This paper documents the evolution of gross and net capital flows to emerging market
economies and surveys the large literature on the potential drivers. While the capital flow
landscape has been shaped by the evolution of both global and country-specific factors, the
relative importance of these factors has varied over time and differs depending on the type of
capital flows. The findings from the survey of the literature thus underscores the importance
of policies in both source and recipient countries in shaping capital flows.
This letter provides an assessment of recent macroeconomic developments in Benin and an update on the discussions of Fund staff with the Beninese authorities on macroeconomic policies and structural reforms that could form the basis for the authorities’ request for a new arrangement under the Extended Credit Facility (ECF). An earlier assessment letter to donors was issued in December 2009 and is available at http://www.imf.org/external/pp/longres.aspx?id=4399.