Financial capital into the country, which can directly

liberalization has become an integral part of the process of globalization of
the world economy. Answering the question of why developed and developing
countries liberalize their capital accounts, there is a theory of theory of
Milton Friedman, according to which optimal use of capital is possible only if
it can be freely moved across the borders of states. Directed by the desire for
maximum profit, world savings should flow into regions offering investors the
best investment prospects.

borrowers choose those creditors that offer the lowest rate of interest.
Capital liberalization can cause a massive influx of foreign capital into the
country, which can directly or indirectly (through the expansion of state
financing and bank lending) go to the development of the real sector and
thereby contribute to the growth of production, the expansion of consumption
and the welfare of the population. Freedom of capital flows has a significant
impact on the state of financial institutions and markets.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

In many cases,
a positive consequence of liberalization is the development of more capacious,
competitive and diversified financial market. The variety and quality of
services provided by financial institutions can be enhanced by direct access of
foreign financial institutions to the domestic market. Liberalization of the
regime opens up the possibility for national investors to further diversify
investment portfolios and improve the efficiency of investments. Thus, all
countries benefit from financial liberalization, since the highest growth rates
are combined with the best investments.

Moreover, the obvious
advantages of currency liberalization is that the abolition of restrictions on
the movement of capital is one of the conditions for the inflow of direct
foreign investment and an important source of reducing the cost of attracting
capital, which stimulates innovation, technological progress and the
achievement of higher rates of economic growth