Economist warns of capitgal mobility impacts

THE Issue of international capital mobility has important implications for national economies, according to Imad Moosa, from the School of Economics, Finance and Marketing at RMIT University in Australia.
Capital mobility refers to the ability of private funds to move across national boundaries in pursuit of higher returns, while market integration refers to prices among different locations or related goods following similar
patterns over a long period of time.
Moosa, in his presentation during the second Apec senior officials’ meeting, said capital mobility was higher in developing countries than in developed countries but there were some consequences that needed to be considered and addressed.
“If capital mobility of a country is low, its growth prospects will be constrained by its ability to save,” Moosa said.
“If capital mobility is high, countries cannot pursue independent monetary policies and that’s why market integration is conducive to capital mobility.”
Moosa said it was important for market integration in developing countries because of high capital mobility. He said this was because macroeconomic capital mobility was not a necessary condition for market integration.
But, he said, market integration was conducive to capital mobility and was a sufficient condition for market integration in developing countries for capital mobility which could have a considerable impact on the economy.