1. The Capital Flow Paradox
HEINER FLASSBECK
Director
Division on Globalization
and Development Strategies

2. Surplus countries have lower relative income than deficit countries
Source: Prasad et al 2007

3. Current account balance of developing countries in per cent of GDP (1980-2005)

4. Current account balance
(Arge-Bras I-S.xls, Brazil)
Source: National sources.

5. Global imbalances involve the United States and a small number of big surplus countries including Japan, Germany, China and major oil exporters
Current-account balances as a percentage of GDP,

6. Current Account and Growth
Source: Prasad et al 2007

7. Current account, Growth, and Investment Ratios
Source: Prasad et al 2007

8. Number of developing countries with current account deficits
1996, 17 out of the 22 countries of the region had a current account deficit. in 1998 all 19 Latin American countries had an external deficit. After the 1997 and 1998 crises, declined number of deficit countries and each region is running a current account surplus as a group.
From a strong reliance on foreign capital inflows to a policy of preserving favourable monetary condition, such as slightly undervalued exchange rate and low interest rates and thereby favouring growth by stimulating export demand, competitiveness and productive investment
Source: UNCTAD

9. Current Accounts per Country Group
Source: UNCTAD

10. Capital Accumulation, Trade, Industrialization and Growth
Broaden Size of markets allowing for economies Source of foreign exchange for imported capital goods
Investment
Exports
Add production capacity, productivity Improve competitiveness and access to new markets

11. Appendix