The global financial crisis and developing countries

The global financial crisis that emerged in the financial sector in developed countries and then spread to developed countries’ real sectors, has already affected confidence in emerging markets’ stock markets, and has already affected developing countries.

The UK Department for International Development and the Dutch Ministry of Foreign Affairs are supporting a team of 6 ODI researchers and research collaborators in ten poor countries (in Asia: Indonesia, Cambodia and Bangladesh, in South America Bolivia and in Africa: Benin, Ghana, Kenya, Nigeria, Uganda and Zambia) to examine the effects of the global financial crisis.  The main research questions include:

• What are the elements in the shock at national level (via private capital flows, trade, aid and remittances);
• What are the effects on growth, investment, poverty and inequality and debt (distinguish between actual and likely effects); and
• What are the possible policy implications (distinguish between actual, possible and optimal policy responses).

There will also be thematic papers on

• Private financial flows;
• Remittances; and
• Trade.

The research involves a workshop in London, consultations in each country, and synthesis review and runs from December 2008 – March 2009. It aims to inform key policy processes and international events on the actual effects of and appropriate policy responses to the global financial crisis. ODI’s work on the global financial crisis is highlighted at http://www.odi.org.uk/odi-on/financial-crisis/default.asp