《全球金融及经济发展》英文版 Global Development Finance.pdf_P21-P25

Financial Flows to Developing Countries Recent Trends and Near-Term Prospects IE GLOBAL RECOVERY BROADENED Flows of foreign direct investment(FDi) in 2004, boosting world gross domestic into developing countries have become in product(GDP) by an estimated 3.8 percent creasingly concentrated, while FDI outflows the highest rate in four years and up sharply from from developing countries have increased 2.5 percent in 2003 and 1.7 percent in 2002. Grad- dramatically ual realignment of stimulative monetary policies in Most emerging market economies have taken many advanced countries led to modest increases in advantage of favorable financing conditions short-term interest rates during the year(particu over the past few years to restructure their debt. larly in the United States), but long-term rates Strong gains in private capital flows over the remained low in most advanced and developing past few years have been partly offset by de- countries, particularly when adjusted for inflation clining official flows arising from large repay Macroeconomic objectives were attained in most ments to bilateral and multilateral creditors developing countries, and progress was made on key Within official flows, the shift from loans to structural reform initiatives. These favorable exter- grants has accelerated, with the decline in net nal and domestic factors contributed to strongly im- official lending more than offset by the in- proving economic fundamentals, as reflected in a crease in bilateral aid grants, but not to the record expansion in developing-world GDP growth extent of official aid commitments More re- (6.6 percent in 2004, much higher than the global sources are needed to support efforts to reach average), upgrades in credit ratings, and a reduction the mdgs in emerging-market bond spreads to near lows by the end of the year. Against this favorable backdrop, capital flows to developing countries continued to expand in Capital flows to developing countries 2004, following a strong rebound in 2003. This Capital flows continue recovery, chapter examines key developments and emerging but pace slows trends in the various components of capital flows et capital flows increased by $42 billion in and considers the outlook for continued short- 2004, continuing the recovery that began in term gains Among our main findi 2003, although at a slower pace than the S81 bil lion rebound of 2003(figure 1.1 and table 1.1) The pickup in capital flows to developing Private and official net debt flows reached a record countries over the past two years has coin- high of $324 billion in 2004, up significantly from cided with a dramatic improvement in their $200 billion during 2000-2 and just above the current account balances. Developing coun- $323 billion level reached in 1997 tries continue to export capital to developed The pickup in net capital flows over the past countries (mostly the United States) in the two years appears more modest after taking into form of rapidly growing accumulations of account inflation, economic growth, and the size foreign reserves. able depreciation of the dollar against most major

1 Financial Flows to Developing Countries: Recent Trends and Near-Term Prospects THE GLOBAL RECOVERY BROADENED in 2004, boosting world gross domestic product (GDP) by an estimated 3.8 percent— the highest rate in four years and up sharply from 2.5 percent in 2003 and 1.7 percent in 2002.1 Gradual realignment of stimulative monetary policies in many advanced countries led to modest increases in short-term interest rates during the year (particularly in the United States), but long-term rates remained low in most advanced and developing countries, particularly when adjusted for inflation. Macroeconomic objectives were attained in most developing countries, and progress was made on key structural reform initiatives. These favorable external and domestic factors contributed to strongly improving economic fundamentals, as reflected in a record expansion in developing-world GDP growth (6.6 percent in 2004, much higher than the global average), upgrades in credit ratings, and a reduction in emerging-market bond spreads to near record lows by the end of the year. Against this favorable backdrop, capital flows to developing countries continued to expand in 2004, following a strong rebound in 2003. This chapter examines key developments and emerging trends in the various components of capital flows and considers the outlook for continued shortterm gains. Among our main findings: • The pickup in capital flows to developing countries over the past two years has coincided with a dramatic improvement in their current account balances. Developing countries continue to export capital to developed countries (mostly the United States) in the form of rapidly growing accumulations of foreign reserves. 