Are free capital movements a good idea?

There's a new IMF working paper out that addresses this question: Financial Globalisation: A Reappraisal.Brad DeLong explains it in simple English:

"...liberalization tends to bring growth, which offers long-term protection against crises. Banking crises tend to be more disruptive than currency crises and also tend to precede them; free capital markets are not usually at fault in those cases. Plenty of countries with capital controls have gotten into big messes. Macro-volatility has been declining as the world has become more integrated in terms of capital flows...I wish this piece had looked at the (supposedly?) negative instance of free capital movements more closely..."

Marginal Revolution explains what one of the problems is:

"The standard line is that Chile and China have avoided crack-ups -- of the sort that plagued Thailand, Indonesia, and Argentina -- by restricting the free flow of capital in and out of their country."

This sort of commonsensical short explanation or executive summary is very useful for teaching economic development, because the implications and significance of the report tend to get buried in the details of the report. My interpretation of the conclusions from this very long report:

Most statistical studies to-date do not support short-term growth benefits for capital account liberalization, however measures of economic integration do provide evidence of growth. Microeconomic data is better for detecting growth and productivity from financial integration. Financial globalisation leads to growth and stability in several ways: 1. capital accumulation, 2. financial sector development, and 3. better governance in government and corporations. These "collateral benefits are long-term benefits, not short-term benefits, which implies that developing countries should take a more long-term sustainable approach to development which is exactly what is stressed in the King of Thailand's development policy.

Source: Brad DeLong's blog cites Marginal Revolution.