The Challenge for Developing Countries in a World of Financial Globalization

  • Anthony Elson


The expansion of financial globalization to encompass a number of middle-income countries after the mid-1980s has raised a number of challenges not only for those countries, but also for other developing countries that have not participated in this expansion. The onset of financial globalization has also posed a challenge for the role of official development finance, as private flows to developing countries since the early 1990s have risen to a level well in excess of ODA flows from bilateral and multilateral sources. Within the IFA, the role of official development finance is to fill a missing market in the channeling of financial resources to those developing countries that do not have access to international capital markets. This gap has been filled predominantly by the World Bank, along with other multilateral development banks, and by official bilateral aid flows. The IMF has also been called on to play a role in development finance, although its net contribution has been relatively small in relation to other institutional players. This chapter examines first the changing pattern of private capital flows to developing countries and then the challenge for low-income countries and the official aid community arising from the growing influence of private capital flows.1


Foreign Direct Investment Income Country Development Assistance Recipient Country Private Capital 
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© Anthony Elson 2011

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  • Anthony Elson

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