Capital Control

Position Paper: Capital Control

The first article (An Introduction to Capital Control) describes the purpose and cost of the capital control and also explains why it is important to control capital flows. In the beginning, it is explaining capital flow and the benefit of capital flow among countries. Capital flow lets a country to trade consumption today for consumption tomorrow. Moreover, capital flow allows a country to borrow today in order to improve its ability in the future. However, capital control is necessary such as protecting domestic companies and industries from foreign countries and correcting the imbalance of international payment surplus or deficit. In the following of the article, the author describes the types of capital control: control on inflows or outflows, price (tax) and quantity control within international trades.

The second article shows that the problems with and the problems without capital control. At first, it says about people’s expectation on capital control when it was removed; boost production and productivity, benefit from technology advancement from capital flow and prevent corruption created by capital control. The article says that the open of free capital flow results in all the capital will eventually flow into the rich countries from the poor countries because the foreign investors rather save funds in more stabilized countries like the United States and some other