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1 Targeting Aid: What the World Bank Has (Not) Achieved  / 2002 /  SSRN Electronic Journal

10.2139/ssrn.3079317

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East Asian Economic Review Vol. 5, No. 1, 2001. pp. 119-147.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2001.5.1.79

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Too Much, Too Little, or Too Volatile? International Capital Flows to Developing Countries in the 1990s

Author

Peter Nunnenkamp

Kiel Institute of World Economics

nunnenkamp@ifw.uni-kiel.de
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

Developing countries are constrained in financing current account deficits as real capital mobility is still far from perfect. At the same time, capital flows to these countries proved to be extremely volatile. The paper argues that the long-term problem of "too little" should not be confused with the short-term problem of "too volatile". The former is related to sovereign risk, which may be difficult to overcome. The latter could be kept within limits by financial restructuring towards relatively stable types of capital flows.

JEL classification: F31, F32,

Keywords

International Capital Markets, Developing Countries, Debt, Equity Investment, Sovereign Risk, Volatility

Language

English

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