The emerging countries re-export back quite a good part of what they receive, after having increased their financial reserves.
The flow of capital from rich countries to developing ones is to day a stable phenomenon of the world economy . It has reached in the last few years the size of a billion dollar , and it seems now to have reached a sort of stability It is now a main element in the inter national economy , which does not comes from any particular decisions of Governments or Banks. The forecast of the iif (Institute for International Finance) are shown here in Table one, for the current year and for next. Of course , the main origin of such flows is the difference in the rate of increase of the respective economies , that is about one per cent in the rich area , and about five per cent in the Emerging Countries. The movement is simply available capital looking for profit , and moving to the places that promise a higher level of profit . By now the phenomenon has had some effects on the receiving countries, who now re-export back quite a good part of what they receive , after having increased their financial reserves.
Table 1: Capital flows from Mature Countries to Emerging ones In billion dollars
| 2012 | 2013 | 2014 |
Total Inflow | 1,113 | 1,173 | 1,209 |
Private flows | 1,080 | 1,118 | 1,150 |
Equity invest | 572 | 616 | 646 |
Priv. Creditors | 508 | 502 | 504 |
Official inflow | 33 | 55 | 59 |
Total Outflow | -1,427 | -1390 | -1,359 |
Private Outflow | -975 | -1,116 | -1,026 |
Reserves Increase | -375 | -374 | -333 |
The figures of table one for 2012 and the forecasts for 2013
confirm that he Capital Inflow is not increasing much , bur keeps to a high level , and that it is basically made up by a private flow , to which the Emerging Countries answer by an high level of recycling back. The private outflow is about the same level than the inflow . So, the Emerging countries can increase their reserves ( in the table presented with a minus sign) and improve their stability, and their ability to resist to a possible financial crisis.
Table two .Inflow and outflow to Emerging Countries and back in 2013 In billion dollars
Countries | Pv. Inflow | % | Pv. Outflow | % |
Asia | 517 | 46,3 | -540 | 53,1 |
(China | 303 | 27.1 | -407 | 40.0) |
Europe | 218 | 19.5 | -163 | 16.0 |
Latin America | 298 | 26.6 | -152 | 15.0 |
Africa Mid E | 85 | 7.6 | -161 | 15.9 |
Total | 1,118 | 100.0 | -1,016 | 100,0 |
The distribution of the flow of capital shows the important position of Asia which counts for about half of the total flow and outflow , and particularly of China . In second position is Latin America , followed by Emerging Europe , and Africa and Middle East the latter exporting more than the inflow , as the Middle East has the oil income., and it’s a capital exporter. The capital outflow does not include the increase of reserves , but only the capital actually flowing back.