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					Developing country surpluses:
 The implications for macroeconomic policies



              Jayati Ghosh
             Resource flows to developing countries

 350
 300
 250
 200
 150
 100
  50
   0
 -50   1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
-100
-150
-200

            Net private flows   Net official flows   Workers' remittances
             Developing countries: net capital flows

800
700
600
500
400
300
200
100
  0
-100   1996- 1999     2000    2001    2002      2003   2004    2005    2006   2007
        98
-200

                    Net private capital flows     Net official flows
                    Current account               Change in reserves
          Private capital flows to developing countries

350
300
250
200
150
100
 50
  0
 -50   1996- 1999   2000   2001    2002    2003   2004   2005     2006      2007
        98
-100
-150
-200

               Net FDI     Net portfolio flows    Net other private flows
                      Net capital flows by region




800.0

700.0
                                                    266.1
600.0

500.0
                                                    111
400.0

300.0
                                                    313.3
200.0
                       11.8
100.0                  36.9
                       27.4                          50.8
                       6.5
                       -5.3                         -47.4
   0.0

-100.0
                  1996-98                       2004-06

    Africa   Central & Eastern Europe   CIS   Emerging Asia   Middle East
                       Developing countries: Change in reserves

450                                                                                              140

400                                                                                              120

350
                                                                                                 100

300
                                                                                                 80
250
                                                                                                 60
200
                                                                                                 40
150

                                                                                                 20
100

50                                                                                               0


 0                                                                                               -20
      1996-98   1999       2000      2001   2002    2003     2004      2005     2006   2007

         Developing Asia          Africa    Central & Eastern Europe      CIS      Middle East
                        FDI stock as per cent of GDP


   Latin America                                                                    34.1
                                             10.5

      South Asia                  6.3
                        1.1

                                                     14.9
           China                  5.8

       East Asia                                                   23.2
                                        8.7

           Africa                                                          27.8
                                                12.7
All DCs excluding                                                            29.1
      China                               10.2
   All developing                                                         26.4
      countries                          9.8

                    0         5         10          15      20      25       30     35     40

                                                         1990    2004
                  FDI inflow as per cent of GFCF
                           (average of 2002-04)

16                                                              14.6
                   13.5
14
12
        9.6                                9.1
10                              9
 8
 6
 4                                                   3.4

 2
 0
         All      Africa    East Asia     China   South Asia    Latin
     developing                                                America
      countries
               Current account balances as per cent of GDP
                        Asian developing countries

12
                                 10
10                         9.1

8                    7.2

6          5.4 5.7                                            5.6 5.5 5.3
     4.5                                       4.8
                                                     4.2
4
                                         2.1
2

0
     Developing        China             ASEAN-4                  NICs      South Asia
-2                                                                          -0.9
       Asia
                                                                               -2.2-2.5
-4

                                      2005     2006        2007
              Current account balance as per cent of GDP
                       Other developing regions

10                                                                8.8
                                                                        7.7
 8

 6                                                                            5
 4
     1.71.9
 2            0.6
 0
      South          Central          Sub-Saharan "Developing"      CIS
-2                                         -1.3
     America &       America           -1.7 -2.2
                                          Africa    Europe
-4    Mexico

-6                  -4.8-4.8
                                                    -5.3
                               -6
                                                           -6.5
                                                        -6.7
-8

                                    2005   2006   2007
              Current account balances in 2006 ($ bn)

                                                Africa       19.9

                                       Latin America          48.7

                                                  CIS               99

                                         Middle East                       212.4

                                     Developing Asia                            253.1

                          Other advanced economies                             230.8

                                                Japan                    170.4

                                           -88.9
                           Central & Eastern Europe

                                         -117.1
                                     European Union

   -856.7                              United States

-1000       -800   -600       -400       -200            0               200           400
             Fiscal balances of developing countries
                        as per cent of GDP

 8
 6
 4
  2
  0
 -2   1999    2000    2001   2002    2003    2004    2005     2006     2007
 -4
 -6
 -8
-10

                Developing Asia             Latin America
                Sub-Saharan Africa          Eastern & Central Europe
                CIS
                      Unemployment rates                                             Employment to population rates

14                                                                   80
                                                                     75
12                                                                   70
                                                                     65
10
                                                                     60
 8                                                                   55
                                                                     50
 6
                                                                     45
                                                                     40
 4
                                                                     35
 2                                                                   30
       C/E East Asia SE Asia      South    Latin Middle Sub-                C/E East Asia SE Asia     South    Latin   Middle   Sub-
     Europe &        & Pacific     Asia   America East & N Saharan        Europe &        & Pacific    Asia   America East & N Saharan
       CIS                                & Carib Africa Africa             CIS                               & Carib Africa    Africa

                                 1996 2006                                                        `1996   2005

				
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