Transcript Document

Global capital flows: overview
UNCTAD short courses for delegates, September 2013,
Palais des Nations.
By Diana Barrowclough, Senior Economist
Division on Globalization and Development Strategies, UNCTAD.
1
Trends (1)
Highly volatile global capital flows
Net private capital inflows to
emerging economies, per cent of GDP
Net capital inflows, billions of dollars
14 000
9
8
12 000
7
10 000
6
8 000
5
6 000
4
3
4 000
2
2 000
0
1976
1
0
1981
1986
1991
1996
2001
Developed economies
Developing economies
Transition economies
2006
2011
1978
1984
1990
1996
2002
2008 2012
Net private inflows
Net private inflows, excl. equity outflows
Source: UNCTAD Trade and Development Report 2013, Ch1
Trends (2)
Volatile net private capital inflows to EMs
B. As a percentage of GDP
A. In billions of current dollars
9
1 400
8
1 200
7
1 000
6
800
5
600
4
3
400
2
200
0
1978
1
1984
1990
1996
2002
Net private inflows
2008 2012
0
1978
1984
1990
1996
2002
2008 2012
Net private inflows, excl. equity outflows
Source: UNCTAD Trade and Development Report 2013, Ch3
Why (1)?
Correlated price trends in global asset markets
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
1980
1982
1984
1986
1988
World equity index
1990
1992
1994
1996
1998
2000
World commodity index
2002
2004
2006
2008
2010
2012
Currency index
Source: UNCTAD Trade and Development Report 2013, Ch1
Why (2)?
Asset composition of
the ECB and the US Fed. Reserve
A. European Central Bank
B. United States Federal Reserv e
(Billions of euro)
(Billions of dollars)
3 500
3 500
3 000
3 000
2 500
2 500
2 000
2 000
1 500
1 500
1 000
1 000
500
500
0
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gold and gold receivables
Securities (incl. securities held for monetary
policy purposes)
Lending to euro area credit institutions
Other assets
Total assets
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gold and other assets
Treasury securities (notes and bonds)
Mortgage-backed securities
Central bank liquidity swaps
Total assets
Source: UNCTAD Trade and Development Report 2013, Ch3
Why (3)?
Monetary policies in developed countries did not lead to
more domestic credit, but contributed to international
financial instability
MONETARY BASE AND BANK CLAIMS ON THE PRIVAT SECTOR, 2001–2012
(Per cent of GDP)
A. United States
B. Euro area
70
25
160
50
140
60
20
40
120
50
15
40
100
30
80
30
10
20
20
60
40
5
10
10
20
0
0
2001
2003
2005
2007
2009
2011 2012
Bank claims on private sector
0
0
2001
2003
2005
2007
2009
2011 2012
Monetary base (right scale)
Source: UNCTAD Trade and Development Report 2013, Ch3
Why (4)?
Net lending/borrowing US & Eurozone
A. United States
B. Euro area
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
2000
2002
2004
2006
2008
2010
2012
2000
2002
2004
2006
2008
2010
2012
Households and non-profit institutions serving households
Non-financial business
Financial business
Government
Rest of the world
Source: UNCTAD Trade and Development Report 2013, Ch3
A. United States
B. European Union
2 500
8 000
2 000
6 000
1 500
4 000
1 000
2 000
500
0
0
-2 000
- 500
-4 000
-1 000
-6 000
-1 500
-2 000
-8 000
2005
2006
2007
2008
2009
2010
2011
2012
2005
C. Dev eloping countries
2006
2007
2008
2009
2010
2011
2012
D. Least dev eloped countries
2 000
40
1 500
30
1 000
20
500
10
0
- 500
0
-1 000
-10
-1 500
-20
-2 000
-30
-2 500
-3 000
-40
2005
2006
2007
2008
2009
2010
2011
FDI: incurrence of liabilities
Portfolio: incurrence of liabilities
Financial derivatives: incurrence of liabilities
Other investment: incurrence of liabilities
Net errors and omissions
Current account balance
2005
2006
2007
2008
2009
2010
FDI: acquisition of financial assets
Portfolio: acquisition of financial assets
Financial derivatives: acquisition of financial assets
Other investment: acquisition of financial assets
Change in reserve assets
Capital account balance
2011
Some implications for development (1)
- Capital flows management in context
_____________________________________________________________________________
Financing the real economy for meeting the new patterns of
demand – hampered or hindered by global capital flows?
Investment and access to financing are needed, to fund expansion
of productive capacities and their adaptation to new demand
patterns.
Key challenges:
 Capital flows management: pragmatic exchange-rate
management and capital-account management needed to reduce
vulnerability to external financial shocks
 Domestic financial systems need to channel credit towards
productive investment in the real sector.
Implications (2)
Sources of investment finance (%)
# countries
(firms)
Internal
finance
Bank
finance
Trade
credit
Equity or
stock sales
Developed
Europe
5, (3354)
68
21
3
5
Emerging
Europe
10, (3196)
58
25
5
7
Africa
44, (17,971)
58
9
3
2
LAC
31, (14,657)
81
21
10
4
Developing
Asia
24, (20,477)
59
20
3
3
Developing
Oceania
5, (619)
67
26
3
9
Transition
economies
17, (10,507)
53
16
4
7
References and further
information
• Trade and Development Report 2013.
• UNCTAD conference: Capital Account
regulations and Gobal Economic
Governance, October 3-4, 2013
• WTO Working session: Capital Account
Regulations and the Trading System,
October 3, 2013
• UNCTAD Development Account project.