1. Global Development Finance 2002 Financing the Poorest Countries

2. The Coming Global Recovery Global slowdown sharpest in 30 years Recovery begins in U.S. and high-tech Asia Commodity exporters in Sub-Saharan Africa remain under pressure Largest downside risks are in financial markets

3. A shallow recession? (World and Industrial and Developing Country GDP growth, 1997-2004) Developing countries Industrial countries World Forecast Percentage change

4. A shallow recession? -notes cont.

5. High-tech exporters hit hard (Export growth 1999-2003) Note: * High-tech exporters are Korea, Malaysia, Singapore and Taiwan. Source: Datastream. Percent

6. Sub-Saharan Africa Note: MUV is the unit value of manufactures exports from the G-5 countries to developing countries, expressed in U.S. dollars. Developing countries Real non-oil commodity prices fell sharply, especially in Africa (Indices 1980 = 100; deflated by MUV)

7. Sub-Saharan Africa Source: FAO Statistical Office (FAOSTAT). Developing countries No productivity increase in Sub-Saharan Africa (agricultural per capita production index, 1980 = 100)

8. No productivity increase in Sub-Saharan Africa notes cont

9. Private capital flows to emerging markets Global slowdown depressed capital market flows in 2001 FDI was resilient Limited contagion from the Argentine crisis

10. Capital market flows to developing countries have fallen (percent of GDP) Note: Refers to long-term commitments of bank loans, bond issues, and equity issues.

11. FDI to developing countries is resilient (US$ billions) FDI to developing countriesGlobal FDI Sources: World Bank staff estimates; UNCTAD, World Investment Report 2001.

12. Contagion from Argentine crisis is limited (basis point change in spreads during crisis episodes) October 2000 April 2001 July 2001 December 2001 Argentina3173638743806 Developing countries 1 6468-46 1 excluding Argentina, Turkey Source: World Bank staff estimates; JP Morgan Chase

13. The Poor Countries’ International Financial Transactions Poor countries’ integration with global economy increased Poor countries with good policies saw increased FDI flows Capital outflows depend on policies Foreign bank participation in poor countries rose sharply

14. Private external financial transactions are important in poor countries (percent of GDP, 1999)

15. Countries with better policies saw rapid growth in FDI (average annual percent change in FDI/GDP ratio, 1996-99) Note: Policies as of 1995

16. Outflows smaller in poor countries with better policies (percent of GDP, 1999) Note: Estimate of stock of outflows, calculated by summing annual outflows from early 1980s to 1999; Policies as of 1996

17. Foreign bank presence has sharply increased in the poor countries (percent) Source:World Bank staff estimates; Bankscope

18. Official Support to Developing Countries Aid fell in 2001 Countries with good policies can absorb more aid Government commitment key to effective conditionality

19. Aid is falling again (US$ billions and percent of GNP) Billions of U.S. dollarsPercent of donor GNP Source: OECD and World Bank

20. Compliance with conditionality means better economic performance (percent of countries showing improvement)

21. Global Development Finance 2002 Financing the Poorest Countries