This paper discusses the changing pattern of capital flows to developing countries. The analysis is heavily colored by recent events. It concentrates on the principal facts, developments, and policies that characterize the current episode of capital inflows to Asia and Latin America

This paper discusses the changing pattern of capital flows to developing countries. The analysis is heavily colored by recent events. It concentrates on the principal facts, developments, and policies that characterize the current episode of capital inflows to Asia and Latin America.

Devaluation is an integral part of adjustment in many developing countries, particularly relied upon by countries facing large external imbalances. A devaluation can only reduce trade imbalances if it translates to a real devaluation and if trade flows respond to relative prices in a significant...