International Capital Flows to Latin America

The main feature of the new economic model (NEM) in Latin America is its outward orientation through both trade and capital account liberalisation. The opening of the capital account, accompanied — or often preceded — by domestic capital market liberalisation (see Chapter 5), creates the pre-conditions for large capital flows from abroad. These flows will then take place if and when the international economic circumstances are favourable and if the particular countries are broadly seen to have achieved macroeconomic stability.