Journal of Economic Perspectives: Vol. 10 No. 2 (Spring 1996)


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Inflows of Capital to Developing Countries in the 1990s

Article Citation

Calvo, Guillermo A., Leonardo Leiderman, and Carmen M. Reinhart. 1996. "Inflows of Capital to Developing Countries in the 1990s." Journal of Economic Perspectives, 10(2): 123-139.

DOI: 10.1257/jep.10.2.123


Half a decade has passed since the resurgence of international capital flows to many developing countries and history has, once again, shown that foreign investment is prone to repeated booms and busts. Mexico's 1994 crisis is but a recent example that highlights the vulnerability of capital-importing countries to abrupt reversals; thus, an aim of policy is to reduce that vulnerability. This paper discusses the principal causes, facts, and policies that have characterized capital inflows to Asia and Latin America. In particular, the authors examine what policies have proved useful in protecting these economies from the vagaries of international capital flow.

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Calvo, Guillermo A. (U MD)
Leiderman, Leonardo (Tel Aviv U)
Reinhart, Carmen M. (IMF)

JEL Classifications

O19: International Linkages to Development; Role of International Organizations
O16: Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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