In the interests of the longer-term outlook for growth, the idea of turning back from globalisation, that is to say, reinstating control mechanisms, is not a sensible alternative. The re-introduction or maintenance of administrative controls in an otherwise liberal environment is fundamentally problematical. Firstly, market participants will always contrive to avoid these controls and, if anything, they are more imaginative than the controlling authorities.
Secondly, capital restrictions are very expensive to implement in most cases. To be effective they must be applied on a comparatively broad front and could therefore also hinder desirable capital movements. What is more, they may also delay the necessary development of an efficient financial sector. This is illustrated by what is now happening in Malaysia.