International Finance and Development

by Ocampo, Jose Antonio; Kregel, Jan; Griffith-Jones, Stephany

• ISBN13: 9781842778623
• ISBN10: 1842778625
• Format: Paperback
• Copyright: 2007-06-15
• Publisher: ZED BOOKS

Summary

This is a comprehensive and unique survey of how the relationship between finance and economic development has changed since the historic Monterrey Consensus of the International Conference on Financing for Development in 2002. It has become clear that mechanisms are needed to ensure that international private capital flows, including FDI, enhance productive investments and thereby contribute to development. Recent trends in official development financing offer some grounds for optimism, although many developing countries are constrained by their the external debt problems, and this book will play a key role in critically assessing recent policies and proposing constructive ways forward. The final part on systemic issues highlights new concerns and the modest progress so far.

Author Biography

José Antonio Ocampo is the UN Under-Secretary General for Economic and Social Affairs. Jan Kregel was Chief of the Policy Analysis and Development Branch of the Financing For Development Office in the Department of Economic and Social Affairs (DESA) in the United Nations Secretariat. Stephany Griffith-Jones is Professorial Fellow at the Institute of Development Studies at the University of Sussex, and worked at DESA in 2005.

Table of Contents

Overview	p. 1
International Private Capital Flows	p. 2
Official Development Financing	p. 6
External Debt	p. 10
Systemic Issues	p. 12
International Private Capital Flows	p. 17
Main Features of Private Flows to Developing Countries	p. 18
Foreign Direct Investment	p. 26
Trends and composition of foreign direct investment	p. 26
How stable is FDI?	p. 28
Particular benefits of FDI	p. 30
Financial Flows	p. 34
Bank credit	p. 34
Portfolio flows	p. 38
Impact of derivatives	p. 41
Measures to Counter Pro-cyclicality of Private Capital Flows	p. 45
Counter-cyclical financing instruments	p. 45
Prudential capital account regulations	p. 48
Counter-cyclical prudential regulation	p. 52
Basel II and developing countries	p. 55
A Greater Challenge: Encouraging Private Flows to Lower-Income Developing Countries	p. 59
Official Development Financing	p. 65
Official Development Assistance	p. 65
The origins and weakening of the commitment to ODA	p. 65
The resurgence of ODA	p. 67
ODA and the Millennium Development Goals	p. 68
Volatility and conditionality of aid flows	p. 71
Selectivity of aid flows	p. 74
Aid effectiveness	p. 77
Donor efforts to increase aid effectiveness	p. 79
The Multilateral Development Banks	p. 81
The role of multilateral development banks	p. 83
Structure and trends	p. 87
The debate around the multilateral development banks	p. 93
The way forward	p. 96
South-South Cooperation	p. 97
Innovative Sources of Financing	p. 99
Major mechanisms in the short run	p. 101
Major mechanisms in the longer run	p. 103
External Debt	p. 107
Debt and development	p. 107
The post-war approach to lending to developing countries	p. 107
Rapid external borrowing and debt rescheduling in the 1960s and 1970s	p. 108
Debt resolution in the 1980s	p. 110
Debt relief	p. 112
The Heavily Indebted Poor Countries (HIPC) Initiative	p. 112
The Multilateral Debt Relief Initiative	p. 117
New measures for official debt relief for middle-income countries (Evian approach)	p. 119
Debt sustainability	p. 121
Debt sustainability analysis for low-income countries	p. 121
An assessment of debt sustainability analyses	p. 124
Debt resolution and debt relief involving private creditors	p. 129
New approaches and initiatives	p. 129
Systemic Issues	p. 139
Global macroeconomic imbalances and the international reserve system	p. 140
Changes in the structure of global financial markets	p. 147
Risk implications of changes in global financial markets	p. 147
Implications for prudential regulation and supervision	p. 151
Crisis prevention and resolution	p. 155
Domestic macroeconomic policies	p. 155
Surveillance of national macroeconomic policies	p. 157
The role of emergency financing and precautionary financial arrangements	p. 158
Strengthening IMF financing of poor countries	p. 161
Conditionality of IMF lending	p. 162
The role of SDRs in the international financial system	p. 164
The role of regional financial arrangements	p. 166
Enhancing the voice and participation of developing countries in international financial decision-making	p. 168
Bibliography	p. 175
Index	p. 197
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