Abstract

Since the early 1970s foreign direct and portfolio equity investment flows into developing countries, although continuing to increase in absolute terms, have been relatively less important than in previous years, as foreign private capital flows have been dominated by debt-creating bank credit.

© 1985 International Monetary Fund

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Contents

  • Prefatory Note

  • I Introduction

  • II Trends in Foreign Private Investment

    • Sectoral Composition

    • Financing and Ownership

    • Income Payments

  • III The Role of Foreign Direct Investment in Development

    • Transfer of Resources

    • Impact on Host Developing Countries

  • IV Policies of Host Developing Countries Toward Foreign Investment

    • Restrictions

    • Incentives

  • V Developments and Policies in Industrial Countries and Foreign Investment

    • Developments in Financial Markets

    • Policies of Industrial Countries

  • VI Foreign Investment and External Adjustment

  • VII Prospects and Policies

  • APPENDICES

  • I Measuring Foreign Investment

    • Classification of Countries

  • II Restrictions and Regulations Concerning Foreign Investment in the 25 Major Developing Country Borrowers

  • III Income Payments on Direct Investment and External Debt, and Ability to Pay

  • IV Statistical Tables

  • Tables

  • Section

  • II

    • 1. Developing Countries: Composition of Financing Flows, 1973–83

    • 2. Non-Oil Developing Countries: External Liabilities, 1973, 1983

  • V

    • 3. Non-Oil Developing Countries: Selected Financial Flows through International Capital Markets, 1974–83

  • VI

    • 4. U.S. Direct Investment in Developing Countries: Trends in and Distribution of Earnings, 1973–83

  • Appendix IV

    • 1. Net Flow of Financial Resources from Industrial Countries to Developing Countries, 1960–82

    • 2. Developing Countries: Stock of Foreign Direct Investment, 1973, 1983

    • 3. Industrial Countries: Stock of Foreign Direct Investment in Developing Countries, 1970, 1982

    • 4. Non-Oil Developing Countries: Net Recorded Foreign Direct Investment Abroad, 1973–82

    • 5. Four Industrial Countries: Composition of Foreign Direct Investment Stock in Developing Countries, 1967, 1980

  • Charts

  • Section

  • II.

    • 1. Non-Oil Developing Countries: Financing Flows, 1973–83

    • 2. Seven Major Borrowers and Non-Oil Developing Countries: Payments on Direct Investment and Interest on External Debt, 1973–83

  • VI.

    • 3. Developing Countries: Rates of Return on U.S. Direct Investment and Related Variables, 1973–82

  • Appendix III

    • 4. Selected Non-Oil Developing Countries: Nominal GDP Growth and Rates of Return on Foreign Direct Investment, 1974–82

    • 5. Selected Non-Oil Developing Countries: Nominal GDP Growth and Interest Rates on Outstanding External Debt, 1974–82

The following symbols have been used throughout this paper:

  • … to indicate that data are not available;

  • — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;

  • between years or months (e.g., 1979-81 or January-June) to indicate the years or months covered, including the beginning and ending years or months;

“Billion” means a thousand million.

Minor discrepancies between constituent figures and totals are due to rounding.

Prefatory Note

This study was prepared in the Research Department of the International Monetary Fund. Its author, David Goldsbrough, is an economist in the Developing Country Studies Division of the Research Department. The paper has benefited from comments by other staff members and by members of the Executive Board of the Fund. However, the opinions expressed are those of the author and do not necessarily represent the views of other staff members or of Executive Directors.