Globalization and private capital movements

This paper examines the power topography of international private capital movements with specific reference to FDI and portfolio equity flows. A number of important development conclusions emerge from the paper. There exists little relationship between incomes and levels of FDI participation, although developed and resource-endowed economies have received greater inflows. While greater liberalization from the mid-1980s has stimulated the explosive growth of portfolio equity capital flows, it has also exposed developing economies to serious systemic risks. Contrary to neoliberal arguments, developing economies that have managed to utilize FDI effectively and to prevent systemic volatility generated from portfolio capital movements from seriously destabilizing them, have generally relied on effective governments. Inter-country economic development has become increasingly unequal in the period 1980-97. While the material conditions of the majority of developing economies have improved, those located in Africa and South Asia in particular have remained seriously disadvantaged.