V. Capital Flows in Europe: The Effect of the Opening Up of Eastern Europe
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund
  • | 2 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund


In sharp contrast to the last decade, capital has been flowing in abundance from industrial to developing countries since the early 1990s. During 1990–92, capital inflows to Latin America amounted to $117 billion (1.2 percent of GDP), roughly the same amount that flowed to the region during the entire 1982-89 period. Similarly, capital inflows to Asia during the period 1989–92 amounted to $144 billion (3.2 percent of GDP). In several instances, domestic factors, such as structural reforms and successful stabilization programs, have played a key role in attracting capital flows. Despite enormous differences in individual countries’ economic environments, however, foreign capital has flooded the entire region, suggesting that external factors such as low international interest rates and recessionary conditions in industrial countries have been major factors in explaining the recent capital inflows episode.1