Skip to main content
SpringerLink
Log in

Africa and the Perversities of International Capital Flows

  • Chapter
Economic Policies, Governance and the New Economics

Part of the book series: International Papers in Political Economy Series ((IPPE))

Abstract

During the 1980s and 1990s, neoclassical economists inside and outside of the International Financial Institutions (IFIs) heavily supported the unfettered movement of capital flows to developing countries. They argued that once impediments to free capital mobility were removed funds would flow from low marginal product of capital-rich countries to high marginal product of capital-poor countries as the capital market worked to equalize risk-adjusted marginal products of capital across borders. On the promise of significant net gains for productive investment and economic growth, many African countries embraced financial globalization. They removed restrictions on capital accounts, opened up to FDI, privatized state assets which frequently included selling off banks to foreign owners, built significant international reserves and built stock markets often under the encouragement and supervision of the International Financial Institutions (IFI).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 54.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Africa-Asia Business Forum (2012) ‘Botswana Investment Guide’. Available at: http://www.aabf.org/botswana_inv_guide.htm.

  • Africa Mutual Funds Corporation (2012) ‘Funds’. Available at: http://africamutualfunds.com/.

  • Africa Mutual Funds Corporation (2012) ‘Funds’. Available at: http://africamutualfunds.com/.

  • Africa Stock Exchanges Association (ASEA) (2012) ‘Statistics’. Available at: http://www.africansea.org/asea/Statistics.aspx.

  • Ajakaiye, Olu and Howard Stein (2009) ‘Industrial-Led Development in Africa: Toward A Policy Framework’, in Diery Seck and Sylvain Boko (eds), Sector-Led Growth in Africa and Implications for Development, Trenton, NJ: Africa World Press.

    Google Scholar 

  • Alfaro , Laura , Kalemli-Ozcam , Sebnem and Volosovych , Vadym (2006) ‘Why Doesn’t Capital Flow from Rich Countries to Poor Countries? An Empirical Investigation’, Weather head Center for International Affairs, Harvard University, Working Paper 06–04m April. Available at: http://dev.wcfia.harvard.edu/sites/default/files/1083__LA_PoorCountries.pdf.

    Google Scholar 

  • Blackburn, Robin (2006) Age Shock: How Finance is Failing Us, London: Verso.

    Google Scholar 

  • Bryceson, Deborah (2002) ‘The Scramble in Africa: Reorienting Rural Livelihoods’, World Development, 30(5): 725–39.

    Article  Google Scholar 

  • Campbell, Bonnier (2008) ‘Regulation and Legitimacy in the Mining Industry in Africa: Where Does Canada Stand?’, Review of African Political Economy, 35(117): 367–85.

    Article  Google Scholar 

  • Capgemini and Merrill Lynch (2009) ‘World Wealth Report, 2009’. Available at: http://www.slideshare.net/Claudiodiniz/world-wealth-report-2009.

  • Chwieroth, Jeffrey M. (2006) ‘Cheerleading for Liberalization: The International Monetary Fund and Financial Globalization in Emerging Markets’, Department of International Relations, LSE. Available at: http://147.142.190.246/joomla/peio/files/Chwieroth_IMF.Financial.Globalization.Emerging.Markets.pdf.

    Google Scholar 

  • Chwieroth, Jeffrey M. (2007) ‘Neoliberal Economists and Capital Account Liberalization in Emerging Markets’, International Organization, 61: 443–63.

    Article  Google Scholar 

  • Cobourn, David (2004) ‘Beyond the Income Inequalities Hypothesis: Class, Neo-Liberalism and Health Inequalities’, Social Science and Medicine, 58: 41–56.

    Article  Google Scholar 

  • Davidson, Paul (2000) ‘Is a Plumber or a New Financial Architect Needed to End Global International Liquidity Problems?’, World Development, June: 1117–31.

    Google Scholar 

  • Detragiache, E., Gupta, P. and Tressel, T. (2006) ‘Foreign Banks in Poor Countries: Theory and Evidence’, IMF Working Paper No. 06/18, January. Available at: http://www.imf.org/external/np/res/seminars/2006/arc/pdf/tressel.pdf.

    Google Scholar 

  • Elhiraika, Adam and Leonce Ndikumana (2007) ‘Reserves Accumulation in African Countries: Sources, Motivations, and Effects’, Economics Department, Working Paper 2007–12. Available at: http://scholarworks.umass.edu/econ_workingpaper/24/.

