Adjustment and international capital flows to developing countries

Since the mid-1970s developing countries have been under pressure to adjust the structure of their economies to sharp and permanent changes in international prices. The structural adjustments required by substantially higher international energy prices include an increase in the domestic production of energy, changes in industrial technology to make it more energy efficient and, in the energy-importing countries, the allocation of additional resources to the production of tradable commodities to counteract the effects of the deterioration in the terms of trade on the current account of the balance of payments. These structural adjustments are of a medium-term or long-term nature, and they require substantial investment. International capital flows in general and long-term official flows in particular have an important role to play in facilitating this process of structural adjustment.

Sustainable Development Goals:

Decent Work and Economic Growth

Industry, Innovation and Infrastructure

Climate Action