Financialization and the Developing world:Mapping the Issues

Judith Tyson and Terry McKinley
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Judith Tyson: School of Oriental and African Studies, University of London
Terry McKinley: School of Oriental and African Studies, University of London

Working papers from Financialisation, Economy, Society & Sustainable Development (FESSUD) Project

Abstract: This research paper has focused on global cross-border trends in private capital flows, along with reviewing trends in trade, international reserves, external debt, remittances and ODA. The paper covers the general period between 1980 and 2013. Within private capital flows, it investigates FDI, Portfolio Flows and Financial Flows (net bank lending) and analyses the trends of these three flows over four periods: 1980-1990, 1991-2002, 2003-2007 and 2008-2013. It finds that during 2003-2007 there was a sharp upswing in cross-border private capital flows, coinciding with the general rise of the forces of financialization. This intensifying trend culminated in the global financial crisis in 2008. As a result, during the last period, 2008-2013, there was a sharp contraction in portfolio flows and financial flows. Among developing regions, Developing Asia fared the best during this period. However, Middle-Income Countries (MICs) were, in general, the hardest hit by the financial crisis and the volatility of private capital flows. This was due to the fact that such flows were highly concentrated in these countries. More recently, MICs have suffered from precipitous capital outflows as a result of the withdrawal (or planned withdrawal) of quantitative easing by central banks in the developed world.

Keywords: foreign direct investment; portfolio flows; financial flows; net bank lending; financial crisis; external debt (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-10-01
New Economics Papers: this item is included in nep-his
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Citations: View citations in EconPapers (3)

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