives to invest in the
economies.
Kyrkilis and Pantelidis (2003) suggest that GNP is the most important
For the purpose of this study, GDP rate is used since the focus is on the
emerging countries.
about the freedom of individuals to decide how they will develop and use
compete in markets, and keep the fruits of their labour (Gwartney and
Lawson, 2007).
26
This research focuses on the components that are designed to measure
Ball and Rausser (1995) discovered that after a period of about five years of
inflation controlling.
Arce, 2003).
Rogoff (2002) further warns that even where some limited form of capital
often dominated by political considerations, and the results are not pretty.
A few powerful political stakeholders benefit but only at a high cost to other
citizens.
27
Although these arguments present an interesting case for South Africa,
adopted “economic freedom” policies, this research is not set to prove the
economic liberalization as their primary engine of growth. They fall into two
groups: developing countries in Asia, Latin America, Africa and the Middle
East; and transition economies in the former Soviet Union and China
(Hoskisson, Eden, Lau and Wright, 2000). This research focuses a lot on the
developing economies that are stratified into four continents, namely Asia,
not have the level of market efficiency and strict standards in accounting
the United States, Europe and Japan), but emerging markets will typically
28
have a physical financial infrastructure, including banks, a stock exchange
The countries in this list include those that are not considered either High
Emerging markets are sought out by investors for the prospect of high
GDP. Investments in emerging markets come with much greater risk due to
or private). Also, local stock exchanges may not offer liquid markets for
29
average governments in transition lifted non-tariff barriers to trade and
These policies are contradictory and this raises the need for more research
sound policies.
Kose and Prasad (2004) aver that capital account liberalization poses major
growth effect of this policy against the possible positive effect of reduced
and Sturm (2000) stating that that greater economic freedom fosters
economic growth.
Prasad, E.S. and Rajan, R. (2008) state that the main benefits of capital
31
capital accounts are de facto becoming more open over time irrespective
are resource-rich have to deal with capital inflows and their mixed benefits,
and supported by other policies. This is the lesson for South Africa and other
African countries.
price and market reform, restructuring and privatisation, and the need to
disagreement exists about the sequencing of such reforms. The two major
32
implementation of a rapid macroeconomic stabilization program, with the
Asiedu and Lien (2004) argue that capital controls have no impact on FDI
to sub-Saharan Africa and the Middle East. This may be explained by the
fact that FDI in the two regions are resource seeking, mainly in fuel, oil and
unalterable fact, and there is nothing that can be done about it, though
(Cole, 2003).
33
Mbaku (2003) feels that if African countries are to deal effectively with
institutions that protect property rights and allow individuals the freedom to
were $190 billion, almost four times larger than in 1990. During 1990-97,
annual net private capital inflows were also larger than those preceding
the 1982 debt crisis, and more heavily concentrated. Most of the surge was
Stals (1999), the former South African Reserve Bank Governor, highlights that
controls. The country relied on the inflows of capital to generate the foreign
exchange reserves that would be needed for the financing of any outflows
34
Harris (1999) points out that South Africa is the only country in sub-Saharan
Exchange controls were first introduced in South Africa during the Second
regulations in South Africa. The dual currency system of the financial and
repatriation of capital is now through the medium of the rand (Dasso, 2007).
South Africa, since 1994, has gradually relaxed capital controls but retains
FDI. The strength of the rand may present an opportune time to ease
affecting South African individuals and corporates, and some are listed
35
below. (The detailed and updated descriptions can be sourced from the
The limits permitted for pension funds and unit trusts invested offshore
have been increased over the period, and from October 2005 it was
completely abolished.
parastatals must obtain a majority (50% +1) interest in all foreign direct
36
Banks will be allowed to hold non-African foreign assets of up to 20% of
40%.
longer apply.
payable to non-residents.
37
individuals are able to invest, without restriction, in inward listed
180 days.
total retail assets in African securities issued and listed on the JSE
38
South African corporates are allowed to utilise part of their local cash
South Africans are allowed to make imports over the internet and pay
with their credit cards. The limit per transaction is R20 000.
establish a rand currency futures market. This will enable South African
Ahmed, Arezki and Funke (2005) discovered that for South Africa, there are
a number of policy variables that contribute to the lower share of FDI and
higher share of portfolio flows. South Africa also scores lower than its major
39
compared with other emerging market economies, South Africa’s foreign
Reinhart (2005) states that no policy recipe can ensure the best use and the
across countries and have not relied on a single instrument. Several factors
its record in fighting inflation, the openness of its economy to foreign trade,
the state of public finances, the size and liquidity of the domestic bond
market, the health of domestic banks, the flexibility of fiscal policy, and the
the financial sector. South Africa is applauded for its world class financial
sector.
Out of a number of statistical studies that have been done on this subject,
the only study that closely resembles the one done on this research was
liberalization.
The Share Measure used the information from the IMF’s Annual Report on
controls on both the capital account and the current account through a
capital account liberalization, albeit one available only for OECD member
41
countries. It was provided in various issues of the Code of Liberalization of
Mexico, Philippines, Sri Lanka, Thailand, and Uganda) for the period 1990–
1996.
