Water Flowing Upwards: Net financial flows from developing countries

from C. P. Chandrasekhar and Jayati Ghosh on Real-World Economics Review blog, 1 May 2024, originally published in the Business Line on April 29, 2024

Once again, low and middle income countries (LMICs) are at the brutal receiving end of the fickle trajectory of international capital flows. As Figure 1 indicates, net financial flows to such countries, which increased rapidly after the Global Financial Crisis that began and was created by advanced economies, peaked in 2014. Thereafter, they have been on a downward trend, which has accelerated dramatically from 2021, to the point that they turned negative in 2023, and are expected to fall further in 2024. In 2023, LMICs as a group (excluding China) sent an estimated $21.4 billion (which they could ill afford to do) outside—and by 2024 that number is expected to more than double, such that these countries will be sending as much as $50.5 billion, mostly to rich economies and multilateral financial institutions.

More, much more, here


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