Globalization Poverty Development Sustainability

Contents

Copyright

Preface

Acronyms and abbreviations

Part I. External finance for developing countries

Overview   3

1. Development in private capital flows    7

2. East Asia’s financial crisis: causes, evolution, and prospects    29

3. The changing role of official finance    49

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Part II. Appendixes

References    137

Part III. Summary tables

Methodology    143

Sources and definitions    147

Country groups    155 

Summary tables    159
All developing countries    160
East Asia and the Pacific    162
Europe and Central Asia    164
Latin America and the Caribbean    166
Middle East and North Africa    168
South Asia    170
Sub-Saharan Africa    172
Severely indebted low-income countries    174
Severely indebted middle-income countries    176
Moderately indebted low-income countries    178
Moderately indebted middle-income countries    180
Other developing countries    182
Low-income countries    184
Middle-income countries    186
Special Program of Assistance    188

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Tables

1 Net long-term resource flows to developing countries, 1990–97    3
1.1 The international economic environment, 1981–97    8
1.2 Net long-term resource flows to developing countries, 1990–97    9
1.3 Developing countries’ short-term debt stocks, 1994–97    9
1.4 Bond issues and loan commitments to developing countries, 1996 and 1997    11
1.5 Changes in stock market and exchange rate indexes, 1997    12
1.6 The rise of emerging market hedge funds, 1992–97    17
1.7 Performance of stock market indexes and mutual funds, 1992–97   18
1.8 FDI flows to the top ten recipient developing countries, 1991, 1994, and 1997    20
1.9 FDI flows to developing countries by income group, 1990–97    20
1.10 FDI in selected developing countries, by sector    21
1.11 FDI outflows from developing countries, 1991–96    23
1A.1 Domestic bond markets in developing countries    25
2.1 Fiscal balances and gross national savings in East Asian countries, 1993–96    30
2.2 Net private capital flows to East Asia, 1994–96    31
2.3 Ratios of short-term debt to total debt and to reserves in East Asia
and Latin America, mid-1997    35
2.4 Real effective exchange rate indexes, December 1996–December 1997    35
2.5 Credit growth in various countries, 1990–96    37
2.6 Macroeconomic indicators in Southeast Asia, 1993–96    38
2.7 Credit ratings for East Asian countries, 1996–97    39
2.8 Composition of private flows, 1990–97    46
2.9 Private flows to Argentina and Mexico, 1994–96    47
2.10 Current account deficits, changes in reserves, and long-term amortization
among major developing country borrowers, 1997–98    48
3.1 Net official flows of development finance, 1990–97    50
3.2 Recipient’s share of official development assistance by policy performance, 1990 and 1995    53
3.3 Heavily indebted poor countries relative to all developing countries, 1996    54
3.4 Economic performance of the heavily indebted poor countries, 1980–95    55
3.5 Countries with a decision point in 1997 under the HIPC Debt Initiative    57

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Figures

1.1 Net flows from international capital markets to developing countries were stable in 1997     11
1.2 Spreads on Brady bonds shrank, then expanded    13
1.3 Secondary market spreads on international bonds decline and rise    14
1.4 Countries in all regions were affected by rising secondary market spreads on sovereign
bond issues, October–December 1997    15
1.5 Capitalization of emerging equity markets keeps growing, 1986–97    17
1.6 Both the amount and the share of global FDI to developing countries are rising, 1991–97    19
1.7 FDI flows remained strong in most regions in 1997    21
1.8 During the 1990s privatization projects have attracted substantial foreign investment    21
1.9 Service’s share of U.S. and Japanese FDI to developing countries is large
and growing, 1985 and 1995    22
1.10 FDI inflows are positively correlated with GDP growth    23
2.1 East Asia’s debt-export ratios were lower than Latin America’s in 1996    33
2.2 East Asia’s real effective exchange rates have appreciated in recent years    35
2.3 As dollar prices fell, East Asia’s exports slowed    35
3.1 Net ODA from DAC countries has slipped to its lowest level since 1970…    50
3.2 …and net ODA from industrial countries has shown a steep decline since the mid-1980s    51
3.3 Export credit agencies’ new commitments to developing countries have shown
strong growth in the 1990s    58
3.4 Export credit agencies’ exposure in developing economies remained concentrated in 1996    59
3.5 The financial performance of export credit agencies strengthens, bringing a surplus in 1996    59
3.6 Growth in investment insurance has paralleled the surge in foreign direct investment
in developing countries    60

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Boxes

1.1 Measuring resource flows    10
1.2 What are derivatives?    16
1.3 Multilateral Agreement on Investment and developing countries    24
1A.1 Why is development of the bond market desirable?    26
1A.2 Considerations in foreign sovereign borrowing    27
2.1 Warning signs of a currency crisis    32
2.2 The quality of investment in crisis countries    34
2.3 Capital controls in Chile and Colombia    42
2.4 Initiatives of the Group of Ten and the Basle Committee on Banking Supervision    45
3.1 Initiatives of the Group of Ten and the Basle Committee on Banking Supervision    45
3.2 World Bank Group guarantees in support of private sector growth    61

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