Non-FDI Capital Inflows in Low-Income Developing Countries: Catching the Wave?

42 Pages Posted: 26 May 2015

See all articles by Juliana Araujo

Juliana Araujo

International Monetary Fund (IMF)

Antonio C. David

World Bank - Policy Research Department; International Monetary Fund (IMF)

Carlos van Hombeeck

Bank of England

Chris Papageorgiou

International Monetary Fund (IMF) - Research Department

Date Written: April 2015

Abstract

Low-income countries (LIDCs) are typically characterized by intermittent and very modest access to private external funding sources. Motivated by recent developments in private flows to LIDCs this paper makes two contributions: First, it constructs a new comprehensive dataset on gross private capital flows with special focus on non-FDI flows in LIDCs. Concentrating on LIDCs and more specifically on gross non-FDI private flows is intentionally aimed at closing a gap in existing datasets where country coverage of developing economies is limited mainly to emerging markets (EMs). Second, using the new data, it identifies several shifting patterns of gross non-FDI private inflows to LIDCs. A surprising fact emerges: since the mid 2000's periods of surges in gross non-FDI private inflows in LIDCs are broadly comparable to those of EMs. Moreover, while gross non-FDI inflows to LIDCs are on average much lower than those to EMs, we show that the LIDC top quartile gross non-FDI inflow is comparable to the EM median inflow and converging to the EM top quartile inflow.

Keywords: Capital inflows, Low-income developing countries, Emerging markets, Capital flows, Private sector, Gross Capital Flows, Surges, Low-Income Countries, Market Access, monetary fund, private capital, financial development, loans, investment, private capital inflows

JEL Classification: F21, F30, F32, F34

Suggested Citation

Araujo, Juliana and David, Antonio C. and van Hombeeck, Carlos Eduardo and Papageorgiou, Chris, Non-FDI Capital Inflows in Low-Income Developing Countries: Catching the Wave? (April 2015). IMF Working Paper No. 15/86. Available at SSRN: https://ssrn.com/abstract=2609670

Juliana Araujo (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Antonio C. David

World Bank - Policy Research Department ( email )

1818 H Street
Washington, DC 20433
United States

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Carlos Eduardo Van Hombeeck

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Chris Papageorgiou

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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