Edison, Klein, Ricci and Sloek (2002) concluded that there is mixed evidence
They suspect that this was because their study could not present a common
Edison, Klein, Ricci and Sloek (2002) close by pointing out that as better
This proposed research will employ the Economic Freedom of the World
Cole (2003) supported the use of the EFW index as the measure of
economic freedom and stated that it is quite robust with respect to major
and Sloek (2002) is 29, and this study covers 69 emerging economies over
the same period of time. Therefore it can be confidently stated that the
results from the study done on this research are more robust and that this
44
3. RESEARCH PROPOSITIONS
3.1. PROPOSITION 1
economies.
3.2. PROPOSITION 2
economies.
A lot of research work has been done to test Proposition 1 but the results are
highlighted by Edison, Klein, Ricci and Sloek (2002) the major concern is to
45
The literature reviewed supports Proposition 2 but there is no quantitative
study done (not even for developed economies) to prove that gradual
done in the proposed research are critically chosen to provide robust results
46
4. RESEARCH METHODOLOGY
This was a causal research to study the relationship between capital control
The research design for this quantitative research was a secondary data
study. Zikmund (2003) defined secondary data as data that have been
previously collected for some purpose other than the one at hand.
sourced from credible sources, namely the IMF and United Nations (UN).
The EFW report by Gwartney and Lawson (2007) provided the EFW index for
all countries in the world under the jurisdiction of the IMF and the World
Bank.
The EFW index measured the degree to which the policies and institutions of
and security of privately owned property. Forty-two data points were used
security of property rights; (3) access to sound money; (4) freedom to trade
The index used in this research was under the fourth component above,
rate and capital controls. In order to get a high rating in this area, a
country must have low tariffs, a trade sector larger than expected, easy
Lawson, 2007).
48
often prohibited in key sectors (= 1) or prevalent and encouraged (= 7)”;
and, “In a country, rules governing foreign direct investment are damaging
Lawson, 2007).
international capital market controls index was used as just a capital control
variable. The GDP sourced from the IMF website was the dependant
49
explained. The dataset, the capital control relaxation index and economic
4.1. POPULATION
population, they represent about 20% of the world's economies, and have
poor-run institutions that make it difficult for recognisable institutions like the
World Bank and the IMF to access information from them. It was therefore
economies.
50
51
4.2. SIZE OF THE SAMPLE
For the purpose of this study, a sample of the economic leaders among
developing countries that are generally seen as the emerging market were
utilised. A total of 67 (with capital control relaxation index being the limiting
namely the EFW index and GDP. Zikmund (2003) defines convenience
economies, this was by far the largest sample; hence accurate results are
53
4.3. PROCESS OF DATA ANALYSIS
To test for the propositions described in chapter 3, two statistical tests were
Firstly, the median graph to visually check if there was any relationship
To quantify this relationship, a correlation report was drawn (in NCSS) to see
if the there was correlation between the capital control relaxation index
and GDP rate, and to what level of significance that correlation was. If
there is correlation, the coefficient must be < 0.05 for a 5% or < 0.01 for a 1%
At first, the regression analysis was considered but it was eliminated from the
analysis because there were only ten points to plot and the test was not to
test linear relationship between two variables, rather it was done to see if
54
4.4. DEFENDING THE METHODOLOGY
The most critical component of the dataset was the EFW index. The
EFW index as the measure of economic freedom was quite robust and is a
Ayal and Karras (1998) identified six elements of EFW which were shown to
together or in continents, the median and the mean graph were plotted.
Zikmund (2003) defines these measures as follows: the mean is the measures
measure of central tendency that is the midpoint, the value below which
half the values in the sample falls. The mean takes all data points into
it. It is therefore always better to use it with the standard deviation. The
over a long time series of 25 years, from 1980 to 2005. The EFW indices and
GDP rates were put into a number of different statistical analysis methods to
growth.
follows:
private sector and government efficiency are kept constant for this
study.
The study will focus on those emerging economies which have enough
data to perform a study. There are possible sampling errors and the
Inaccuracy of the EFW index. Kose and Prasad (2004) pointed out
that there might be limitations to the EFW. They stated that many
of capital controls.
The data is sourced from the IMF and World Bank and both these
reform policies which are routed from open market policies. Therefore
2005, only the fifth-year data is given; as a result the study has a
that.
57
5. RESULTS
The results of the research are divided into two sections. The first section
contains results from the tests done to check the impact of relaxation of
capital controls on economic growth, and the second set of results are from
the statistics done to check if the pace of relaxation of capital controls has
The statistical analysis was performed for all emerging economies grouped
and Asia. Oceania and Europe each had one country and were therefore
South Africa. On each account two tests were performed, namely median
58
5.1.1. AFRICA
relaxed in 1985, the GDP rate rose from 2.5 to 3.7, but from 2003 the capital
controls were tightened and GDP rate still continued to grow from 4% to
above 5%.
59
5.1.1.2. CORRELATION STUDY
GDP median CC median
0.166732, which is greater than 0.05. This means that there is no significant
therefore only 22% of the variation in GDP pattern can be described by the
60
5.1.2. AMERICA
61
5.1.2.2. CORRELATION STUDY
GDP median CC median
0.858124, which is greater than 0.05. This means that there is no significant
of capital controls.
62
5.1.3. ASIA
economic growth.
63
5.1.3.2. CORRELATION STUDY
GDP median CC median
0.687885, which is greater than 0.05. This means that there is no significant
of capital controls.
64
5.1.4. ALL EMERGING ECONOMIES
economies)
65
5.1.4.2. CORRELATION STUDY
GDP median CC median
of capital controls.
