Study Of The Causes Of The Asian Emerging Market Countries, Non-normal Capital Flows

The enormous amount of speculative international capital emerges as an important factor which affects global economic and financial situations. On one hand, the investment and financial capital that inflow into emerging markets with useful human resource and technology spillover provide great impetus to economic developments. On the other hand, excessive capital inflows become a potential concern for stable and lasting development. When optimistic economic expectations reverse, the portfolio and abnormal investment turn into capital flight immediately based on the profit-hunting and risk-avoiding tendency, leave behind horrible economic turmoil. The Latin-America debt crisis, Mexico monetary crisis and Asian financial crisis gave us instructive lessons, so the principle beneath international capital flow is worth of research and analysis.On the base of review to literature on the measurement and determinants of abnormal capital flows, we first define the concept of abnormal capital flow and modify the approach of measurement. Then we construct an economic model to show that there exists multiple capital equilibrium in emerging markets, analyze the theoretic reasons why large-scale abnormal capital flows occur in emerging markets. This paper focus on the explanatory factors to the abnormal capital flows in the long term, choose a set of economic variables including global and country-specfic factors to make empirical analysis, compare the similarities and differences between our nation and other Asian emerging markets. Recently, China liberalizes capital account and internationalizes RMB step by step, so the capital flow that escapes the supervision will be a great challenge to macroeconomic management. Drawing lessons from other Asian emerging markets, we can get useful instructions for management of abnormal capital flow and make political advisements.