Dasgupta, DipakRatha, Dilip2014-08-282014-08-282000-07https://hdl.handle.net/10986/19821The authors study what drives private capital flows to developing countries, as well as the apparent response of official lending for the years 1978-97. Econometric results reveal that non-foreign direct investment portfolio flows to a country tended to rise in response to: 1) An increase in the current account deficit. 2) A rise in foreign direct investment flows. 3) Higher per capita income. 4) Growth performance. Once those variables were accounted for, private flows did not seem to be influenced by location, and regional factors. In addition, private capital flows (whether foreign direct investment or not) seem to respond positively (with a one-year lag) to World Bank lending commitments. By far the most important determinant of official lending to a developing country, seems to be the external current account balance, or a change in international reserves in the country. Official flows - including World Bank lending - appear to have played a stabilizing (or counter-cyclical) role in response to the volatility of private capital flows, and fluctuations in commodity prices, and GDP growth. (The stabilizing effect is weak, as official flows are only one-tenth of total long-term flows).en-USCC BY 3.0 IGOADJUSTMENT LENDINGAGGREGATE LEVELALLOCATION MODELSBALANCE OF PAYMENTSBANK LENDINGBANK LOANSBENCHMARKBLEND COUNTRIESBONDSBORROWINGBORROWING COUNTRIESCAPITAL FLOWSCAPITAL MARKETSCOMMERCIAL BORROWINGCOMMERCIAL LOANSCOUNTRY LEVELCOUNTRY SPECIFICCREDIT RATIONINGCREDIT RISKCURRENT ACCOUNTCURRENT ACCOUNT DEFICITCYCLICAL BEHAVIORDEBTDECISION MAKINGDEPENDENT VARIABLEDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMIESDEVELOPING WORLDDEVELOPMENT ECONOMICSECONOMETRIC ANALYSISECONOMIC CONDITIONSECONOMIC DEVELOPMENTECONOMIC GROWTHEMPIRICAL RESULTSEXOGENOUS VARIABLESEXPLANATORY VARIABLESFINANCIAL ASSETSFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL INSTITUTIONSFINANCIAL MARKETSFISCAL YEARFORECASTSFOREIGN EXCHANGEGDPGDPGLOBAL MARKETSGLOBALIZATIONGNPGROWTH PERFORMANCEGROWTH RATEHIGH VOLATILITYINCOME DEVELOPING COUNTRIESINCOME GROUPINCOME LEVELSINDEPENDENT VARIABLESINDUSTRIAL COUNTRIESINFLATIONINFLATION RATEINFLATION RATESINTEREST RATESINTERNATIONAL RESERVESLAGGED DEPENDENTLIQUIDITYLOW- INCOME COUNTRIESLOW-INCOME COUNTRIESMACROECONOMIC VARIABLESMATURITIESMIDDLE-INCOME COUNTRIESMORAL HAZARDNEGATIVE EFFECTNEGATIVE SIGNPER CAPITAPER CAPITA INCOMEPER CAPITA INCOMESPOLICY REFORMSPOLICY RESEARCHPORTFOLIOPRIMARY COMMODITIESPRIVATIZATIONQUANTITATIVE ANALYSISRAPID GROWTHREAL EXCHANGEREAL EXCHANGE RATEREAL EXCHANGE RATESREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESREAL PRICESREDUCED FORM EQUATIONREGIONAL DISTRIBUTIONRELATIVE IMPORTANCERISING DEMANDRISING TRENDSHARP FALLSIGNIFICANT FACTOR10.1596/1813-9450-2392