Trade and Development Report 2008

Commodity Prices, Capital Flows and the Financing of Investment

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The Trade and Development Report 2008, subtitled Commodity Prices, Capital Flows and the Financing of Investment” highlights the paradox that the “capital poor” developing world is exporting capital to the “capital rich” developed countries. The Report suggests shifting the focus in financial policies from households putting more money aside and imports of foreign savings, to the reinvestment of profits and credit creation through the domestic banking system.




Since 1999, many developing countries have registered strong improvements in their external balances, and their aggregate current account has swung into surplus. As a result, as a group they have become net exporters of capital to developed countries. Many of them, particularly a number of fast growing exporters of manufactures, owe this situation to their successful global integration and to a reorientation of their macroeconomic policies towards a greater focus on competitive exchange rates. In other countries, substantially increased earnings from primary commodity exports have also led to stronger current-account positions.


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