    Google Scholar 

  • Epstein, Gerald (2002) ‘Financialization, Rentier Interests, and Central Bank Policy’, Political Economy Research Institute, University of Massachusetts. Available at: http://www.peri.umass.edu/fileadmin/pdf/financial/fin_Epstein.pdf.

  • Financial Times (2011) ‘Hedge Fund Industry Assets Swell to $1.92 Trillion’, 24 April. Available at: 24 http://www.ft.lk/2011/01/24/hedge-fund-industryassets-swell-to-1–92-trillion/.

  • Fischer, Stanley (1997) ‘Asia and the IMF’, IMF Seminar, 19 September. Available at: http://www.imf.org/external/np/apd/asia/fischer.htm.

  • Gallagher, Kevin (2012) ‘The Global Governance of Capital Flows: New Opportunities, Enduring Challenges’, PERI Working Paper Series, No. 283, (May) Available at: http://www.peri.umass.edu/236/hash/5177c19e45bd73aaf9ae065db 58a72cb/publication/512/.

    Google Scholar 

  • Gallagher, Kevin, Griffith-Jones Stephany and Ocampos, Jose Antonio (eds) (2012) ‘Regulating Global Capital Flows for Development’, The Frederick S. Pardee Study for the Longer Range Future, Boston University. Available at: http://www.bu.edu/pardee/files/2012/03/RegulatingCapitalTF-March2012.pdf.

    Google Scholar 

  • Gertler, Mark, and Kenneth Rogoff. (1990) ‘North-South Lending and Endogeneous Domestic Capital Market Inefficiencies’, Journal of Monetary Economics 26(2): 245–66.

    Article  Google Scholar 

  • Ghana Stock Exchange (2012) ‘Profile of Listed Companies’. Available at: http://www.gse.com.gh/indexl.php?linkid=46.

  • Gomme, Paul. (1993) ‘Money and Growth Revisited: Measuring the Costs of Inflation in an Endogenous Growth Model’, Journal of Monetary Economics 32(1): 51–77.

    Article  Google Scholar 

  • Gordon, Roger H. and A. Lans Bovenberg (1996) ‘Why Is Capital So Immobile Internationally? Possible Explanations and Implications for Capital Income Taxation?’, The American Economic Review, 86(5): 1057–75.

    Google Scholar 

  • Howse, Robert (2007) ‘The Concept of Odious Debt in Public International Law’, UNCTAD Discussion Papers No. 185, July. Available at: http://unctad.org/en/docs/osgdp20074_en.pdf.

    Google Scholar 

  • IMF (2007) ‘Global Financial Stability Report’, April. Available at: http://www.imf.org/External/Pubs/FT/GFSR/2007/01/pdf/text.pdf.

    Google Scholar 

  • IMF (2010a) ‘Capital Inflows: The Role of Controls’, IMF Staff Position Note, 19 February. Available at: http://www.imf.org/external/pubs/ft/spn/2010/ spn1004.pdf.

    Google Scholar 

  • IMF (2010b) ‘Heavily Indebted Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) — Status of Implementation, 2010’. Available at: http://www.imf.org/external/np/pp/eng/2010/091410.pdf.

    Google Scholar 

  • IMF (2011) ‘Recent Experiences in Managing Capital Inflows — Cross-Cutting Themes and Possible Policy Framework’ (February). Available at: http://www.imf.org/external/np/pp/eng/2011/021411a.pdf.

    Google Scholar 

  • IMF (2012) ‘Angola: Transactions with the Fund from May 1, 1984 to May 31, 2012’. Available at: http://www.imf.org/external/np/fin/tad/extransl.aspx?memberKey1=23&endDate=2012%2D06%2D09&finposition_flag=YES.

    Google Scholar 

  • Index Mundi (2012) ‘Commodity Food Price Index, April, 1997–March 2012’. Available at: http://www.indexmundi.com/commodities/?commodity=foodprice-index&months=180.

    Google Scholar 

  • Jomo, K.S. and von Arnin, Rudiger (2012) ‘Economic Liberalization and Constraints to Development’, in Akbar Noman, Kwesi Botchwey, Howard Stein and Joseph Stiglitz (eds), Good Growth and Governance in Africa: Rethinking Development Strategies (Oxford: Oxford University Press).

