Recent Trends and Prospects of External Debt Situation and Financial Flows to Asian and Pacific Developing Countries

Abstract

Following the debt crisis in 1982, the value of aggregate not financial flows to developing countries fluctuated sharply during the 1980s. In the meantime, the structure of financial flows to developing world also changed significantly in the past decade. In particular, foreign direct investment (FDI) has played an increasing role in the external financing of the developing countries. Following the pattern of the developing world, net resource flows to the Asian and Pacific Developing Countries (APDCs) have experienced various fluctuations in terms of both value and structure in the 1980s, though the APDCs as a whole, had lighter debt burden and better access to the external financial resources compared with the rest of the developing world. Looking forward, the current world economic recession may have a strong and adverse impact on the flow of resources. Insufficient external resources have raised great concern particularly in the APDCs where the demand for foreign capital will intensify - as both current account deficit and resource gap are projected to widen in the near future. The aims of this paper are to review the recent trends of debt situation and resource flows to APDCs under the new international environment and to provide some projections on debt indicators and resource flows for the next two years. Section II briefly reviews the main features of external debt and financial flows to the developing world. Section III analyzes the debt situation and the changing pattern of net resource flows to APDCs. The focus is on external debt flow and foreign direct investment. Section IV provides projections on debt indicators and other resource flows to APDCs for 1992 and 1993. Finally Section V highlights the major findings. An appendix provides detailed statistical data.