... capital occurred, more and more countries put controls on capital movements in order to gain freedom to stimulate domestic economies. Unfortunately, in many countries, the stimulus turned inflationary as income groups fought to raise or maintain their shares, and governments accommodated these demands. Moreover, as world trade and capital movements expanded again, these controls became porous and sometimes counterproductive. But the problem with capital flows is that they can be destabilising -- especially short-term capital movements. If a country is not doing well, a cumulative flight of capital can confirm the fears that provoked it. Still, there has been experimentation with different international mechanisms to minimize fluctuations and the consensus is that nations with sound fundamentals have been able to benefit from capital flows. CAC as an emotive issue CAC is widely regarded as one of the hallmarks of a developed economy. It is also seen as a major comfort ...

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