INTERNATIONAL FINANCE AND POLICY SPACE

摘要

Foreign capital flows to developing and transition economies may support investment, economic diversification and growth, or generate macroeco-nomic instability, external imbalances and boom-and-bust credit episodes. The effects are highly dependent on their amount, composition and use. Governments need to apply capital management policies in order to establish a suitable macroeconomic framework for investment and growth, influence the amount and type of capital inflows and channel them to productive uses. This is also true for FDI, as its contribution to structural change, technological upgrading, access to world markets, employment generation and output growth depends critically on the regulatory and policy framework in the host country. However, different trade and investment agreements may reduce the scope for host-country governments to regulate capital movements and curtail their ability to influence the behaviour of investors to ensure that FDI supports their development strategy.