SÃO PAULO, Brazil—Emerging nations from Brazil to Taiwan are
racing to erect protective berms around their economies as a
torrent of capital pours in from rich countries such as the
U.S., threatening to derail growth by sending currencies
soaring, squeezing exporters and injecting volatility into local
markets.  This week, Taiwan imposed limits on bond holdings by
foreigners. In October, both Brazil and Thailand raised taxes on
foreign investment in local bonds. In June, South Korea
restricted derivatives trading, while Indonesia limited
investors from selling some short-term bonds. Meantime, central
banks from Israel to South Africa are buying dollars to keep
their currencies from rising.  As currencies surge across
emerging markets, officials are reaching for once-taboo policy
prescriptions broadly defined as capital controls in a bid to
head off asset bubbles and the other economic downsides of
excessive capital flows. The moves, which often carry unwanted
side effects, are the latest example of how econom