66
5.1.5. SOUTH AFRICA
67
5.1.5.2. CORRELATION STUDY
GDP median CC median
0.23082, which is greater than 0.05. This means that there is no significant
of capital controls.
68
5.2. IMPACT OF PACE OF RELAXATION OF CAPITAL CONTROLS
ON ECONOMIC GROWTH
Again, the statistical analysis was performed for all emerging economies
America and Asia. Oceania and Europe each had one country and were
South Africa. On each account two tests were performed, namely median
5.2.1. AFRICA
The graph below shows the impact of the pace of capital control relaxation
rate.
69
Figure 8: Impact of the pace of eliminating exchange controls on economic
growth (Africa)
GDP median Change in CC median
median
70
There is a negative correlation of -0.572733 and the significance level is
0.106999, which is greater than 0.05. This means that there is no significant
71
5.2.2. AMERICA
The graph below shows the impact of the pace of capital control relaxation
growth (America)
72
5.2.2.2. CORRELATION STUDY
GDP median Change in CC median
median
America)
0.208986, which is greater than 0.05. This means that there is no significant
73
5.2.3. ASIA
The graph below shows the impact of the pace of capital control relaxation
years1985 to 2000.
growth (Asia)
74
5.2.3.2. CORRELATION STUDY
GDP median CC median
0.393769, which is higher than 0.05. This means that there is no significant
75
5.2.4. ALL EMERGING ECONOMIES
The graph below shows the impact of the pace of capital control relaxation
emerging economies)
76
5.2.4.2. CORRELATION STUDY
GDP median CC median
emerging economies)
0.717589, which is higher than 0.05. This means that there is no significant
77
5.2.5. SOUTH AFRICA
The graph below shows the impact of the pace of capital control relaxation
78
5.2.5.2. CORRELATION STUDY
GDP median CC median
Africa)
0.343645, which is higher than 0.05. This means that there is no significant
79
6. DISCUSISION OF RESULTS
This chapter interprets results to details and attempts to answer the research
3. Each section will discuss results from each test done, compare it with
6.1.1. AFRICA
The visual presentation on Figure 3 shows that when controls were relaxed in
1985, the GDP rate rose from 2.5 to 3.7, but when the capital controls were
tightened from 2003, the GDP rate continued to grow from 4% to above 5%.
Actually it looks like the GDP is lagging behind the capital control
relaxation. The correlation study shows that only 22% of the variation in GDP
80
It is noted that African countries took some time to open up their
development.
As discovered by Ball and Rausser (1995), after a period of about five years
inflation controlling.
The other reason for the rise in GDP when the capital controls are tightened
could be that while generating revenue is not the purpose of the capital
their spending can have positive effects on the real sector of the economy.
In this case, this effect could mitigate the negative output effects of
The statistical fact that only 22% of the variation in GDP pattern can be
81
78% can be ascribed to other factors, such as capital inflows from
mainly driven by trade. Both net FDI inflows and portfolio inflows seem to
have a very limited impact on economic growth in the country due to their
These countries are poor and, Sierra Leone in particular was dependent on
capital.
Asiedu and Lien (2004) argue that capital controls have no impact on FDI
to sub-Saharan Africa. This may be explained by the fact that FDI in the
82
Another explanation is that foreign investors do not consider government
of liberalization is that the restrictive policies did not bind in the first place.
6.1.2. AMERICA
The reason for this poor performance while these countries have relaxed
their capital controls can be attributed to the fact that Latin America was
Elson (2006) noted that unlike Asian countries – where a key driver in the
banks.
83
Appendix B shows a table of the correlations of relaxation of capital
R2=41%, Hungary with R2=73% and Panama R2=52% have GDPs that are
which has an efficient private sector, these countries have poor domestic
production and highly depend on capital inflows from North America and
opened up their economies, they have failed to align their fiscal policies
6.1.3. ASIA
84
It is interesting to note that Asian economies are as not as opened as Latin
America’s, but Asia (except for the duration of the Asian Financial Crisis) far
85
together. Only 5.2989% of the variation in GDP pattern can be described
Collectively, emerging economies have the highest GDP rate of just above
5%. As previously stated by Prasad and Rajan (2008), the main benefits of
and more related to their role in building other institutions than to the
increased financing provided by capital inflows. There, the benefits may not
and in Africa FDI is seeking natural resources. The timing and approach of
capital controls was never aligned right across. Most African countries only
opened their economies in the 80s. The Asian countries had high
economic reforms.
86
The other question raised by Prokopijevic (2002), is if advances in economic
freedom lead to growth and prosperity, is it not logical to assume that more
controls, which is much better than for all emerging countries grouped
together.
With the highest growth rate of about 6%, South Africa still faces challenges
of relatively poor infrastructure, law and order problems and low foreign
87
strength of the rand may present an opportune time to ease capital
controls further.
South Africa is a resource-rich country and has to develop policies that will
help it appropriately invest its foreign capital inflows. It is also seen as the
economic harbour of the African continent, therefore most investors will use
attract FDI, but it needs to correct other factors, especially the political
environment.
Again, the statistical analysis was performed for all emerging economies
America and Asia. A separate study was then done on South Africa. On
each account, two tests were performed, namely median graphs for visual
graph.
