Dr Valpy Fitzgerald – Professor of International Economics and Finance, Oxford University

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We asked Valpy about the prospects for cross-border capital flows to the poorest and most vulnerable countries. Valpy highlights that overall the prospects are good, demonstrating that both direct investment lending to poorer countries have increased again post-crisis. However there are two problems to address: (1) most FDI is asymmetrical, going into extractive industries rather than sectors more important to development, and (2) short-term capital flows tend to be very volatile, with a risk of contagion creating instability in capital flows to poor countries.
2 months ago