Post-crisis trends in private capital flows to developing countries

Briefing papers
August 2014
Judith Tyson, Stephany Griffith-Jones and Dirk Willem te Velde

Private capital flows have the potential to provide essential financing for developing countries for economic growth, but are subject to risks, as well as opportunities, that have been highlighted by the global financial crisis. This paper examines the related post-crisis trends and issues and propose policy options to support positive outcomes.

In this paper post-crisis trends in private capital flows to developing countries are discussed, focusing on the poorest and most vulnerable low income countries (“LICs”). It argues that post-crisis trends in flows to LICs, whilst relatively small in absolute terms and relative to GNP, are positive. In particular, FDI has expanded steadily and portfolio flows, which fell to negligible levels during the crisis, recovered in 2013 with strong sovereign bond issuances for selected LICs.