88
As shown by Figure 8, there seem to be an inversely proportional
relaxation was increased the GDP rate decreased and vice versa. Exactly
For America, as shown in Figure 9, the sudden drop in 1987 and the sudden
tightening of capital controls in the early 90s resulted in a sharp fall of the
GDP rate. Only after 2002, when the rate of change of capital control was
employed by Latin America in the early 90s had very severe outcomes, one
As for Asia, as shown in Figure 10, it is clear that the 1997 crisis taught them
financial discipline. Post these financial crises, the capital controls were
89
When all emerging economies are grouped together (as represented by
the early 90s, and this had a positive impact on economic growth.
South Africa as well has managed to improve its GDP by employing gradual
Figure 12.
only Botswana (with R2=41%), in Europe only Russia (with R2=91), in Latin
America Chile (with R2 =41%) and Paraguay with (R2=56%), and in Asia
America and China in Asia – are not featured here. These countries have
the variables.
90
These results are in agreement with the assertion of Prasad and Rajan (2008)
Kose and Prasad (2004), in support of South Africa and other African
91
The degree of openness of the domestic economy to foreign
legal system; recognition of, and protection for, property rights; and a well-
functioning financial sector are all vital ingredients for lasting economic
success.
Rodrik and Subramanian (2003) concluded from their study that the quality
of institutions overrides everything else. Institutions are the only positive and
92
includes of rule of law, independent judiciary, free press, and participatory
politics.
93
7. CONCLUSIONS
7.1. BACKGROUND
from foreign capital? The findings from the research work previously done
94
consensus regarding the impact of foreign exchange controls on economic
growth. The other challenge concerns the pace at which these capital
controls, will they be able to absorb the pressures from the large capital
inflows with their poor institutions? And if they go slow, will they not miss out
emerging economies.
7.2. FINDINGS
25 years, 1980 to 2005. These countries were grouped per continent, and a
being studied was calculated and that was plotted with GDP. This visual
was not consistent over the period of study. From the visual presentation it
was noted that the GDP had a response delay of about 5 years after
capital control was relaxed. In contrast to the theory, in Africa, and in South
does not mean that Africa has superior economic policies that ensure
translation of this capital into flourishing economies; it might mean that this
The major contribution of this research was on the study of the impact of
economic growth. It was evident from the visual presentations that when
96
there were low adjustments on capital controls, the GDP increased.
results.
7.3. SUMMARY
growth led by the USA and UK has been a result of surging commodity
97
7.4. RECOMMENDATIONS
and systematically relax its capital controls and use that to bolster its
business, which will further attract foreign investment. The floating currency
The current turmoil in financial markets has really challenged capitalism and
banking industry in the UK and USA has been nationalised. A lesson for
98
should involve and clearly define the role of government in their attempt to
growth. There are a few ideas listed below that should be considered for
controls.
points.
measures.
economies in transition.
control adjustment and GDP rate, perhaps the GDP rate should
100
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Independent Review, v. VIII, n. 2, Fall 2003, ISSN 1086-1653, pp. 193– 211.
Economic Growth, 1980–99. Cato Journal, Vol. 23, No. 2. Cato Institute.
