Similar with goods trade, trade in capital literally has a net gain, but different groups may have different results. The gain of the capital market may differentiate depending on the country and its trading environment. Moreover, countries with liberalized capital flows are likely to have unexpected economic reversal that different from free good market. .
Whether a country could gain from the capital market is depending on, broadly speaking, the countries' open and liberal degree, which will be the premise to determine the result of capital flows. According to the article "The US-Japanese Stake In A Free and Open Asian Capital Market- written by Lawrence H. Summer (deputy treasury secretary), it is possible to identify four critical factors in the emerging market problems:.
1. Large-scale unmatched borrowing-"lending for conspicuous construction projects favored by local elites is much more like consumption than investment and at least as likely to cause repayment problems."" .
2. Poor developed domestic financial systems-"Lax lending standards, weak supervisory regimes and inadequate capital all help to permit large-scale imbalances to develop "and to disguise their true extent when they do develop."" .
3. Unsustainable exchange rate -"in the presence of unsustainable current account deficits and a weak and over-extended financial system, rigid adherence to particular exchange rate without concomitant monetary commitment invites disaster."" .
4. The absence of strong and credible domestic institution-"if a nation's track record of basically sound government and policies is shorter "and the underlying transparency and integrity of core institutions less well develop "policy maker have to be that much more careful."" .
We can tell from this summary of emerged market problems that all these four factors are caused either by corrupt government or governments' failure policymaking, say countries with weak regulation and supervision in their domestic financial markets.