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India's Financial Globalisation

Ila Patnaik () and Ajay Shah ()

No 11/7, IMF Working Papers from International Monetary Fund

Abstract: India embarked on reintegration with the world economy in the early 1990s. At first, a certain limited opening took place emphasising equity flows by certain kinds of foreign investors. This opening has had myriad interesting implications in terms of both microeconomics and macroeconomics. A dynamic process of change in the economy and in economic policy then came about, with a co-evolution between the system of capital controls, macroeconomic policy, and the internationalisation of firms including the emergence of Indian multinationals.Through this process, de facto openness has risen sharply. De facto openness has implied a loss of monetary policy autonomy when exchange rate pegging was attempted. The exchange rate regime has evolved towards greater flexibility.

Keywords: Capital flows; Capital controls; Economic integration; Exchange rate regimes; External borrowing; Financial sector; India; Globalization; Foreign direct investment; International financial markets; Monetary policy; financial globalisation, equity market, financial intermediation, financial system, Financial Aspects of Economic Integration, (search for similar items in EconPapers)
Pages: 24
Date: 2011-01-01
New Economics Papers: this item is included in nep-ifn, nep-mac and nep-mon
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