How to keep your emerging market out of turmoil, with 1 handy tool

Capital controls are back

A Wall Street trader.
(Image credit: TIMOTHY A. CLARY/AFP/Getty Images)

Developing countries are giving investors a panic attack. Until quite recently, they offered attractive sources of returns to wealthy people around the world: Investors dropped $1.2 trillion into these markets in 2017 alone — more than the previous two years combined. But now money is flowing out just as fast: In just the last month and a half, investors pulled $8 billion out of bond and equity markets in developing countries.

From a historical perspective, these sorts of boom-and-bust cycles should look familiar. And there's actually a ready-made tool for addressing them: capital controls.

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.