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The Transition from Official Aid to Private Capital Flows: Implications for a Developing Country

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  • Renu Kohli

Abstract

India's capital account displays a sharp swing in external financing from official assistance to private capital transfers in the 1990s. This paper examines the implications of this transition for the country. An analysis of the private resource transfer reveals that unlike official flows, private capital flows are associated with real exchange rate appreciation, expansion in domestic money supply and stock market growth, liquidity and volatility. The paper concludes with a discussion on the implications of the transition for economic policy.

Suggested Citation

  • Renu Kohli, 2004. "The Transition from Official Aid to Private Capital Flows: Implications for a Developing Country," WIDER Working Paper Series RP2004-46, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2004-46
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    File URL: https://www.wider.unu.edu/sites/default/files/rp2004-046.pdf
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