The global financial crisis and developing countries

December 2008

The global financial crisis that emerged in the financial sector in developed countries has spread to the real sector in both developed and developing countries. ODI’s Investment and Growth Programme has conducted research on the global financial crisis since October 2008, highlighted in ODI on... the Global Financial Crisis.

The UK Department for International Development, the Dutch Ministry of Foreign Affairs and the Swedish International Development Cooperation Agency has supported a team of 10 ODI researchers and 30 developing country researchers in ten poor countries (in Asia: Indonesia, Cambodia and Bangladesh, in South America Bolivia and in Africa: Benin, Ghana, Kenya, Nigeria, Uganda and Zambia) to examine the effects of the global financial crisis.  The project was staged in two phases.

In Phase 1 the main research questions included:

  • What are the elements in the shock at national level (via private capital flows, trade, aid and remittances)
  • What are the possible effects on growth, investment, poverty and inequality and debt (distinguish between actual and likely effects)
  • What are the possible policy implications (distinguish between actual, possible and optimal policy responses)

The research involved a workshop in London on 11 February 2009, consultations in each country, and synthesis reviews.

Phase 2 used the methoodolgy developed in Phase 1 to:

·       Update information on the effects of the global financial crisis, by examining the following transmission belts:

o   Private financial flows (splitting out portfolio flows, foreign direct investment (FDI) and international bank lending);

o   Trade (imports and exports);

o   Remittances; and

o   Aid.

·      Update information on economic (growth) and social (employment and poverty) effects.

·      Monitor policy responses.

·      Deepen the existing analysis where feasible, e.g. on effects on special groups or industries.

·      Discuss country-specific issues.

Outputs

Mozambique Phase 2

Research reports and studies | February 2010 | Carlos Castel-Branco and Rogério Ossemane
The effects of the global financial crisis on Mozambique
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Sudan Phase 2

Research reports and studies | February 2010 | Medani M. Ahmed
The effects of the global financial crisis on Sudan.
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Tanzania Phase 2

Research reports and studies | February 2010 | H.B. Lunogelo, A. Mbilinyi and M. Hangi
The effects of the global financial crisis on Tanzania.
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Uganda Phase 2

Research reports and studies | February 2010 | Sarah Ssewanyana and Lawrence Bategeka
The effects of the global financial crisis on Uganda.
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Zambia Phase 2

Research reports and studies | February 2010 | Manenga Ndulo, Dale Mudenda, Lutangu Ingombe and Frank Chansa
The effects of the global financial crisis on Zambia.
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Cambodia Phase 2

Research reports and studies | January 2010 | Hossein Jalilian and Glenda Reyes
The effects of the global financial crisis on Cambodia
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Bolivia Phase 2

Research reports and studies | January 2010 | Luis Carlos Jemio and Osvaldo Nina
The effects of the global financial crisis on Bolivia
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Kenya Phase 2

Research reports and studies | January 2010 | Francis M. Mwega
The effects of the global financial crisis on Kenya
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Ethiopia Phase 2

Research reports and studies | January 2010 | Getnet Akemu
The effects of the global financial crisis on Ethiopia
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Bangladesh Phase 2

Research reports and studies | January 2010 | Mustafizur Rahman, Md. Ashiq Iqbal, Towfiqul Islam Khan and Shouro Dasgupta
The effects of the global financial crisis on Bangladesh
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Donor responses to the global financial crisis: A stock take

Research reports and studies | October 2009 | Dirk Willem te Velde, Isabella Massa
This paper maps out the response to date of a selection of bilateral and multilateral donors, in terms of their progress against various parameters such as aid commitments, new policies, use of and improvements in existing instruments and suggestions for new shock...
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Ghana

Research reports and studies | April 2009 | Charles Godfred Ackah, Ellen Bortei-Dorku Aryeetey and Ernest Aryeetey
The current financial crisis, following so closely the 2007-2008 food and fuel price shocks, and the expected slowdown of global growth have come at a moment when Ghana is considered more vulnerable than it has been in the recent past.
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Bolivia

Research reports and studies | April 2009 | Luis Carlos Jemio and Osvaldo Nina
The global financial crisis is expected to have a negative impact on the Bolivian economy. Effects will transmit into the economy through lower export prices and quantities, reduced amount of remittances and depressed foreign direct investment (FDI) flows.
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Nigeria

Research reports and studies | April 2009 | Olu Ajakaiye and ’Tayo Fakiyesi
The current global financial crisis, which was triggered by the credit crunch within the US sub-prime mortgage market, is continuing to spread and deepen in several countries.
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Kenya

Research reports and studies | April 2009 | Francis M Mwega
This paper examines the effects (so far) of the global financial crisis, possible impacts and the scope and limitations of current policy responses in Kenya.
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Cambodia

Research reports and studies | April 2009 | Hossein Jalilian, Chan Sophal, Glenda Reyes and Saing Chan Hang, with Phann Dalis and Pon Dorina
The global financial crisis has had a serious impact on the Cambodian economy, which has been heavily dependent on the world economy.
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Indonesia

Research reports and studies | April 2009 | Ira S Titiheruw, Hadi Soesastro and Raymond Atje
Up to September 2008, Indonesia’s was economy still showing some resilience towards the global financial crisis already underway in the world’s most powerful economies.
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Bangladesh

Research reports and studies | April 2009 | Mustafizur Rahman, Debapriya Bhattacharya, Md Ashiq Iqbal, Towfiqul Islam Khan and Tapas Kumar Paul
The global financial crisis has already started to have a negative impact on the increasingly globalising economy of Bangladesh.
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Uganda

Research reports and studies | April 2009 | Sarah Ssewanyana, Lawrence Bategeka, Evarist Twimukye and Winnie Nabiddo
Uganda has recorded strong economic growth since 1992, driven mainly by the services, manufacturing and construction sectors. However, there are still challenges in terms of economic transformation, exemplified by persistent high poverty levels and inequality.
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Global Financial Crisis Discussion Series: Zambia

Research reports and studies | April 2009 | Manenga Ndulo, Dale Mudenda,Lutangu Ingombe and Lillian Muchimba
This study explores the impact of the global financial crisis on Zambia through its effects on trade, foreign direct investment (FDI), development assistance and remittances, which are the major transmission mechanisms of the crisis to the country.
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The global financial crisis and developing countries

Workshop | 11 February 2009 09:00 - 17:00 (GMT+00)
ODI is co-ordinating a large study examining the effects of the global financial crisis in ten developing countries. The research, has already led to important preliminary findings, which were presented by developing country experts at this workshop.
Find out more