    Google Scholar 

  • Joyce, Joseph and Noy, Ilan (2005) ‘The IMF and the Liberalization of Capital Flows’, East-West Center Working Papers, Economic Series, No. 84, August. Available at: http://scholarspace.manoa.hawaii.edu/bitstream/handle/10125/3658/ECONwp084.pdf?sequence=1.

    Google Scholar 

  • Ju, Jiandong and Shang-Jin Wei (2006) ‘Solution to Two Paradoxes of International Capital Flows’, IMF Working Paper. WP/06/178. Available at: http://www.imf.org/external/pubs/ft/wp/2006/wp06178.pdf.

    Book  Google Scholar 

  • Jubilee USA Network (2008) ‘Recent Development on Odious and Illegitimate Debt’, Briefing Note Five. Available at: http://www.jubileeusa.org/fileadmin/user_upload/Resources/Policy_Archive/408briefnoteodiousilldebt.pdf.

    Google Scholar 

  • Khan, Mustaq (2007) ‘Governance, Economic Growth and Development Since the 1960s’, DESA Working Paper Series, No. 54, August. Available at: http://www.un.org/esa/policy/backgroundpapers/khan_background_paper.pdf.

    Google Scholar 

  • King, Robert, and Rebelo Sergio (1993) ‘Transitional Dynamics and Economic Growth in the Neoclassical Model’, The American Economic Review, 83(4): 908–31.

    Google Scholar 

  • Knaup, Horan, Schiessl, Michaela and Seith, Anne (2011) ‘Speculating with Lives: How Global Investors Make Money Out of Hunger’, Spiegel, 9 September. Available at: http://www.spiegel.de/international/world/speculating-with-liveshow-global-investors-make-money-out-of-hunger-a-783654.htm1.

    Google Scholar 

  • Lane, Philip, and Gian Maria Milesi-Ferretti (2001) ‘The External Wealth of Nations: Measures of Foreign Assets and Liabilities for Industrial and Developing Countries’, Journal of International Economics, 55: 263–94.

    Article  Google Scholar 

  • Lucas, Robert (1990) ‘Why Doesn’t Capital Flow from Rich to Poor Countries?’, American Economic Review, 80: 92–6.

    Google Scholar 

  • Mkandawire, Thandika (2012) ‘Institutional Monocropping and Monotasking’, in Akbar Noman, Kwesi Botchwey, Howard Stein and Joseph Stiglitz (eds), Good Growth and Governance in Africa: Rethinking Development Strategies, Oxford: Oxford University Press.

    Google Scholar 

  • McIntosh, Bill (2012) ‘How Big is the Hedge Fund Industry’, The Hedge Fund Journal, September. Available at: http://www.thehedgefundjournal.com/news/8022.

    Google Scholar 

  • Micco, A., Panizza, U. and Yanez, M. (2005) ‘Bank Ownership and Performance, 1995–2002: A Data Set’. Available at: http://www.iadb.org/res/files/data_app_mpy.xls.

    Google Scholar 

  • McKinsey Global Institute (2008) ‘Mapping Global Markets: Fifth Annual Report’, October. Available at: http://www.mckinsey.com/Insights/MGI/Research/Financial_Markets/Mapping_global_capital_markets_fifth_annual_report.

    Google Scholar 

  • McKinsey Global Institute (2011) ‘Mapping Global Markets 2011’, August. Available at: http://www.mckinsey.com/Insights/MGI/Research/Financial_Markets/Mapping_global_capital_markets_2011.

    Google Scholar 

  • Mensah, Sam (2004) ‘Capital Market Development in Africa: Selected Topics’, Addis Ababa: UNECA. Available at: http://www.uneca.org/acmdp/CapitalMarketsDevptInAfrica.PDF.

    Google Scholar 

  • Murinde, Victor (2009) ‘Capital Flows and Capital Account Liberalization in the Post-Financial-Crisis Era: Challenges, Opportunities and Policy Responses’, ADB, Working Paper No. 99, July. Available at: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/WORKING%2099%20Internet% 20PDF.pdf\.

    Google Scholar 

  • Machiko Nissanke and Howard Stein (2003) ‘Financial Globalization and Economic Development: Toward an Institutional Foundation’, Eastern Economic Journal, 29(2): 287–308.

