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

Author

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  • Juliana D. Araujo

    (University of Southern California
    International Monetary Fund)

  • Antonio C. David

    (International Monetary Fund)

  • Carlos Hombeeck

    (Bank of England)

  • Chris Papageorgiou

    (International Monetary Fund)

Abstract

Low-income countries (LICs) are typically characterized by intermittent and very modest access to private external funding sources. Motivated by recent developments in private flows to these economies, this paper makes two contributions: first, it constructs a new comprehensive dataset on gross private capital flows with special focus on non-FDI flows to LICs. Concentrating on LICs 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 LICs. A surprising fact emerges: since the mid-2000s periods of surges in gross non-FDI private inflows to LICs are broadly comparable to those of EMs. Moreover, while gross non-FDI inflows to LICs are on average much lower than those to EMs, we show that gross non-FDI inflows to the top quartile of LICs are comparable to those of the median EM and converging to the top quartile of EMs.

Suggested Citation

  • Juliana D. Araujo & Antonio C. David & Carlos Hombeeck & Chris Papageorgiou, 2017. "Non-FDI Capital Inflows in Low-Income Countries: Catching the Wave?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(2), pages 426-465, June.
    • Handle: RePEc:pal:imfecr:v:65:y:2017:i:2:d:10.1057_s41308-016-0025-x
    DOI: 10.1057/s41308-016-0025-x
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    3. Juliana D. Araujo & Povilas Lastauskas & Chris Papageorgiou, 2017. "Evolution of Bilateral Capital Flows to Developing Countries at Intensive and Extensive Margins," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(7), pages 1517-1554, October.
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    7. Araujo, Juliana D. & David, Antonio C. & van Hombeeck, Carlos & Papageorgiou, Chris, 2017. "Joining the club? Procyclicality of private capital inflows in lower income developing economies," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 157-182.
    8. Mr. Markus Eberhardt & Mr. Andrea F Presbitero, 2018. "Commodity Price Movements and Banking Crises," IMF Working Papers 2018/153, International Monetary Fund.

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    More about this item

    Keywords

    F21; F30; F32; F34;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F30 - International Economics - - International Finance - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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