capital market is a market where long-term funds are gotten in exchange for financial instruments such as bonds, capital market plays a huge role in any economy, for any economy to witness growth such economy must have a good capital market, an efficient capital market will lead to economic growth.

in addition to a source of capital,

in addition to making investment easy, attracting foreign investment,

it also forms and become a sound metric of risk and other economic variables in the market.

it forms a way to integrate the market and economy internationally. you need a capital market to be an international player and internationally relevant.

I think the following paper will help you in this regard:

Capital mobility and economic performance: are emerging economies different?

S Edwards - 2001 - nber.org

In one word - Critical.

It seems to be a puzzle for the case of China, PROC. They use the land as collateral and build its economy based on western economic functioning, but use the communist way to distribute the gain. There is still market mechanism working for the China society, but there is much less efficiency from the pointview of western world. There is a large FDI in the old days. Now......