The Analysis of Emerging Policy Issues in Development Finance

April 1996 A survey of recent economic literature and a case for improving capacity in developing countries to monitor and analyze data on private capital flows, especially portfolio investment flows (through both debt and non-debt instruments). Gooptu makes a case for improving capacity in developing countries to monitor and analyze data on private capital flows, especially portfolio investment flows (through both debt and non-debt instruments). He surveys recent economic literature and identifies unanswered international finance-related policy questions being grappled with in developing countries. From this he deduces the tremendous need for better data to analyze important economic issues (with a focus on data related to external debt and financial flows). Gooptu provides an overview of recent trends in financial flows to developing countries, highlighting the surge of private capital flows to a few such countries in the 1990s. He traces some of the major policy issues dealt with in the 1980s and describes the analysis and discussions behind policy decisions. He concludes by suggesting some policy issues that are important today in development finance --- and which research agenda might be fruitful for examining changing debt structure and financial flows. This paper --- a product of the International Finance Division, International Economics Department --- is part of a larger effort in the department to address issues related to the economic management of capital flows to developing countries.