    Google Scholar 

  • Nkikumana, Leonce and Boyce, James (2003) ‘Public Debts and Private Assets: Explaining Capital Flight from Sub-Saharan African Countries’, World Development 31(1): 107–30.

    Article  Google Scholar 

  • Nkikumana, Leonce and Boyce, James (2011) Africa’s Odious Debt: How Foreign Loans and Capital Flight Bled a Continent, London: Zed Press.

    Google Scholar 

  • Obstfeld, Maurice and Ken Rogoff (1996) Foundations of International Macroeconomics, Cambridge, MA: The MIT Press.

    Google Scholar 

  • ODI (2009) ‘The Global Financial Crisis and Developing Countries: Preliminary Synthesis of Ten Draft Country Reports’. Available at: http://www.odi.org.uk/resources/docs/4245.pdf.

    Google Scholar 

  • OECD (2011) Divided We Stand: Why Inequality Keeps Rising, Brussels: OECD. Available at: http://www.oecd.org/dataoecd/40/12/49170449.pdf.

    Google Scholar 

  • Portes, Richard, and Helene Rey (2005) ‘The Determinants of Cross-Border Equity Transaction Flows’, Journal of International Economics 65: 269–96.

    Article  Google Scholar 

  • Poverty Environment Net (2005) ‘Diamond-Based Growth in Botswana’. Available at: http://povertyenvironment.net/files/CASE%20Botswana.pdf.

    Google Scholar 

  • Prebisch, Raul (1950) ‘The Economic Development of Latin America and its Principal Problem’, New York: UN Dept. of Economic Affairs.

    Google Scholar 

  • Razin, Assaf and Chi-Wa Yuen (1994) ‘Convergence in Growth Rates: a Quantitative Assessment of the Role of Capital Mobility and International Taxation’, in Leonardo Leiderman and Assaf Razin (eds), Capital Mobility: The Impact on Consumption, Investment, and Growth, New York: Cambridge University Press.

    Google Scholar 

  • Reinhart, Carmen, and Kenneth Rogoff (2004) ‘Serial Default and the “Paradox” of Rich to Poor Capital Flows’, American Economic Review Papers and Proceedings, 94: 52–8.

    Article  Google Scholar 

  • Rousseau, Peter and Richard Sylla, R (2003) ‘Financial Systems, Economic Growth and Globalization’, in Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson (eds), Globalization in Historical Perspective, Chicago: University of Chicago Press.

    Google Scholar 

  • Rutherford, Lucas and Michael Ofori-Mensah (2011) ‘Ghana’s Mining Code: In Whose Interest’, Governance Newsletter: A Publication of The Institute of Economic Affairs, 17(4): 1–8.

    Google Scholar 

  • SADC Committee of Central Bankers (2012) ‘Bank of Botswana’. Available at: http://www.sadcbankers.org/Lists/News%20and%20Publications/Attachments/18/Fin%20Sys%20Botswana2011.pdf.

    Google Scholar 

  • Schindler, Martin (2009) ‘Measuring Financial Integration: A New Data Set’, IMF Staff Papers 56(1): 222–38. Available at: http://www.palgrave-journals.com/imfsp/journal/v56/n1/pdf/imfsp200828a.pdf.

    Article  Google Scholar 

  • Sindzingre, Alice and Howard Stein (2001) ‘Institutions, Global Integration and Development in Sub-Saharan Africa: A Theoretical Enquiry’, African Studies Association, 2001 Annual Meeting, Houston, TX, November.

    Google Scholar 

  • Singer, Hans (1950) ‘The Distribution of Gains Between Investing and Borrowing Countries’, American Economic Review, 40: 473–85.

    Google Scholar 

  • Siphambe, Happy (2007) ‘Growth and Employment Dynamics in Botswana: A Case Study of Policy Coherence’, Working Paper No. 82. Policy Integration and Statistics Department. International Labour Office, October. Available at: http://www.ilo.int/wcrosp5/groups/public/---dgreports/---integration/documents/publication/wcros_088432.pdf.

    Google Scholar 

  • Southern Agricultural Growth Corridor of lanzania (SAGCOI) (2011) ‘Investment Blueprint’. Available at: http://www.sagcot.com/uploads/media/Invest-Blueprint-SAGCOT_High_res.pdf.

