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In the 1990s, foreign direct investment began to swamp all other cross-border capital flows into developing countries. Does foreign direct investment support sound development? In particular, does it contribute to poverty reduction?
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Private portfolio flows to a country tend to rise in response to an increase in the current account deficit, a rise in foreign direct investment flows, higher per capita income, and growth performance. The most important determinant of official lending to a developing country seems to be the...
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