Development Finance in the Era of Financial Liberalization

Abstract

Conceptual discussions on development alternatives often tend to swing between extremes. This is true, for example, when the discussion centers on inward versus outward oriented strategies, open versus regulated capital accounts or centralized versus decentralized decision-making. Such ‘extremism’ affects actual decision-making as well. But more often than not, ground realities and/or pragmatism induced by circumstances forces policy to lag behind advocates of change when economic transitions occur. Moreover, institutions and policy instruments that are seen as typical of one kind of regime often persist, even if in differentiated or changed form and serving different objectives, when the policy environment varies or changes. But the element of similarity or continuity is substantially different across geographies and time.