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Long-term international finance for development: Challenges and possibilities

A concern that has emerged repeatedly in the previous chapters is the apparent inability of the current global monetary and financial systems to make available long-term finance for growth and development. This chapter considers some of the possible strategies for ensuring the provision of such finance. The focus is on the financing of productive capital formation, including for infrastructure, which helps, directly and indirectly, to accelerate growth and structural change. This effectively requires challenging the rationale underlying private financial flows that are driven by short-term profits and rents, and strengthening mechanisms for mobilizing and allocating both domestic and external finance for value creation and development over a longer time horizon. While domestic resources (both private and public) are likely to remain the most important (TDRs 2008 and 2013), international finance can play an important role when domestic funding is not available or is insufficient, particularly when a country is in need of foreign exchange to import capital goods and production inputs beyond what it earns through its exports of goods and services.

Related Subject(s): International Trade and Finance
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