ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Capital Liberalisation and Currency Crisis-Experience of Mexico and India

Capital Liberalisation and Currency Crisis Experience of Mexico and India Ganesh Kumar Nidugala This paper attempts to compare and contrast the experience with capital liberalisation policy followed by Mexico and India in the overall context of their economic reforms, its effects on macro-economic variables, particularly the exchange rate. The main argument of the paper is that India avoided a peso type of crash by following a policy of gradual liberalisation of capital flows, and prudent exchange rate policy, and getting the sequencing of reforms right. Though, in terms of generalisability, this study has the limitation of just two cases, when combined with the results of previous studies, there are some important lessons to be learnt for economic reforms in developing countries.

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