The process of globalization has permeated every sphere of human activity, most
notably in the arena of economic globalization. Economic globalization encompasses the
integration of national economies into the international economy through trade, foreign
direct investment, capital flows and migration. The benefits of globalization are
numerous such as foreign direct investments and portfolio flows that engender
accelerated economic growth both in the advanced and the emerging economies and
creation of employment opportunities and poverty alleviation. Capital exporting countries
earn higher returns on investments.
However, large capital flows emanating from the global financial markets could
have disruptive effects on the global economic system. These pervasive effects of capital
flows are often more pronounced in the developing and emerging countries, which often
lack sufficient institutional capacity to mitigate such large capital flows.
Based on the economic logic that capital allocation is more efficient in the absence
of exchange control and barriers to competition in financial markets, standard economic
theories postulate the view that free movement of capital across international borders
carries profound and widespread benefits. However, the recent global economic crises
have led opinion makers to advocate for the use of capital controls especially for
emerging and developing economies. Leading economists and policy makers world-wide
are now recalibrating their views on the benefits of free capital flows, advocating for the
The Economic Costs of Exchange and Capital Controls on Businesses in Namibia- A focus on
institutional investors and exporting companies xii
use of exchange controls, in certain circumstances as a way to reduce a country’s
vulnerability to international financial crises.
This research paper found that existing exchange and capital controls in Namibia
impose economic costs as they tend to misalign companies’ decisions resulting in less
optimal risk diversification options and exchange rate losses. Other costs on business
manifest in the form of opportunity costs, administrative burdens and inefficiency losses.
SSA, R (2021). The Economic Costs Of Exchange And Capital Controls On Businesses In Namibia – A Focus On Institutional Investors And Exporting Companies. Afribary.com: Retrieved May 10, 2021, from https://afribary.com/works/the-economic-costs-of-exchange-and-capital-controls-on-businesses-in-namibia-a-focus-on-institutional-investors-and-exporting-companies
Research, SSA. "The Economic Costs Of Exchange And Capital Controls On Businesses In Namibia – A Focus On Institutional Investors And Exporting Companies" Afribary.com. Afribary.com, 02 May. 2021, https://afribary.com/works/the-economic-costs-of-exchange-and-capital-controls-on-businesses-in-namibia-a-focus-on-institutional-investors-and-exporting-companies . Accessed 10 May. 2021.
Research, SSA. "The Economic Costs Of Exchange And Capital Controls On Businesses In Namibia – A Focus On Institutional Investors And Exporting Companies". Afribary.com, Afribary.com, 02 May. 2021. Web. 10 May. 2021. < https://afribary.com/works/the-economic-costs-of-exchange-and-capital-controls-on-businesses-in-namibia-a-focus-on-institutional-investors-and-exporting-companies >.
Research, SSA. "The Economic Costs Of Exchange And Capital Controls On Businesses In Namibia – A Focus On Institutional Investors And Exporting Companies" Afribary.com (2021). Accessed May 10, 2021. https://afribary.com/works/the-economic-costs-of-exchange-and-capital-controls-on-businesses-in-namibia-a-focus-on-institutional-investors-and-exporting-companies