Global Development Finance 2000

GLOBAL DEVELOPMENT FINANCE 2000 tracks the annual movement of international capital flows to developing countries, and discusses selected analytical and policy issues in international finance for developing countries. The report shows that growth in developing countries is starting to recover from the 1997-99 global financial crisis, as predicted in Global Development Finance 1999 and Global Economic Prospects 2000. Global Development Finance 2000 shows that the recovery is based on stronger than anticipated growth in a broader group of industrial countries, on exceptional strength in the recovery of global trade, and on the firming of commodity prices. All these are elements that will permit more "self-financing" of development and a more sustainable path of recovery in developing countries. But some 41 developing countries, with over 1 billion people, will have barely crossed the threshold to positive growth per capita, underscoring the still fragile path of adjustment and recovery ahead.

Powerpoint presentations from the Washington, D.C. launch: Prospects and Risks for Developing Countries (361KB) and Trends in Capital Flows (371KB)

The report also shows that trends in private capital markets appear to be moving toward the end of a cycle: from an increasingly easy credit boom from 1990 to 1996, to a collapse in supply in 1997-99, and an expected gradual recovery between 2000 and 2002, with trends in private capital flows to developing countries in 1999 marking three fundamental changes. First, a retreat in international capital markets flows. Second, the reduction in private capital flows also reflects a collapse in demand for external financing in rapidly adjusting countries in East Asia and elsewhere. Third, and in marked contrast, foreign direct investment (FDI) flows have now become the single-largest source of more stable and reliable longer-term development finance for all developing countries.

Global Development Finance 2000 also examines trends in official finance, which in 1999 included a modest upturn in aid flows, and the launch of an enhanced debt relief program for the heavily-indebted poor countries.

Stepping back from these developments, three other chapters in the report then deal with some central questions that are on the minds of analysts and policy-makers after the 1997-99 global crisis: the benefits and risks of short-term capital flows from international banks, safeguards that countries may need to consider in order to avoid liquidity crises, and "millennium" lessons from a study of the history of over one hundred years of private capital flows to emerging markets and associated booms and busts (from the 1870s to the 1990s).