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FDI flows

In the Middle East and North Africa region, financial flows in 2015 went against the global trend

Sun Hwa Song's picture

Now that the 2017 edition of International Debt Statistics (IDS) has been released, as a member of the team who put these statistics together, I thought I would look back at what the data tells us about financial flows into the Middle East and North Africa (MENA) region.

According to IDS 2015 data, net financial flows (debt and equity) to all low and middle income countries were only one third of their 2014 levels ($1,159 billion). In particular net debt flows turned negative (-$185 billion) for the first time since the 2008 financial crisis, while foreign direct investment (FDI) showed a marginal increase of $7 billion from $536 billion in 2014. These phenomena were observed in all regions but MENA.

The net debt inflows into the MENA region diverged from global trends. The inflows increased 84 percent from 2014. On the other hand, FDI recorded its lowest level since 2010.

Stock-markets lead to more FDI...or is it vice-versa?

Fulbert Tchana Tchana's picture
Most studies on the relationship between foreign direct investments (FDI) and financial market development focus on financial market development as a link between FDI and economic growth. However at present our disciple has no deep understanding of direct causality between FDI and financial market development, especially in emerging markets, where financial markets are in the development stage.
 

Prospects Weekly: Renewed Euro Area tensions cut into capital flows to developing countries in May and June

Global Macroeconomics Team's picture

Renewed Euro Area tensions cut into capital flows to developing countries in May and June, and prompted a sharp downturn in business sentiment worldwide. Together these developments point to slower growth in 2012Q2 and Q3, unless recent improvements in financial markets and policy steps cause business sentiment to strengthen.