A Theoretical And Empirical Analysis On Capital Account Liberalization And National Economic Safety

Capital account liberalization is one of the most important issues each country focus on and deal with carefully in this modern time of financial globalization. As an indispensable part of global economic entities, China plays a very significant role in world economy which attract attention from all over the world, and any bit of alteration will have double influence on both domestic and world economy. Take these influence into consideration is not only for the domestic but also take part in international economic affairs responsibly. How to utilize the international capital to fill up the vacancy of domestic capital in opening process but not destroy the continuablity of economic growth, and avoid the impact of international capital flow. it is valuable not only in academic area but also in practice.First in this paper, we conclude some theory related and research outcomes before. The sense of capital account liberalization is development, no matter form the vision of international direct investment or indirect investment. Especially to developing countries. Get enough international capital means have more chance to get into the world market so as to enhance one's strength. But to the investor, the aim they invest is to get more profit but the impact to other countries. These two aspects are not always paradox, win-win situation could be gotten in proper conditions. This is of course the ideal state and all of country pursue for it. In fact, flexibility and fluctuating of International capital usually have somehow impact on economy. According the concept of economic continuable development, we will demonstrate the impact of international capital to china from five aspects, include financial safety, trade safety, industry safety, energy sources safety and ecological safety, analyze the threaten and risk existed or maybe existed of it, so well as the problem of economic safety in China.Theoretical analysis may not explain the relationship between capital account liberalization and economic safety entirely, after analyze the influence of the five aspects, we made empirical analysis by some models and econometric methods so as to describe the relationship much more precisely. Because the economic safety is a comprehensive index system involve various items, so we should quantify it first and have a general estimation of it. Here we use AHP method raised by an American operational research expert A.L.Saaty in 1970s. It combine the qualitative and quantifying analysis to construct Hierarchy structure in order to give a general description of economic safety, therefore ,the model of these two variables is available. The result shows that capital account liberalization have influence on national economic safety. The extents of impact in different area are different. Especially in finance and trade, the impact is remarkable, but the respond lagged in industry and energy source, ecological area, the impact will appears time by time.From the analysis both in theoretical and empirical, we could find that the impact of international capital flow on economic safety will affect the country's development, more attention should be paid and relevant measures should be constructed to prevent from it. Realize the negative affect as large as possible and adopt an gradual attitude to liberalize capital account cautiously, national continuable development would be possible.