13 . • Flows of foreign direct investment (FDI) into developing countries have become increasingly concentrated, while FDI outflows from developing countries have increased dramatically. • Most emerging market economies have taken advantage of favorable financing conditions over the past few years to restructure their debt. • Strong gains in private capital flows over the past few years have been partly offset by declining official flows arising from large repayments to bilateral and multilateral creditors. • Within official flows, the shift from loans to grants has accelerated, with the decline in net official lending more than offset by the increase in bilateral aid grants, but not to the extent of official aid commitments. More resources are needed to support efforts to reach the MDGs. Capital flows to developing countries Capital flows continue recovery, but pace slows Net capital flows increased by $42 billion in 2004, continuing the recovery that began in 2003, although at a slower pace than the $81 billion rebound of 2003 (figure 1.1 and table 1.1). Private and official net debt flows reached a record high of $324 billion in 2004, up significantly from $200 billion during 2000–2 and just above the $323 billion level reached in 1997. The pickup in net capital flows over the past two years appears more modest after taking into account inflation, economic growth, and the sizeable depreciation of the dollar against most major

GLOBAL DEVELOPMENT FINANCE 2005 currencies. The offsetting impact of these factors can be captured by measuring capital flows as a percentage of GDP in the recipient countries (figure 1.2). From this perspective, recent performance has been less robust: net capital flows to developing countries equaled 4.5 percent of their GDP in 2004, up slightly from 4.3 percent in 2003, but significantly below highs of more than 6 percent reached in the mid-1990s. Developing countries continue to export capital Current account balances in developing countries continue to strengthen, swelling from a slight deficit in 1999 to a surplus of $153 billion in 2004. That surplus was equal to 2.0 percent of their GDP (table 1.1), up from 1.8 percent 14 Figure 1.1 Financial flows to developing countries, 1990–2004 $ billions 0 50 100 150 200 250 300 350 1990 1992 1994 1996 1998 2000 2002 2004 Sources: World Bank Debtor Reporting System and staff estimates. Total net capital flows Net private flows Net official flows Table 1.1 Net capital flows to developing countries, 1996–2004 $ billions 1996 1997 1998 1999 2000 2001 2002 2003 2004e Current account balance 83.6 87.2 93.7 8.0 43.6 16.9 72.0 112.8 152.7 as % of GDP 1.7 1.7 1.6 0.1 0.8 0.4 1.3 1.8 2.0 Financed by: Net equity flows 161.4 190.6 178.1 195.1 178.6 180.9 159.8 176.6 192.3 Net FDI inflows 128.6 168.1 171.5 182.4 166.2 174.8 154.0 151.8 165.5 Net portfolio equity inflows 32.9 22.6 6.6 12.7 12.4 6.0 5.8 24.8 26.8 Net debt flows 123.7 106.9 54.9 15.4 6.2 3.5 8.9 62.2 84.1 Official creditors 3.8 12.9 34.4 13.9 5.8 27.0 5.2 11.6 24.9 World Bank 7.3 9.2 8.7 8.8 7.9 7.5 0.2 1.2 1.4 IMF 1.0 3.4 14.1 2.2 10.7 19.5 14.0 2.4 10.9 Others 4.5 0.4 11.6 7.3 3.0 0.0 8.6 12.8 12.7 Private creditors 119.9 94.0 20.5 1.5 0.4 30.5 3.7 73.8 109.0 Net medium- and long-term debt flows 82.5 84.8 85.0 21.6 7.4 6.6 0.9 24.9 55.4 Bonds 49.5 38.2 39.7 29.8 17.5 11.0 11.2 28.1 63.0 Banks 30.7 43.8 50.4 6.8 5.8 11.0 3.8 3.1 1.8 Others 2.3 2.9 5.2 1.5 4.3 6.5 6.5 6.3 5.7 Net short-term debt flows 37.4 9.2 64.5 20.1 7.9 23.9 2.8 48.9 53.6 Balancing itema 111.2 157.5 122.9 169.1 169.1 112.5 69.0 59.9 50.9 Change in reserves 90.4 52.9 16.3 33.4 46.8 81.7 171.7 291.9 378.2 ( increase) Memo items: Total foreign aid (grants) (ex technical cooperation grants) 26.7 25.3 26.7 28.5 28.7 27.9 32.2 43.4 47.4 Net private flows (debt equity) 281.3 284.6 198.6 196.6 178.1 150.3 163.5 250.4 301.3 Net official flows (aid debt) 30.5 38.2 61.1 42.4 23.0 54.9 37.4 31.7 22.5 Total net capital flows (private and offical) 311.8 322.8 259.6 239.1 201.1 205.2 200.9 282.1 323.8 Note: e estimate a. Combination of errors and omissions and net acquisition of foreign assets (including FDI) by developing countries. Sources: World Bank Debtor Reporting System and staff estimates; IMF, Balance of Payments Yearbook, various years; and Dealogic Bondware and Loanware.