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Dasso Z. (2007) Exchange Control in Investing in South Africa, Webber Wentzel
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Monetary Fund WP/01/187. IMF Monetary and Exchange Affairs
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Kose, M.A. and Prasad, E. (2004) Liberalizing Capital. Back to Basics, Finance
Krueger, A.O. (2004) Meant Well, Tried Little, Failed Much: Policy Reforms in
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Loots, L (2006) Globalisation, emerging markets and the South African
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1
APPENDICES
Appendix A: GDP and capital control relaxation controls for emerging economies
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Algeria
International Capital Markets Control Index 0 0 0 2 1.7 1.7 2.8 2.7 2.9 3.5
GDP ‐5.4 5.6 1.3 3.8 2.2 2.6 4.7 6.9 5.2 5.1
Pace of Relaxation of Foreign Exchange Controls 0 0 2 ‐0.3 0 1.1 ‐0.1 0.2 0.6
Argentina
International Capital Markets Control Index 0 0 0 9.5 6.6 5.8 5.2 5.6 3.5 2.9
GDP 0.7 ‐7 ‐1.3 ‐2.8 ‐0.8 ‐4.4 ‐10.9 8.8 9 9.2
Pace of Relaxation of Foreign Exchange Controls 0 0 9.5 ‐2.9 ‐0.8 ‐0.6 0.4 ‐2.1 ‐0.6
Bahamas
International Capital Markets Control Index 0 0 0 0 1.5 1.5 0.8 0.8 1.5 1.5
GDP 7.1 4.1 ‐1.6 4.4 1.9 0.8 2.3 1.4 1.8 2.5
Pace of Relaxation of Foreign Exchange Controls 0 0 0 1.5 0 ‐0.7 0 0.7 0
Belize
International Capital Markets Control Index 5 5 5 5 0.8 0.8 0.8 0.8 0.8 0.8
GDP 5 ‐1.4 11.2 0.7 13 5 5.1 9.3 4.6 3.5
Pace of Relaxation of Foreign Exchange Controls 0 0 0 ‐4.2 0 0 0 0 0
Benin
International Capital Markets Control Index 0 0 0 0 0 0 0 0 3.4 3
GDP 9.3 4.3 9 6 4.9 6.2 4.5 3.9 3.1 2.9
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 3.4 ‐0.4
Bolivia
International Capital Markets Control Index 2 2 2 5 7.8 7.8 6.3 6.3 6.2 5.9
GDP 0.6 ‐1.7 4.6 4.7 2.5 1.7 2.5 2.7 4.2 4
Pace of Relaxation of Foreign Exchange Controls 0 0 3 2.8 0 ‐1.5 0 ‐0.1 ‐0.3
Botswana
International Capital Markets Control Index 5 5 5 5 6.9 6.9 7.2 6.9 7.1 6.9
GDP 12 7.2 6.8 4.5 8.3 4.9 5.7 6.2 6.3 3.8
Pace of Relaxation of Foreign Exchange Controls 0 0 0 1.9 0 0.3 ‐0.3 0.2 ‐0.2
Brazil
International Capital Markets Control Index 0 0 0 3.6 4.2 4.2 5.9 5.6 5.5 6.2
GDP 9.2 7.9 ‐4.2 4.2 4.3 1.3 2.7 1.1 5.7 2.9
Pace of Relaxation of Foreign Exchange Controls 0 0 3.6 0.6 0 1.7 ‐0.3 ‐0.1 0.7
Burundi
International Capital Markets Control Index 0 0 0 0 0 2.3 2.3 2.3 2.3 3.9
GDP ‐6.8 11.8 3.5 ‐7.9 ‐0.9 2.1 4.4 ‐1.2 4.8 0.9
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Cameroon
International Capital Markets Control Index 0 0 0 0 0.8 0.8 3.9 3.9 4 3.6
GDP 9.9 8.1 ‐6.2 3.3 4.2 4.5 4 4 3.7 2
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0.8 0 3.1 0 0.1 ‐0.4
Central African Republic
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0
GDP ‐3 3.7 ‐3.8 4.9 1.8 0.3 ‐0.6 ‐7.6 1.3 2.2
1
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Chad
International Capital Markets Control Index 0 0 0 0 0 0 2.3 2.7 2.8 2.3
GDP ‐6 7.9 3.2 ‐0.8 ‐0.9 11.7 8.5 14.7 33.6 7.9
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 2.3 0.4 0.1 ‐0.5
Chile
International Capital Markets Control Index 2 2 2 6.5 4.3 7 6.7 6.9 7.7 7.7
GDP 7.9 2 3.7 10.6 4.5 3.5 2.2 4 6 5.7
Pace of Relaxation of Foreign Exchange Controls 0 0 4.5 ‐2.2 2.7 ‐0.3 0.2 0.8 0
China
International Capital Markets Control Index 0 2 5 4.9 2.7 2.7 3.3 3.4 3.5 3.7
GDP 7.9 13.5 3.8 10.9 8.4 8.3 9.1 10 10.1 10.4
Pace of Relaxation of Foreign Exchange Controls 2 3 ‐0.1 ‐2.2 0 0.6 0.1 0.1 0.2
Colombia
International Capital Markets Control Index 0 0 0 6 3.9 3.9 2.9 4.1 3.6 3.8
GDP 4.4 3.1 4.3 5.2 2.9 1.5 1.9 3.9 4.9 4.7
