Developing Countries and International Finance II

The first revolution of the global capital flow cycle occurred between 1990 and 1999. Developing countries attracted little new private capital during the 1980s. This chapter examines the global capital flow cycle. It looks at the series of crises that struck during the 1990s, focusing deeply on the largest of them: the 1997 Asian crisis. The chapter then examines how that crisis subsequently prompted considerable discussion about reforming the international financial system in order to alter how crises are managed and to try to reduce the frequency of such crises in the future. Weaknesses in Asian financial systems became a source of general concern in the spring of 1997. The trigger was the discovery that one of Thailand’s largest financial institutions, Finance One, was insolvent. The chapter looks at the most recent revolution of the cycle, which began in the wake of the US financial crisis of 2008. It concludes by drawing some more general lessons.

Business · Capital flows · Economics · International finance · Market economy · Finance · Global Financial Crisis and Policies