Low-income countries (LICs) in Africa, Latin America and the Caribbean have been hard hit by the impact of the global financial crisis on foreign investment and other private capital flows.
Matthew Martin and Nils Bhinda will present Development Finance International’s newly published paper Private Capital Flows to Low Income Countries: Dealing With Boom and Bust. This study traces the impact of foreign private capital flows on LICs in Africa and Latin America. It shows why, if the countries’ own analyses had been widely heard, the international community would have responded faster and reduced the damage caused by the crisis. It also makes key recommendations for the international community and countries themselves, on how to deal with future crises and maximise the contribution of foreign private capital to development.
Dr Isabella Massa will draw from a recent ODI paper, which examines the links between economic growth and private capital flows in LIC’s, to present research suggesting drops in foreign direct investment (FDI) and cross-border bank lending will have a significantly negative impact on growth and incomes in Sub-Saharan Africa. She will also touch upon the results of an 11 country case study co-ordinated by ODI which amongst others monitored the effects of the global financial crisis on capital flows.
The global financial crisis and sub-Saharan Africa: The effects of slowing private capital inflows on growth
This paper uses a panel cointegration analysis to examine the long-run relationship between economic growth and four types of private capital inflows on a sample of selected sub-Saharan African countries between 1980 and 2007.