Pace of Relaxation of Foreign Exchange Controls 0 0 6 ‐2.1 0 ‐1 1.2 ‐0.5 0.2
Congo, Democratic Republic of
International Capital Markets Control Index 2 2 2 2 2.3 3.1 3.1 3.1 2.3 0
GDP 2.4 0.5 ‐6.6 0.7 ‐6.9 ‐2.1 3.5 5.8 6.6 6.5
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0.3 0.8 0 0 ‐0.8 ‐2.3
Congo, Republic of
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0
GDP 12.7 2.4 1 4 7.6 3.8 4.6 0.8 3.5 7.8
2
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Costa Rica
International Capital Markets Control Index 2 5 5 8 9.6 9.6 8.7 8.8 8 8.3
GDP 0.8 0.7 3.6 3.9 1.8 1.1 2.9 6.4 4.3 5.9
Pace of Relaxation of Foreign Exchange Controls 3 0 3 1.6 0 ‐0.9 0.1 ‐0.8 0.3
Côte d’Ivoire
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0.8
GDP 5.2 3.6 ‐1.1 7.1 ‐4.6 0 ‐1.6 ‐1.7 1.6 1.8
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0.8
Dominican Republic
International Capital Markets Control Index 2 2 2 2 6.5 6.5 5.8 5.8 5.5 5.8
GDP 8 ‐2.1 ‐5.5 4.7 8.1 3.6 4.4 ‐1.9 2 9.3
Pace of Relaxation of Foreign Exchange Controls 0 0 0 4.5 0 ‐0.7 0 ‐0.3 0.3
Ecuador
International Capital Markets Control Index 2 2 2 5 7.7 7.7 5.6 6.1 6.7 6.7
GDP 4.9 4.4 3 1.7 2.8 5.3 4.2 3.6 8 6
Pace of Relaxation of Foreign Exchange Controls 0 0 3 2.7 0 ‐2.1 0.5 0.6 0
Egypt
International Capital Markets Control Index 0 0 0 7.1 7.3 7.3 5.8 5.6 5.8 6
GDP 3.4 7.4 2.3 4.5 5.4 3.5 3.2 3.2 4.1 4.5
Pace of Relaxation of Foreign Exchange Controls 0 0 7.1 0.2 0 ‐1.5 ‐0.2 0.2 0.2
El Salvador
International Capital Markets Control Index 2 2 2 5 8.9 8.2 7.3 7.3 7.4 7.5
GDP ‐8.6 0.6 4.8 6.4 2.2 1.7 2.3 2.3 1.9 3.1
3
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 3 3.9 ‐0.7 ‐0.9 0 0.1 0.1
Ethiopia
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 3.5
GDP 4 ‐11.4 2.6 6.1 5.9 7.7 1.2 ‐3.5 13.1 10.2
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 3.5
Fiji
International Capital Markets Control Index 5 5 2 2 0 0 0 0 0 0
GDP ‐1.7 ‐3.8 5.8 4.9 ‐1.4 2 3.2 1.1 5.4 0.7
Pace of Relaxation of Foreign Exchange Controls 0 ‐3 0 ‐2 0 0 0 0 0
Gabon
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0
GDP 0 5.8 5.1 5 ‐1.9 2.1 ‐0.3 2.4 1.1 3
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Ghana
International Capital Markets Control Index 0 0 0 0 1.5 2.3 4.8 5.2 5.4 2.3
GDP 0.5 5.1 3.3 4 3.7 4.2 4.5 5.2 5.6 5.9
Pace of Relaxation of Foreign Exchange Controls 0 0 0 1.5 0.8 2.5 0.4 0.2 ‐3.1
GuineaBissau
International Capital Markets Control Index 0 0 5 5 0 0.8 0.8 0.8 0.8 0.8
GDP 16 4.3 4.6 4.4 7.5 0.2 ‐7.1 ‐0.6 2.2 3.2
Pace of Relaxation of Foreign Exchange Controls 0 5 0 ‐5 0.8 0 0 0 0
Haiti
International Capital Markets Control Index 0 0 0 2 2 0 2.3 6.5 7.3 9.1
GDP 7.3 0.8 ‐0.4 3.3 1.3 ‐0.6 ‐0.5 0.2 ‐2.6 0.4
4
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 2 0 ‐2 2.3 4.2 0.8 1.8
Honduras
International Capital Markets Control Index 0 0 0 5 6.6 6.2 4.8 4.9 5.2 5
GDP 0.7 4.2 0.1 4.1 5.7 2.6 2.7 3.5 5 4.1
Pace of Relaxation of Foreign Exchange Controls 0 0 5 1.6 ‐0.4 ‐1.4 0.1 0.3 ‐0.2
Hungary
International Capital Markets Control Index 0 0 0 6.4 4.5 8.8 8.1 8.2 8.1 5.9
GDP 0.2 ‐0.3 ‐3.5 3.4 5.2 4.1 4.4 4.2 4.8 4.2
Pace of Relaxation of Foreign Exchange Controls 0 0 6.4 ‐1.9 4.3 ‐0.7 0.1 ‐0.1 ‐2.2
India
International Capital Markets Control Index 0 0 0 2.3 2 2 3.6 3.6 3.7 3.7
GDP 3.6 5.3 5.6 7.6 5.4 3.9 4.5 6.9 7.9 9
Pace of Relaxation of Foreign Exchange Controls 0 0 2.3 ‐0.3 0 1.6 0 0.1 0
Indonesia
International Capital Markets Control Index 0 0 0 3.8 4.8 3.2 3.6 3.6 3.7 3.7
GDP 9.9 2.5 7.2 8.2 5.4 3.6 4.5 4.8 5 5.7
Pace of Relaxation of Foreign Exchange Controls 0 0 3.8 1 ‐1.6 0.4 0 0.1 0
Iran
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0
GDP ‐14.9 4.2 19.6 2.7 5.1 3.7 7.5 7.2 5.1 4.4
