Necessity of applying restrictions on capital flows for the developing countries

Abstract

Despite of the multitude of advantages provoked by foreign capital for the developing countries, and namely as a result of foreign investments’ efficient implementation in real sector of national economy, international practice of many countries from the last years, emphasizes a very stringent picture – the financial international market is supposed to a high instability, volatility in the directionning of capital flows, currency and financial crisis. Also, nowadays another avalanche of inflows attack the transition economies, namely, those resulting from transferring money gained abroad by migrants, which destabilizes not only the capital account from the Balance of Payments, but also, the whole macroeconomic indicators. That is why, it becomes actual not the problem of attracting capital into the national economy of one’s country, but, very often, of finding measures to discourage financial flows’ entrance - so of applying restrictions on capital account.