T C A Srinivasa-Raghavan: Uni-dimensional measures

PERSPECTIVES

Many market players and economists think that the answer to India 's problems is full capital account convertibility "" now, immediately, tonight. The point has also been made that if we rank countries by the degree of capital account openness, India scores the least "" at -1.1, it is in the company of China and Turkey. Another point that is made is that Brazil, Russia, Mexico and Indonesia all are more open than India. The implication is that the only thing that matters for sound macroeconomic management is a completely open capital account. Just do that much, and all the current problems of macroeconomic management will melt away.

Real life, however, is not that simple. It is rarely, if ever, uni-dimensional, and when making comparisons it is generally useful to bear in mind that those other things matter too. So if one examines these other countries from the point of view of the key parameters of sound macro-management, a better pictures emerges. This picture is painted in the accompanying tables.