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Jamaica
International Capital Markets Control Index 2 2 2 8 8.2 8.2 6.9 6.4 6.5 6.5
GDP ‐4 ‐0.9 4.9 1 0.7 1.5 1.1 2.3 1 1.4
5
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 6 0.2 0 ‐1.3 ‐0.5 0.1 0
Kenya
International Capital Markets Control Index 0 0 0 8 5.4 5.4 6.2 6.2 5.8 5.6
GDP 5.6 4.1 4.1 4.3 0.6 4.7 0.3 2.8 4.6 5.8
Pace of Relaxation of Foreign Exchange Controls 0 0 8 ‐2.6 0 0.8 0 ‐0.4 ‐0.2
Madagascar
International Capital Markets Control Index 0 0 0 0 3 3 4.6 4.8 4.6 4.5
GDP 0.8 1.2 3.1 1.7 4.7 6 ‐12.7 9.8 5.3 4.6
Pace of Relaxation of Foreign Exchange Controls 0 0 0 3 0 1.6 0.2 ‐0.2 ‐0.1
Malawi
International Capital Markets Control Index 2 2 2 2 0.8 0.8 4.3 4 4 3.3
GDP 0.4 4.6 5.7 13.8 0.8 ‐4.1 1.9 4.2 5 2.3
Pace of Relaxation of Foreign Exchange Controls 0 0 0 ‐1.2 0 3.5 ‐0.3 0 ‐0.7
Malaysia
International Capital Markets Control Index 5 5 5 6.2 3.7 3.7 3.6 3.9 4.1 3.8
GDP 7.4 ‐0.9 9 9.8 8.9 0.3 4.4 5.5 7.2 5.2
Pace of Relaxation of Foreign Exchange Controls 0 0 1.2 ‐2.5 0 ‐0.1 0.3 0.2 ‐0.3
Mali
International Capital Markets Control Index 0 0 0 0 0 0 3.4 3.3 3.3 3.4
GDP 3.3 ‐1.9 16.5 2.4 ‐3.2 12.1 4.3 7.2 2.4 6.1
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 3.4 ‐0.1 0 0.1
Mauritius
International Capital Markets Control Index 2 2 2 8 7.8 7.8 6.1 6.5 6.5 6.7
GDP 11.4 4.8 4.9 4.4 7.2 4.2 1.5 3.8 4.7 3.1
6
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 6 ‐0.2 0 ‐1.7 0.4 0 0.2
Mexico
International Capital Markets Control Index 2 2 5 6.4 5.1 5.1 4.9 4.7 4.4 4.5
GDP 9.5 2.2 5.1 ‐6.2 6.6 0 0.8 1.4 4.2 2.8
Pace of Relaxation of Foreign Exchange Controls 0 3 1.4 ‐1.3 0 ‐0.2 ‐0.2 ‐0.3 0.1
Nicaragua
International Capital Markets Control Index 0 0 0 5 8 8 7.1 7.3 7 7
GDP 4.6 ‐4.1 ‐0.1 5.9 4.1 3 0.8 2.5 5.3 4.3
Pace of Relaxation of Foreign Exchange Controls 0 0 5 3 0 ‐0.9 0.2 ‐0.3 0
Niger
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0
GDP 4.9 7.7 ‐1.3 2.6 ‐1.4 7.1 3 4.5 ‐0.8 7.4
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Nigeria
International Capital Markets Control Index 0 0 0 0 7 7 6.5 6.1 6.1 6.2
GDP 2.9 10.5 13.8 2.3 5.4 3.1 1.5 10.7 6 7.2
Pace of Relaxation of Foreign Exchange Controls 0 0 0 7 0 ‐0.5 ‐0.4 0 0.1
Pakistan
International Capital Markets Control Index 2 2 2 2 0.8 0.8 3.9 3.8 4.2 3.7
GDP 8.5 7.6 4.5 5 4.3 2 3.2 4.8 7.4 7.7
Pace of Relaxation of Foreign Exchange Controls 0 0 0 ‐1.2 0 3.1 ‐0.1 0.4 ‐0.5
Panama
International Capital Markets Control Index 8 8 8 10 9.1 9.1 8.5 8.8 7.7 8.6
GDP 4.5 4.9 8.1 1.8 2.7 0.6 2.2 4.2 7.5 6.9
7
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 2 ‐0.9 0 ‐0.6 0.3 ‐1.1 0.9
Paraguay
International Capital Markets Control Index 5 5 5 10 7.1 7.1 7.1 7.5 7.2 7.2
GDP 11.7 3.9 2.9 5.5 ‐3.3 2.1 0 3.8 4.1 2.9
Pace of Relaxation of Foreign Exchange Controls 0 0 5 ‐2.9 0 0 0.4 ‐0.3 0
Peru
International Capital Markets Control Index 2 2 2 8.6 8.9 8.9 7.6 7.6 7.7 7.8
GDP 7.7 2.1 ‐5.1 8.6 3 0.2 5 4 5.1 6.7
Pace of Relaxation of Foreign Exchange Controls 0 0 6.6 0.3 0 ‐1.3 0 0.1 0.1
Philippines
International Capital Markets Control Index 2 2 2 6.6 4.6 4.6 3.1 3.1 2.9 3.5
GDP 5.1 ‐7.3 3 4.7 6 1.8 4.4 4.9 6.4 4.9
Pace of Relaxation of Foreign Exchange Controls 0 0 4.6 ‐2 0 ‐1.5 0 ‐0.2 0.6
Russia
International Capital Markets Control Index 0 0 0 3.5 2.9 3.2 3.4 4 4.1 4
GDP na na na ‐4.1 10 5.1 4.7 7.3 7.2 6.4
Pace of Relaxation of Foreign Exchange Controls 0 0 3.5 ‐0.6 0.3 0.2 0.6 0.1 ‐0.1
Rwanda
International Capital Markets Control Index 0 0 0 0 1.5 1.5 2.3 2.3 3.8 3.8
GDP ‐3.6 4.4 0.4 35.2 6 6.7 9.4 0.9 4 6
Pace of Relaxation of Foreign Exchange Controls 0 0 0 1.5 0 0.8 0 1.5 0
Senegal
International Capital Markets Control Index 0 0 0 0 2.3 0 3.5 3.5 4.2 0.8