FINANCIAL FLOWS TO DEVELOPING COUNTRIES Figure 1.2 Financial flows to developing Figure 1.3 Current account balance of developing countries as a percentage of GDP, 1990-2004 countries, 1976-2004 Total net capital flows 321 All developing countries Net private flows U Low-income countries 19901992199419961998200020022004 Sources: World Bank Debtor Reporting System and staff estimates Sources: IMF: World Bank staff estimates. in 2003. Current account surpluses in the devel- holdings rose from 33 percent in 2003 to 38 percent oping world are a dramatic change from previ- in 2004 ous decades, when the developing countries as a deficits(figure 1.3)that averaged 1.4 percent of by declining official llow s were partly offset group consistently ran modest current account Strong gains in private flow their GDP from 1976 to 1999. The swing in the The pickup in net capital flows over the past few current account is even more dramatic in low- years(measured in dollars) reflects strong gains in income countries, where current account deficits net private flows as well as declines in net official averaged 2.3 percent of GDP in 1976-99 flows(figure 1. 1). Net private flows(debt and eq (figure 1. 3) uity) have grown by a cumulative total of $140 billion since 2001, rising from 3.8 to 4.2 percent The pace of reserve accumulation accelerates of GDP-still below the high of 5. 2 percent The dramatic current account surpluses chalked reached in 1996(figure 1.2). In contrast, net offi up in the past few years have been used primarily cial flows(concessional aid and long-term debt) to accumulate foreign exchange reserves, rather have declined by a cumulative total of $32 billion than to finance productive domestic investments. since 2001(from 1.0 to 0.3 percent of GDP). The That trend accelerated last year, as foreign re- $20 billion increase in bilateral aid that has oc serve accumulation in developing countries con- curred has been eclipsed by a $52 billion decline in tinued to finance a large share of the U.S. current net official lending, which reflects large re account deficit in 2004. Foreign reserves held by ments made to multilateral and bilateral credi developing countries grew by $378 billion in From a historical perspective, the recent decline in 2004 (4.9 percent of GDP), following a $291 bil- net official flows continues a downward trend that lion(4.1 percent of GDP) increase in 2003. began in the early 1990s(figures 1. 1 and 1.2) Meanwhile. the u.s. current account deficit bal looned from $531 billion in 2003(4.8 percent of GDP)to S666 billion in 2004(5.6 percent of Capital flows from the private sector GDP Debt and equity flows showed modest gains The acceleration in reserve accumulation was et private flows(debt and equity) increased highly concentrated in just a few countries. China by S51 billion in 2004, following a $87 bil accounted for more than half of the increase in lion surge in 2003. The modest gains in 2004 2004, with foreign reserves increasing by $207 were split between net debt and equity flows billion. China's share of developing-country reserve (figure 1.4)

FINANCIAL FLOWS TO DEVELOPING COUNTRIES in 2003. Current account surpluses in the developing world are a dramatic change from previous decades, when the developing countries as a group consistently ran modest current account deficits (figure 1.3) that averaged 1.4 percent of their GDP from 1976 to 1999. The swing in the current account is even more dramatic in lowincome countries, where current account deficits averaged 2.3 percent of GDP in 1976–99 (figure 1.3). The pace of reserve accumulation accelerates The dramatic current account surpluses chalked up in the past few years have been used primarily to accumulate foreign exchange reserves, rather than to finance productive domestic investments. That trend accelerated last year, as foreign reserve accumulation in developing countries continued to finance a large share of the U.S. current account deficit in 2004. Foreign reserves held by developing countries grew by $378 billion in 2004 (4.9 percent of GDP), following a $291 billion (4.1 percent of GDP) increase in 2003. Meanwhile, the U.S. current account deficit ballooned from $531 billion in 2003 (4.8 percent of GDP) to $666 billion in 2004 (5.6 percent of GDP). The acceleration in reserve accumulation was highly concentrated in just a few countries.2 China accounted for more than half of the increase in 2004, with foreign reserves increasing by $207 billion. China’s share of developing-country reserve holdings rose from 33 percent in 2003 to 38 percent in 2004. Strong gains in private flows were partly offset by declining official flows The pickup in net capital flows over the past few years (measured in dollars) reflects strong gains in net private flows as well as declines in net official flows (figure 1.1). Net private flows (debt and equity) have grown by a cumulative total of $140 billion since 2001, rising from 3.8 to 4.2 percent of GDP—still below the high of 5.2 percent reached in 1996 (figure 1.2). In contrast, net official flows (concessional aid and long-term debt) have declined by a cumulative total of $32 billion since 2001 (from 1.0 to 0.3 percent of GDP). The $20 billion increase in bilateral aid that has occurred has been eclipsed by a $52 billion decline in net official lending, which reflects large repayments made to multilateral and bilateral creditors. From a historical perspective, the recent decline in net official flows continues a downward trend that began in the early 1990s (figures 1.1 and 1.2). Capital flows from the private sector Debt and equity flows showed modest gains Net private flows (debt and equity) increased by $51 billion in 2004, following a $87 billion surge in 2003. The modest gains in 2004 were split between net debt and equity flows (figure 1.4). 15 Figure 1.2 Financial flows to developing countries as a percentage of GDP, 1990–2004 % GDP 0 1 2 3 4 5 6 7 1990 1992 1994 1996 1998 2000 2002 2004 Sources: World Bank Debtor Reporting System and staff estimates. Total net capital flows Net private flows Net official flows Figure 1.3 Current account balance of developing countries, 1976–2004 % GDP 6 4 5 3 2 1 0 1 2 3 1976 1980 1984 1988 1992 1996 2000 2004 Sources: IMF; World Bank staff estimates. All developing countries Low-income countries

GLOBAL DEVELOPMENT FINANCE 2005 Figure 1.4 Financial flows to developing countries Figure 1.5 Net equity flows to developing from the private sector, 1990-2004 countries. 1990-2006 s billions s billions Net equity flows Net FDI inflows 50 Net portfolio equity 9901992199419961998200020022004 990199219941996199820002002200420 Sources: World Bank Debtor Reporting System and staff estimates Sources: World Bank Debtor Reporting System and staff estimates Net equity flows increased by $16 billion in investment climate in many developing countries 2004, reaching $192 billion in 2004, marginally has improved markedly, with higher corporate below the $195 billion peak attained in 1999. Net earnings, liberalization of foreign ownership rules, equity flows have been stable at 2.7 percent of and a stronger global recovery. In response to GDP since 2002, below the high of 3.7 percent at- these improvements, net FDI inflows to developing tained in 1999 countries increased by S14 billion(9 percent) in Net private debt flows increased by $35 bil- 2004, partly reversing a S23 billion cumulative lion in 2004, reaching $109 billion, up signifi- decline in the previous two years(figure 1.5) cantly from a low of -S30 billion recorded in The increase was spread across most regions, 2001, but still below the high of S120 billion with the exception of the Middle East and North recorded in 1995. As a percentage of GDP, net Africa(table 1.2). In Latin America, a S6 billion re- debt flows increased from.5 percent in 2001 to bound reversed substantial declines in the previous 1. 4 percent in 2004 (compared to the high of four years and raised Latin America's share of net 2.3 percent reached in 1995) FDI inflows to developing countries slightly from quity flows have been much more stable 25 percent in 2003 to 26 percent in 2004, still well han debt flows since the late 1990s(figure 1. 4). below the share of 48 percent the region reached in Why? First, FDI inflows-the largest component 1999-2000. The East Asia and Pacific region of equity flows-have been much more stable than flows of debt and portfolio equity(figures 1. 