An Improved Measuring And Comparative Study Of Capital Account Opening Degree

Capital account openness is a comprehensive assessment of acountry’s controlling intensity over international capital transactions,which is the essential prerequisite for further studies such as the growthenhancing nature capital account opening and the relationship between theability to recover from the crisis and the financial globalization. Thesediscussions are driven by a series of financial crisis since the last century,which remain to be very difficult to answer, largely because the objectivemeasure has not yet to be established.The paper attempts to measure the G20countries’ capital accountliberalization from1984to2010by improving the establishedmeasurements of capital account opening degree and constructing, at thesame time,19countries’ time series index of capital account opening from1984to2010. These series are used to (1) provide improved measurementbasis and reasonable quantitative researching support to study the opennessof capital account;(2) quantitatively describe G20’s capital accountopenness level and summarize the related authorities’ restrictivenessadjustment to display their opening process characteristics;(3) obtain theempirical results of China capital account opening degree from1984to2010, comparing with other representative economies to sum up theexperience that can draw lessons from.First, the paper calculates G20’ capital account openness level from1984to2010year through a promoting measurement. Innovatingcontributions lie in:(1) first to comprehensively collecting G20governments’ capital account control policy information from1984to2010among studies on Chinese capital account openness.(2) establishing a relatively reliable evaluation standard by combining static controlsummarization and dynamic tracing methods to objectively assess bothyears’ level and changes in capital account restrictiveness.(3) introducingweights of different capital transaction items to the basic constraint-typemeasuring concept to avoid the underestimation of controlling influencescaused by a subaccount with a larger scale.Then, the paper inducts a comparative study and a logic deduction,which is from individual to wholesome then individual again, ranks theG20’s2010measurement results in order, and divides these countries intothree categories according to the capital account opening degree, which arehigh, medium, and low. In addition, the paper studies the degree andchanging characteristics of these three kinds of countries’ capital accountopenness and restrictiveness, respectively. The paper also compares theimproved measurement to the original version with respect to the impactson quantitative results and the reasons behind them.Finally, the paper focuses on the discussion of China’s capital accountopenness, mainly including the relatively level and the variationcharacteristics of controlling policies’ intensity, by comparing with theresults of other countries studied. And then the policy recommendationsare made regarding to China’s capital account liberalization.The conclusions of this paper are:(1) China, India, Indonesia,Argentina, and Mexico have the lowest opening measurements, while UK,Italy and Canada are three countries with highest results, and others belongto the medium category.(2) By introducing the weights, newmeasurements decrease, indicating the larger scale items are affected bymore strict regulations.(3) Generally speaking, capital accounts opennessis improved step by step in most cases.