IPD AI

Capital Flows to Developing Countries

09/01/2002
Network Papers

This paper begins by examining the pattern of capital flows first to low-income countries, and then to emerging economies. In both cases, we see a dramatic collapse in the last several years.

The evolving determinants of these trends in FDI flows (the principal category of private flows to low-income countries) and other capital flows are analysed. The behaviour of flows to emerging economies heavily influences both present and potential future flows to low-income countries. The paper concludes with the policy implications at both source countries and low-income recipient countries.