    Google Scholar 

  • Stein, Howard (2004) ‘Fighting Poverty: Poverty Reduction Strategies, Employment and Accumulation in Africa’, Occasional Paper, Centre for African Studies, University of Copenhagen, September. Available at: http://www.teol.ku.dk/cas/research/publications/occ._papers/stein_samlet.pdf/.

    Google Scholar 

  • Stein, Howard (2008) Beyond the World Bank Agenda: An Institutional Approach to Development, Chicago: University of Chicago Press.

    Book  Google Scholar 

  • Stein, Howard (2010) Financial Liberalization, Institutional Transformation and Credit Allocation in Developing Countries: The World Bank and the Internationalization of Banking’, Cambridge Journal of Economics, 34(2): 257–73.

    Article  Google Scholar 

  • T. Rowe Price (2012a) ‘Africa and Middle East Fund: Prospectus’. Available at: http://individual.troweprice.com/staticFiles/gcFiles/pdf/trame.pdf.

    Google Scholar 

  • T. Rowe Price (2012b) ‘Africa and Middle East Fund’. Available at: http://www3.troweprice.com/fb2/fbkweb/composition.do?ticker=TRAMX#.

    Google Scholar 

  • Tabb, William (2012) The Restructuring of Capitalism in Our Time, New York: Columbia University Press.

    Google Scholar 

  • Taylor, Ian (2005) ‘The Developmental State in Africa: The Case of Botswana’, in Pamela Mbabazi and Ian Taylor (eds), The Potentiality of ‘Developmental States’ in Africa: Botswana and Uganda Compared. Dakar: CODESRIA, pp. 44–56. Available at: https://www.codesria.org/IMG/pdf/4-_Taylor.pdf.

    Google Scholar 

  • Tornell, Aaron, and Andres Velasco.(1992) ‘Why Does Capital Flow from Poor to Rich Countries? The Tragedy of the Commons and Economic Growth’, Journal of Political Economy 100: 1208–31.

    Article  Google Scholar 

  • Ubide, Angel (2006) ‘Demystifying Hedge Funds’, Finance and Development, 43(2). Available at: http://www.imf.org/external/pubs/ft/fandd/2006/06/basics.htm.

  • UNCTAD (2008) ‘On-Line Statistics’. Available at: http://unctad.org/en/Pages/Statistics.aspx.

    Google Scholar 

  • UNCTAD (2011a) ‘On-Line Statistics’. Available at: http://unctad.org/en/Pages/Statistics.aspx.

    Google Scholar 

  • UNCTAD (2011b) Price Formation in Financial Markets, Geneva: UNCTAD

    Google Scholar 

  • UNCTAD (2012) ‘On-Line Statistics’. Available at: http://unctad.org/en/Pages/Statistics.aspx/.

    Google Scholar 

  • UNCTAD (various years) World Investment Report, Geneva: UNCTAD.

    Google Scholar 

  • Watson, Mathew (2009) ‘Investigating the Potentially Contradictory Microfoundations of Financialization’, Economy and Society, 38 (2): 255–77.

    Article  Google Scholar 

  • World Bank (1992) ‘Strategy for African Mining, World Bank Technical Paper No. 181, Africa Technical Department Series, Mining Unit, Industry and Energy Division, Washington, DC: World Bank. Available at: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1999/10/21/000178830_98101904142281/Rendered/PDF/multi_page.pdf.

  • World Bank (various years) Global Development Finance, Washington, DC: World Bank.

    Google Scholar 

  • World Bank (2012) ‘POVCALNET’. Available at: http://iresearch.worldbank.org/PovcalNet/index.htm?0.

  • Worthy, Murray (2011) ‘Broken Markets: How Financial Market Regulation Can Help Prevent Another Food Crisis’, World Development Movement. Available at: http://www.wdm.org.uk/sites/default/files/Broken-markets.pdf.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Michigan, USA

    Howard Stein

Authors
  1. Howard Stein
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Department of Land Economy, University of Cambridge, UK

    Philip Arestis (Director) (Director)

  2. University of Leeds, UK

    Malcolm Sawyer (Professor of Economics) (Professor of Economics)

Copyright information

© 2013 Howard Stein

About this chapter

Cite this chapter

Stein, H. (2013). Africa and the Perversities of International Capital Flows. In: Arestis, P., Sawyer, M. (eds) Economic Policies, Governance and the New Economics. International Papers in Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781137023513_5

Download citation

Publish with us

Policies and ethics

Search

Navigation