4 and Table 1.2 Regional composition of net FDI inflows 1.5).3Second, net FDI and portfolio equity flows to developing countries, 2002-4 have been negatively correlated over the past few Billions years,so that the sum(net equity flows) becomes 2003 ven more stable. This negative correlation reflects All developing countries 154.0151.8165.5 the substitutability of the two categories of equity For example, mergers and acquisitions often in- Regional composit 63.6 volve reclassifying portfolio equity claims as FDI of which China 56.0 claims, which entails offsetting changes in net FDI Latin America and Caribbean and portfolio equity flows East Europe and Central Asia 35.0 Sub-Saharan Africa FDI is increasingly concentrated Middle East and North Africa Economic conditions over the past few years have Note e estimat favored FDI inflows to developing countries. The Sources: World Bank Debtor Reporting System and staff estimates. 16

GLOBAL DEVELOPMENT FINANCE 2005 Net equity flows increased by $16 billion in 2004, reaching $192 billion in 2004, marginally below the $195 billion peak attained in 1999. Net equity flows have been stable at 2.7 percent of GDP since 2002, below the high of 3.7 percent attained in 1999. Net private debt flows increased by $35 billion in 2004, reaching $109 billion, up significantly from a low of –$30 billion recorded in 2001, but still below the high of $120 billion recorded in 1995. As a percentage of GDP, net debt flows increased from –0.5 percent in 2001 to 1.4 percent in 2004 (compared to the high of 2.3 percent reached in 1995). Equity flows have been much more stable than debt flows since the late 1990s (figure 1.4). Why? First, FDI inflows—the largest component of equity flows—have been much more stable than flows of debt and portfolio equity (figures 1.4 and 1.5).3 Second, net FDI and portfolio equity flows have been negatively correlated over the past few years,4 so that the sum (net equity flows) becomes even more stable. This negative correlation reflects the substitutability of the two categories of equity. For example, mergers and acquisitions often involve reclassifying portfolio equity claims as FDI claims, which entails offsetting changes in net FDI and portfolio equity flows.5 FDI is increasingly concentrated Economic conditions over the past few years have favored FDI inflows to developing countries. The investment climate in many developing countries has improved markedly, with higher corporate earnings, liberalization of foreign ownership rules, and a stronger global recovery. In response to these improvements, net FDI inflows to developing countries increased by $14 billion (9 percent) in 2004, partly reversing a $23 billion cumulative decline in the previous two years (figure 1.5). The increase was spread across most regions, with the exception of the Middle East and North Africa (table 1.2). In Latin America, a $6 billion rebound reversed substantial declines in the previous four years and raised Latin America’s share of net FDI inflows to developing countries slightly from 25 percent in 2003 to 26 percent in 2004, still well below the share of 48 percent the region reached in 1999–2000. The East Asia and Pacific region 16 Figure 1.4 Financial flows to developing countries from the private sector, 1990–2004 $ billions 50 0 50 100 150 200 250 1990 1992 1994 1996 1998 2000 2002 2004 Sources: World Bank Debtor Reporting System and staff estimates. Net equity flows Net debt flows Figure 1.5 Net equity flows to developing countries, 1990–2006 $ billions 0 50 100 150 200 1990 1992 1994 1996 1998 2000 2002 2006 2004 Sources: World Bank Debtor Reporting System and staff estimates. Net FDI inflows Net portfolio equity Projection Table 1.2 Regional composition of net FDI inflows to developing countries, 2002–4 $ billions 2002 2003 2004e All developing countries 154.0 151.8 165.5 Regional composition East Asia and Pacific 55.6 59.6 63.6 of which China 49.3 53.5 56.0 Latin America and Caribbean 45.7 36.5 42.4 East Europe and Central Asia 35.0 35.6 37.6 Sub-Saharan Africa 9.0 10.1 11.3 South Asia 4.8 5.2 6.5 Middle East and North Africa 3.8 4.8 4.1 Note: e estimate Sources: World Bank Debtor Reporting System and staff estimates.