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

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  • Ms. Juliana Dutra Araujo
  • Mr. Antonio David
  • Carlos van Hombeeck
  • Mr. Chris Papageorgiou

Abstract

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

Suggested Citation

  • Ms. Juliana Dutra Araujo & Mr. Antonio David & Carlos van Hombeeck & Mr. Chris Papageorgiou, 2015. "Non-FDI Capital Inflows in Low-Income Developing Countries: Catching the Wave?," IMF Working Papers 2015/086, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/086
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    2. 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.
    3. Koh,Wee Chian & Yu,Shu, 2020. "A Decade after the 2009 Global Recession : Macroeconomic and Financial Sector Policies," Policy Research Working Paper Series 9289, The World Bank.
    4. 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.
    5. Mr. Markus Eberhardt & Mr. Andrea F Presbitero, 2018. "Commodity Price Movements and Banking Crises," IMF Working Papers 2018/153, International Monetary Fund.
    6. Eberhardt, Markus & Presbitero, Andrea F., 2021. "Commodity prices and banking crises," Journal of International Economics, Elsevier, vol. 131(C).
    7. Mrs. Sarwat Jahan & Daili Wang, 2016. "Capital Account Openness in Low-income Developing Countries: Evidence from a New Database," IMF Working Papers 2016/252, International Monetary Fund.
    8. Nordine Abidi & Ms. Burcu Hacibedel & Ms. Mwanza Nkusu, 2016. "Changing Times for Frontier Markets: A Perspective from Portfolio Investment Flows and Financial Integration," IMF Working Papers 2016/177, International Monetary Fund.

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