GDP ‐0.8 3.3 ‐0.7 5.4 3.2 4.6 0.7 6.7 5.8 5.3
8
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 0 2.3 ‐2.3 3.5 0 0.7 ‐3.4
Sierra Leone
International Capital Markets Control Index 0 0 0 0 4.6 3.8 3.8 3.8 3.8 3.8
GDP ‐0.6 ‐6.7 1.6 ‐10 3.8 18.2 27.4 9.5 7.4 7.3
Pace of Relaxation of Foreign Exchange Controls 0 0 0 4.6 ‐0.8 0 0 0 0
South Africa
International Capital Markets Control Index 2 2 2 4 4.1 4.1 4.1 4.3 4.2 3.9
GDP 6.6 ‐1.2 ‐0.3 3.1 4.2 2.7 3.7 3.1 4.8 5.1
Pace of Relaxation of Foreign Exchange Controls 0 0 2 0.1 0 0 0.2 ‐0.1 ‐0.3
Sri Lanka
International Capital Markets Control Index 0 0 0 2 3 3 3.4 3.5 3.6 3.5
GDP 5.4 5 6.2 5.5 6 ‐1.5 4 6 5.4 6
Pace of Relaxation of Foreign Exchange Controls 0 0 2 1 0 0.4 0.1 0.1 ‐0.1
Syria
International Capital Markets Control Index 0 0 0 0 0 0 0 0 1 1
GDP 10.5 7.3 10.4 5.4 2.3 3.7 5.9 1.1 2.8 3.3
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 1 0
Thailand
International Capital Markets Control Index 2 2 2 4.6 4.3 4.3 3.8 3.3 4 3.9
GDP 4.6 4.6 11.6 9.2 4.8 2.2 5.3 7.1 6.3 4.5
Pace of Relaxation of Foreign Exchange Controls 0 0 2.6 ‐0.3 0 ‐0.5 ‐0.5 0.7 ‐0.1
Togo
International Capital Markets Control Index 0 0 0 0 0 0 0 0 0 0
GDP ‐2.3 3.7 5.9 6.8 ‐1 ‐2.3 ‐0.2 5.2 2.3 1.2
9
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 0 0 0 0 0 0 0
Trinidad & Tobago
International Capital Markets Control Index 0 0 0 8 7.5 7.5 6.7 6.8 7 7.1
GDP 10.4 ‐4.1 1.5 4 6.9 4.2 7.9 14.4 8.8 8
Pace of Relaxation of Foreign Exchange Controls 0 0 8 ‐0.5 0 ‐0.8 0.1 0.2 0.1
Tunisia
International Capital Markets Control Index 0 0 2 2 0.8 0.8 4 4.1 3.9 4.1
GDP 7.4 5.7 7.1 2.4 4.7 5 1.7 5.6 6 4
Pace of Relaxation of Foreign Exchange Controls 0 2 0 ‐1.2 0 3.2 0.1 ‐0.2 0.2
Turkey
International Capital Markets Control Index 0 0 0 5.5 5.8 5.8 4.3 4 4.2 4
GDP ‐0.8 4.3 9.3 7.2 7.4 ‐7.5 7.9 5.8 8.9 7.4
Pace of Relaxation of Foreign Exchange Controls 0 0 5.5 0.3 0 ‐1.5 ‐0.3 0.2 ‐0.2
Uganda
International Capital Markets Control Index 0 0 0 0 8.5 8.5 8 8.2 8 8.2
GDP ‐3.4 ‐3 6.5 11.3 5.3 4.8 6.9 4.4 5.7 6.7
Pace of Relaxation of Foreign Exchange Controls 0 0 0 8.5 0 ‐0.5 0.2 ‐0.2 0.2
United Arab Emirates
International Capital Markets Control Index 10 5 5 5 6.2 6.2 6.2 5.5 5.7 6.4
GDP ‐1.8 ‐2.5 23.6 6.2 12.4 1.7 2.6 11.9 9.7 8.2
Pace of Relaxation of Foreign Exchange Controls ‐5 0 0 1.2 0 0 ‐0.7 0.2 0.7
Uruguay
International Capital Markets Control Index 10 10 10 10 8.7 8.7 7.3 7.6 7.4 7.6
GDP 6 1.5 0.3 ‐1.4 ‐1.4 ‐3.4 ‐11 2.2 11.8 6.6
10
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005
Pace of Relaxation of Foreign Exchange Controls 0 0 0 ‐1.3 0 ‐1.4 0.3 ‐0.2 0.2
Venezuela
International Capital Markets Control Index 8 5 5 6.9 8.1 7.8 4.5 5.5 5.5 5.2
GDP ‐1.9 0.2 6.5 4 3.7 3.4 ‐8.9 ‐7.8 18.3 10.3
Pace of Relaxation of Foreign Exchange Controls ‐3 0 1.9 1.2 ‐0.3 ‐3.3 1 0 ‐0.3
Zambia
International Capital Markets Control Index 2 2 2 2 9.2 9.2 8.4 8.5 9.3 8.7
GDP 3.9 1.2 ‐0.6 ‐2.8 3.6 4.9 3.3 5.1 5.4 5.2
Pace of Relaxation of Foreign Exchange Controls 0 0 0 7.2 0 ‐0.8 0.1 0.8 ‐0.6
Zimbabwe
International Capital Markets Control Index 2 2 2 3.5 2.5 2.5 2 2.3 2.4 2
GDP 10.7 7 7 0.2 ‐7.3 ‐2.7 ‐4.4 ‐10.4 ‐3.8 ‐5.3
Pace of Relaxation of Foreign Exchange Controls 0 1.5 ‐1 0 ‐0.5 0.3 0.1 ‐0.4
11
Appendix B: Correlation of relaxation of capital controls and economic growth
Countries R R2 R2*100
Burundi - - -
Congo, Republic of - - -
Gabon - - -
Iran - - -
Niger - - -
1
Countries R R2 R2*100
Togo - - -
2
Appendix C: Correlation of the pace of relaxation of capital controls and
Countries R R2 R2*100
Burundi - - -
Congo, Republic of - - -
3
Countries R R2 R2*100
Gabon - - -
Iran - - -
Niger - - -
4
Countries R R2 R2*100
Togo - - -